AEON’s ESG score is above average at 56 (out of 100) under Maybank Investment Bank’s (Maybank IB) proprietary ESG scoring methodology.
In a note today (Dec 29), Maybank IB cited that although it does not provide GHG emission breakdowns (scope 1, 2 & 3) but has identified key areas of environmental concern to address within its internal sustainability policy.
Maybank IB issues a BUY call on the stock at a TP of MYR1.60 (19x FY24E PER, mean) which are unchanged earnings estimates.
Aiming for carbon neutral by 2040
Energy consumption at its standalone retail stores and shopping malls form the largest part of AEON’s carbon footprint. It has set clear guidelines for electricity use in regard to optimal temperatures of its air-conditioners, and switching to LED lights at all its retail and mall operations to conserve energy.
AEON also aims to install rooftop solar panels at all its owned shopping malls (currently installed at 2 malls) which will gradually lower its total electricity expense and increase renewable energy use.
Tackling waste and plastic usage
AEON monitors its annual waste and is actively devising ways to lower waste production. Note that c.70% of its waste comes from food and nonfood surplus (processed food, bakery items etc.). The group works with NGOs to donate excess food items to those in need.
In an effort to reduce single-use plastics, AEON implemented a zero plastic bag campaign at its retail stores on 1 Jan 2023.
No changes in earnings estimates
Consumer spending is expected to remain subdued in the near-term but Maybak IB believes that AEON’s sequential earnings could improve with seasonally higher retail festive spending and shopping mall footfall.
Challenges within its retail segment could also be partially buffered by stronger property management services performance from higher occupancy rates as consumer preferences shift back towards shopping malls post-pandemic.
