KUCHING: AEON Co Bhd‘s (AEON) third quarter of 2014 (3Q14) revenue grew 4.2 per cent year-on-year (y-o-y) to RM930.6 million driven by better sales performances by both of its business segments. However, AEON’s nine month 2014 (9M14) net profit declined 11.6 per cent year-on-year (y-o-y) to RM137.4 million MIDF Amanah Investment Bank Bhd’s research arm (MIDF Research) noted that although the company had yet again successfully maintained its top line growth at a respectable 4.2 per cent y-o-y.
The healthy growth was mainly contributed by better sales performances by both of its business segments.
Retail business segment revenue growth was attributable to better performance of its existing stores and contributions from its new stores opening.
Meanwhile, its property management services segment better overall better performance was due to contribution from its new shopping centre, higher rental rates, and benefits from tenants revamp in some of its existing shopping centres.
“This was mainly due to the lower contribution from the Retail business segment which has seen a decline of 42 per cent y-o-y.
“The slow performance of its retail business that can be attributed to the higher operating cost mainly due to changes in retail mix, promotional expenses from the 30th anniversary campaign, higher utilities costs, and the initial costs associated with the new stores opening,” said the research house.
“We foresee that the company’s bottomline performance will continue to remain subdue in this near term due to higher operating cost, as well as consumers are becoming more sensitive and selective on their spending.
“We further opine that the company’s immediate near term strategy could now be restricted towards undertaking higher level of promotional and discounting expenses to stimulate its revenue.
“As a result, we believe that margin erosion is inevitable for its retail business.”
Nonetheless, Ta Research believe that there could be a pick-up in consumers spending as it move closer towards the implementation of GST with the possibilities of the consumer bringing forward their retail spending.