Affin IB Research upgrades Aeon to Reduce, raises target price

Affin IB Research upgrades Aeon to Reduce, raises target price
Business & Markets 2013
Written by theedgemalaysia.com
Tuesday, 06 August 2013 08:44

KUALA LUMPUR (Aug 6): Affin IB Research has upgraded Aeon Co (M) Bhd to a Reduce (from Sell) at RM15.50 with a higher target price of RM13.80 (from RM12.13) and said Aeon's 1HFY13 same-store-sales (SSS) growth was healthy at 4%.

In a note Tuesday, the research house said it met up with Aeon’s management recently and gathered that FY13's SSS growth would be around 4-5% year-on-year (y-o-y), slightly above current its SSS growth assumption of 3%.

Affin IB Research said consumer spending would remain healthy in 2HFY13, driven mainly by higher sales activities in tandem with the festive holidays sales.

“We now forecast a revised FY13 net profit growth of +13.3% y-o-y, versus our previous growth forecast of +9.6% y-o-y.

“Our FY13-15 EPS have been raised by 3-13% taking into account: 1) a higher SSS growth assumption of 5% (from 3% previously); and 2) a higher occupancy rate assumption of 98% (from 95% previously),” it said.

Affin IB Research said that in conjunction with Aeon's 30th Anniversary celebration next year, the cash-rich company might raise its dividend payout.

“As such, we have also raised our GDPS payout forecast from 35% of PAT to 40% in FY13 and stepping out to 42% for FY14-15.

“Following our EPS upgrade, our TP for Aeon is revised from RM12.13 to RM13.80, pegging the stock at an unchanged FY14 PER target of 18x. In view of the lower share price downside, we are upgrading the stock from Sell to Reduce rating,” it said.