PETALING JAYA: Eco-Shop Marketing Bhd
appears to have turned a corner as its same-store sales growth (SSSG) showed signs of recovery, with analysts expecting the momentum to strengthen alongside the group’s plan to open 100 new stores in financial year 2027 (FY27).
UOB Kay Hian (UOBKH) Research attributed the SSSG recovery to stronger foot traffic, particularly in the East Coast and Central regions, as well as marketing initiatives and store refurbishment efforts.
It added that the group’s SSSG has trended positively since May, supporting expectations of a stronger first quarter for FY27 (1Q27).
As a result, UOBKH Research maintained its “buy” rating with an unchanged target price of RM1.70.
“We like Eco-Shop for its attractive three-year profit compounded annual growth rate of 17.2%, underpinned by store expansion,” it said, noting that the improving SSSG points to limited downside risk.
RHB Research also said Eco-Shop’s strong growth prospects and resilient earnings support a valuation rerating.
The dollar-store segment is expected to benefit from consumers trading down, providing a long runway for the group’s expansion, alongside its necessities-focused product mix underpinning earnings visibility and long-term sustainability.
“Meanwhile, management has conservatively guided for a FY27 gross profit margin (GPM) of 33% to 34%, anticipating higher costs stemming from the ongoing geopolitical conflict in the Middle East,” RHB Research said.
Nonetheless, it expects Eco-Shop to regain price competitiveness as non-dollar-store rivals are likely to pass on higher costs to consumers, while the group maintains its pricing.
Any pressure on its GPM is expected to be partly mitigated by stock-keeping unit (SKU) optimisation, a higher contribution from house-brand products and economies of scale, it explained.
“It was more than offset by the strengthening of the ringgit versus the yuan, improved product mix from increased house-brand contributions and reclassification of supplier rebate
“Close to 700 SKUs have been affected by supplier cost increases, which is an increase from 250 SKUs early on when the conflict first broke out,” it explained.
“It remains highly manageable as Eco-Shop has close to 13,000 SKUs altogether.”
The group posted a 4Q26 core profit of RM64.7mil, up 15.7% year-on-year but down 9.2% quarter-on-quarter.
