On February 20, 2024, Aeon Co. (“Aeon Malaysia”) announced a change in Managing Director from Mr. Keiji Ono to Mr. Naoya Okada (current deputy MD), effective 1 March 2024. According to Bursa filing, the current MD’s resignation aims to pursue a higher position assigned by Aeon Co., Ltd (“Aeon Japan”). Recall that Mr. Keiji Ono assumed the MD position at Aeon on 1 July 2022, concurrently with Mr. Naoya Okada’s appointment as deputy MD.
Aeon Japan (parent company) announced organizational reforms and personnel adjustments. Notably, Aeon Japan holds a majority shareholding of 51% in Aeon Malaysia as of 31 March 2023. Aeon Japan is listed on the Tokyo Stock Exchange and operates 20,083 stores across 15 countries. Beyond its role as the parent company, Aeon Japan exerts substantial influence over Aeon Malaysia, with certain offerings in Aeon Malaysia originating from Aeon Japan.
These include in-house fashion brands such as TOPVALU, Home Coordy, among others, along with La Boheme and AEON MaxValu. Additionally, the current Aeon Living Zone strategy stems from Aeon Japan’s mid-term management plan.
MIDF notes the appointment of Naoya Okada as the new MD signals a meticulously crafted succession plan, with the new MD hailing from the founding family of Aeon Japan. Based on the bourse filing, Naoya Okada is the son of Motoya Okada – an Executive Officer, Chairman, and major shareholder of AEON Japan. Meanwhile, Motoya Okada is the son of the principal
founder of Aeon Japan – Takuya Okada. This it said suggests the integration of the 3rd generation into the company’s leadership structure and signaling a potential succession strategy for Aeon Japan. In addition to his familial ties, Naoya Okada boasts nearly a decade of experience across various subsidiaries under Aeon Japan. The house expects that this not only underscores his deep-rooted connection to the parent company but also hints at the potential infusion of overarching vision into Aeon Malaysia.
Looking into the upcoming 4QFY23 results, MIDF expects revenue of RM1.02b for 4QFY23, better than the 3QFY23 of RM955.9m. This is grounded in the recognition of 4Q as the prime sales season, particularly during yearend and New Year holiday sales. However, the forecast is -4%yoy lower than 4QFY22, given the high base in FY22 on the back of pent-up demand. Furthermore, it anticipates a prevailing trend of cautious consumer spending as we progress into 2024.
MIDF also anticipate that the occupancy rate of the property management services segment will remain stable at 92%.
As such, the house said it expects a core PATANCI of RM32.7m for the upcoming result release for 4QFY23. It also does not foresee any impact on earnings due to changes in the boardroom in the near term, yet does not rule out the possibility of changes in the mid-to-long-term strategy in line with the parent company, given the close ties of the upcoming new MD as a founding family member.
The house maintains a Neutral with an unchanged TP of RM1.14 on the stock as it anticipates sluggish consumer spending on discretionary items such as softline, hardline, and wellness, given the expected high inflationary pressure resulting from various fiscal policies introduced in 2024. These include the implemented low-value goods tax (“LVG”), as well as the forthcoming introduction of the high-value goods tax (“HVG”), higher services tax, and rationalization of targeted subsidies for fuel.
On a positive note, MIDF expects out-of-home consumption for food products within the retail segment to remain relatively robust, driven by resilient demand. Additionally, higher fixed rental income from the PMS segment is anticipated to provide partial support against the backdrop of weaker consumer sentiment for discretionary products
