PETALING JAYA: Phillip Capital Research has initiated coverage on 99 Speed Mart Retail Holdings Bhd
(99 Speed Mart) with a “buy” rating, helped by visible long-term growth supported by a multi-year store expansion pipeline.
The research outfit told clients in a report that it had a 12-month target price of RM4.35 on the retailer, implying a target 2027 price earnings ratio of 39 times, and at a premium over its weighted-average retail peers.
Phillip Capital Research believes this premium is justified by 99 Speed Mart’s visible long-term growth supported by a multi-year store expansion pipeline, its focus on essential consumer products which support resilient demand and defensive earnings.
This is in addition to its market-leading position and its extensive participation in the Sumbangan Asas Rahmah (Sara) programme, strong earnings track record underpinned by consistently high return on equity and a FBM KLCI inclusion, supporting broader institutional participation.
The research house noted that 99 Speed Mart was Malaysia’s largest mini-market chain, specialising in the retail of daily necessities and fast-moving consumer goods through a nationwide network of 3,086 stores.
“We believe its standardised, wholly owned operating model supports scalable network expansion, procurement efficiencies and operating leverage,” said the brokerage.
Coupled with resilient demand for essential consumer products and extensive participation in the Sara programme (81% of stores), Phillip Capital Research said the group is well-positioned to sustain its long-term earnings growth, it added.
The research house noted that Malaysia’s macroeconomic environment remains conducive for staple retailers, supported by resilient domestic demand.
Real gross domestic product growth moderated to 5.4% year-on-year in the first quarter of financial year 2026 (1Q26) from 6.2% in 4Q25, remaining above the advance estimate of 5.3%, it said, adding that growth continues to be supported by resilient private consumption, sustained investment activity and firm electrical and electronics exports.
Meanwhile, private consumption, while normalising to 4.7% in 1Q26 from 5.3% in 4Q25, is expected to remain resilient, supported by higher disposable incomes following civil service wage adjustments and the continuation of targeted cash assistance programmes, it said.
An analyst told StarBiz that by being the largest mini-market chain, 99 Speed Mart is able to leverage on its size to enjoy economies of scale, further enhancing its earnings prospects.
Phillip Capital Research explained that Malaysia’s grocery retail market has remained on a steady growth trajectory, expanding from RM69bil in 2018 to an estimated RM85bil in 2024, with market size expected to surpass RM106bil by 2028.
This translates to a compounded annual growth rate (CAGR) of 6%.
The sector continues to benefit from favourable demographics, improving household incomes and resilient demand for essential consumer goods, it said.
Notably, the mini-market segment has significantly outperformed other grocery formats, recording a 16% CAGR over 2019 to 2023, while growth across supermarkets and hypermarkets has been broadly flat.
“We believe this reflects a change in shopping behaviour as consumers increasingly favour convenience-led retail formats,” said Phillip Capital Research.
The research house said the company’s earnings growth is expected to moderate between 9% and 10% over 2027 to 2028 on a higher comparable base, although it expects net profit margins to remain healthy at around 5.7%, supported by continued operating leverage and economies of scale.
Overall, Phillip Capital Research is forecasting a three-year core earnings CAGR of 14% over 2025 to 2028.
At last look, the stock was trading at RM3.69 apiece.
