PETALING JAYA: 99 Speed Mart Retail Holdings Bhd
’s earnings for the ongoing third quarter could “remain softer” before improving in the final three months of this year, says CIMB Research.
The research house made the comment following the announcement of the mini-market chain’s results for the second quarter of financial year 2026 (2Q26), during which earnings eased quarter-on-quarter (q-o-q) on softer margins and higher costs.
Sequentially, 2Q26 revenue was broadly flat as an increase in store count and in transaction volume were largely offset by a decline in average basket size.
Basket size shrank due to a high comparison base in 1Q26 following a double festive period. A lower gross profit margin, alongside a rise in operating costs and higher depreciation charges, led 2Q26 core net profit to dip 13.4% q-o-q to RM163.3mil.
“We expect slightly stronger earnings in the second half of 2026 on a half-on-half basis, supported by anticipated seasonal strength in 4Q26, although the performance in 3Q26 could remain softer given the absence of major festive periods and cautious consumer sentiment.”
CIMB Research said: “We expect earnings to improve in 4Q26, supported by year-end festive spending, continued store expansion, and resilient demand for essential goods.
“Despite softer consumer spending, we believe 99 Speed Mart’s essentials-heavy and value-oriented positioning should support resilient demand, with additional benefits from consumer downtrading and higher in-home consumption.”
Meanwhile, RHB Research said 99 Speed Mart’s steady sales volume trend should be sustained, notwithstanding the more cautious consumer sentiment.
This is considering the group’s staples- oriented product mix and highly accessible outlet locations.
It is also well-positioned to continue capitalising on the Sumbangan Asas Rahmah (Sara) programme, with approximately 3,000 outlets enrolled as panel stores.
With limited supply chain disruptions and cost inflation stemming from the Middle East conflict, the research house expects input costs to remain stable.
It noted that 99 Speed Mart’s outlet expansion target remains at 250 stores per annum for Malaysia, and management is looking to add less than 10 outlets in China, as this overseas venture is still at an experimental stage.
Beyond the near term, RHB Research said earnings growth should be anchored by 99 Speed Mart’s strategies to expand its addressable markets. These plans include diversifying its sourcing options to enhance product offerings (such as selling electrical appliances in selected stores), developing its bulk sales platform, and expanding beyond Malaysia.
“We believe 99 Speed Mart’s resilient fundamentals in offering earnings visibility amid a challenging market environment will continue to be valued by markets, thereby supporting its valuation premium.
“Sentiment on the stock could be lifted if the upcoming Budget 2027 brings about a higher allocation for the Sara programme and other fiscal support initiatives to boost consumption.”
On costs, Kenanga Research said ongoing energy-efficiency upgrades are estimated to yield approximately RM24mil in annual utility savings, with only about 50% of the store network upgraded, suggesting further savings potential.
Following encouraging demand from its initial rollout of Midea small home appliances in the Klang Valley in April 2026, the range was expanded nationwide and introduced on 99 Bulksales in July.
This expansion provides an avenue to lift average basket size, though near-term earnings contributions will be limited as the range takes up less than 1% of shelf space.
“We see additional growth drivers from growing 99 Bulksales, initiatives to lift basket size through selected home appliances and further utility savings from ongoing energy-efficiency upgrades, while its extensive distribution network and scale continue to reinforce its competitive advantage.
“Nevertheless, we believe much of this growth visibility is largely reflected in current valuations,” said Kenanga Research.
In a separate note, Hong Leong Investment Bank Research pointed out that macro headwinds, such as cost of living pressures and cautious consumer spending, still persist. It expects 99 Speed Mart’s margins to remain insulated, buffered by its ongoing energy-efficiency initiatives.
“We like 99 Speed Mart due to its strong market presence and extensive store network, with competitive pricing that is well-positioned to drive stable revenue.”
