$AEON / 6599 (AEON CO. (M) BHD)
AEON's 2Q24 retail segment is expected to experience seasonally softer sales compared to the previous quarter due to the absence of festive events, which typically drive higher sales volumes. However, the company has seen an improvement in sales momentum across all categories (foodline, softline, and hardline) month-over-month, particularly following the commencement of EPF Account 3 withdrawals on 12 May. To further boost sales during this historically quieter period, AEON has launched various promotional campaigns as part of its 40th-anniversary celebrations, aimed at increasing foot traffic to its stores.

Looking ahead, AEON has set a targeted mall occupancy rate of 94% for FY24, with an anticipated rental renewal rate of 90% and a rental reversion rate of 9%-10%. The company’s ongoing efforts to enhance its stores and shopping malls are progressing well, with the renovations of AEON IOI Puchong expected to be completed by the end of August 2024, and the facelifts for AEON Bukit Indah and AEON Tebrau City scheduled to finish by 4Q24. These rejuvenation efforts are projected to result in a year-over-year sales uplift of approximately 15%-20% from the refreshed malls.

For FY24, AEON is projected to achieve a modest earnings growth of +4.8% year-over-year, driven by expected EBIT margins of 2.5% for the retail segment and 38% for the Property Management Services (PMS) segment, in line with the company’s guidance. Additionally, AEON has installed solar PV panels at 14 of its 28 malls, though only 4 have received approval from TNB to operate. Once fully operational, these solar panels are expected to reduce electricity consumption per mall by 5%-7%.