PETALING JAYA: 99 Speed Mart Retail Holdings Bhd
is prepared to pass on any increase in supplier costs to consumers to safeguard margins, even as the mini-market chain operator says it has yet to see material disruptions from the ongoing Middle East conflict.
Following engagements, RHB Research said 99 Speed Mart has not observed any material cost pressures or supply chain disruptions stemming from the conflict in the immediate term.
“That said, any cost increases will be passed on to consumers to conserve its gross profit margin,” the research house said. RHB Research added that higher electricity tariffs are being mitigated through optimisation efforts, while increased diesel costs continue to be cushioned by government subsidy programmes.
The research house noted that first-quarter (1Q26) gross profit margin expanded by 1.1 percentage points, supported by economies of scale, while pre-tax margin improved to 8.1% on stronger operating leverage.
Meanwhile, MBSB Research said 99 Speed Mart’s gross profit rose to RM625.5mil in 1Q26, with gross profit margin coming in at 20.4%.
The research firm said the margin improvement was driven by a broader product mix and stronger contribution from higher-margin discretionary items such as snacks, frozen food, household goods and selected personal care products.
“However, the sharp improvement in gross profit margin should be interpreted cautiously, as management clarified that supplier rebates and incentives were reclassified from other operating income to a deduction against cost of sales,” it said.
Separately, RHB Research said the Sumbangan Asas Rahmah (Sara) aid scheme, which helps support household spending amid ongoing cost-of-living pressures, now accounts for about 5% of 99 Speed Mart’s total sales.
“Consumer behaviour has not changed significantly, but management is seeing a more conservative spending pattern,” it added.
The research house upgraded the stock to a “buy” from “neutral” while maintaining its target price at RM4.02 a share, saying valuations are becoming “more palatable” given the group’s resilient earnings outlook.
“The promising earnings growth will be supported by the increased budget allocation for Sara and robust outlet expansion to deepen market penetration,” it said.
For 1Q26, 99 Speed Mart posted a core net profit of RM191.1mil, up 25.9% year-on-year (y-o-y), according to MBSB Research. The earnings accounted for 27% of MBSB Research’s full-year forecast and 26% of consensus estimates.
Revenue for the quarter jumped 18% y-o-y to RM3.07bil, driven by continued outlet expansion and stronger same-store sales growth (SSSG).
The group added a net 253 outlets over the past year, bringing its total store count to 3,086 as at end-March, comprising 3,080 stores in Malaysia and six in China.
SSSG came in at a strong 11.1% for the quarter, compared with 1.7% a year earlier, supported by longer operating hours, improved product assortment and contributions from government cash assistance initiatives.
MBSB Research said 99 Speed Mart continues to target about 250 net new stores annually in Malaysia over the medium term, while expansion in China is likely to remain in the single digits as the group refines its store model for local market conditions.
The research house maintained its “buy” call with an unchanged target price of RM4.37 a share, based on a 45 times price-to-earnings multiple pegged to FY27 earnings per share of 9.7 sen.
Similarly, Hong Leong Investment Bank (HLIB) Research said 99 Speed Mart is poised to sustain its earnings momentum through a steady rollout of 250 new outlets annually. The research house said extended store hours, enhancements to the bulk sales platform and continued cost-optimisation efforts are expected to support growth.
HLIB Research reiterated its “buy” call with a higher target price of RM4.24 from RM3.80 previously. It said its valuation, based on a discounted cash flow model, implies FY27 price-to-earnings of 45 times, close to one standard deviation above its 1.5-year mean of 40 times.
Yesterday, shares in 99 Speed Mart rose 13 sen, or 4%, to RM3.41, valuing the group at RM28.64bil. However, the stock remains down 40 sen, or 10.5%, year-to-date.
