PETALING JAYA: Cautious consumer sentiment trends are driving Eco-Shop Marketing Bhd
’s earnings momentum with the company being the most direct listed beneficiary.
AmInvestment Bank Research said several listed Malaysian retailers and consumer-staples names have flagged cautious consumer sentiment trends, with households turning more price-aware and shifting towards a defensive, needs-based basket; a caution management teams link to geopolitical tensions and the perceived economic fallout.
“McKinsey’s work points the same way, shoppers are price-benchmarking and promotion hunting, comparing prices across channels,” the research house said in a report yesterday.
AmInvestment Bank Research said at a flat RM2.60, Eco-Shop undercuts MR DIY Group (M) Bhd, 99 Speed Mart Retail Holdings Bhd and even Shopee/TikTok Shop on like-for-like items; only Chinese cross-border platforms print cheaper, and three to four-week lead times with quality uncertainty make them no substitute for buying in-store today.
“Eco-Shop is the scale incumbent, with an estimated 68% share of the organised fixed-price segment and 10,000-plus stock keeping units (SKUs) against peers such as Ninso, Eko Jimat and Daiso.
“Critically, we read the shift as structural rather than purely cyclical – value formats elsewhere have retained the customers that downtrading first brought in, well beyond the initial macro catalyst,” the research house said.
AmInvestment Bank Research said its expects Eco-Shop to enter a multi-year growth cycle, with the financial year 2026 (FY26) to FY29 core earnings compounding at a compound annual growth rate of 20%, underpinned by three structural themes – a sustainable store expansion plan with ample white space still to fill; an entrenched consumer downtrading trend, of which Eco-Shop is a direct listed beneficiary; and structurally higher margins, where any easing in commodity, freight or ringgit costs is incremental upside given the fixed RM2.60 price point.
“Management targets 100 gross store openings a year and our store-density work points to a healthy runway before saturation.
“Malaysia runs at about 54,000 population per dollar store against about 31,000 across developed peers (for example, Japan and the United States), while Eco-Shop’s own network averages about 70,000, leaving central (77,000) and especially Sabah and Sarawak (about 143,000) visibly underserved, and this is where the bulk of the roll-out is directed.
“Our store-by-store catchment mapping supports the white-space case: only about 50% of outlets fall within three km of another Eco-Shop, against 94% for 99 Speed Mart and 77% for MR DIY, so we expect cannibalisation to stay subdued and revenue per store to hold as the network scales.
“The distribution-centre pipeline, set to more than two times throughput by 2029, supports the roll-out through to FY34,” the research house said.
AmInvestment Bank Research said the group’s gross margin has re-rated from 20% in FY22 to 33% in FY26, with the fourth quarter of 2026 already at 34.5%.
The research house said it forecasts gross margins of 33% to 34% from FY27 onwards, which is within management’s guidance.
It said three durable drivers underpin the step-up: procurement scale and richer supplier rebates, deeper own-brand penetration, having already reached a 60:40 own-brand-to-third-party mix, and productivity gains from employee incentive schemes, store refurbishment and a focus to smaller store formats that raise sales density per sq ft while trimming rent and headcount.
“Cost headwinds look manageable – about 60% to 70% of products are sourced from China and of that about 90% is yuan-denominated, though the group actively hedges this exposure,” it said.
AmInvestment Bank Research initiated coverage on Eco-Shop with a “buy” call and a target price of RM1.80.
