Maybank unit positive on Aeon’s mall disposal
MALAYSIA’S Maybank Investment Bank Research is “mildly positive” on Aeon Co (M) Bhd’s proposed disposal of the Aeon Mahkota Cheras mall.
The research house said it understood that the Aeon Mahkota Cheras mall had been underperforming while earnings contribution to the group was minimal.
“Due to marginal earnings impact, we maintain our earnings forecasts and target price of RM2.20 pegged to 28 times FY18 PER,” Maybank said.
Aeon Co has entered into a sale and purchase agreement with Foremost Wealth Management Sdn Bhd to dispose its 304,920 sq ft land and two-storey retail mall (Aeon Mahkota Cheras Shopping Centre for RM87.8 million cash.
“While details of the Aeon Mahkota Cheras mall were not disclosed, such as revenue and operating profit, we understand that the mall has been underperforming over the years and contribution to Aeon’s retailing segment was minimal,” Maybank said.
It noted that the Aeon Mahkota Cheras Mall was also among the group’s smallest malls with a build-up of 299,979 sq ft versus other larger Aeon malls with build-ups ranging from 0.5 million to 1.5 million|sq ft.
“Based on our current assumptions, we have pencilled in less than 2 per cent revenue contribution per annum from this mall.
“All in, we are slightly positive on the disposal as the disposal of underperforming malls could ease overhead costs and in turn, improve earnings margins. Aeon currently has 26 Aeon Malls (including Aeon Mahkota Cheras) in Malaysia,” Maybank said.
Maybank has maintained its FY18-19 earnings forecasts on Aeon Co for now due to marginal net earnings impact of less than 0.5 per cent per annum post the disposal.
