Aeon Co reported FY23 core PATANCI of RM120.5m, after excluding a one-time item of RM5.7m. This came in within and consensus’ full-year FY23 core PATANCI, which accounted for 102.7%/104.8% of /consensus’ projections said MIDF. The FY23 revenue also came in within street’s expectations of 100.4%/99.6%,respectively. The group reported a single-tier dividend of 4sen/share for 12MFY23 with a date to be determined later, in tandem with 4sen/share for 12MFY22.
On a yearly basis, revenue declined by -2.7%yoy to RM1.03b primarily due to lower sales in the retail segment, attributed to a high base effect. However, core PATANCI saw a significant increase of +31.5%yoy to RM35.9m, driven by an improved occupancy rate and effective rental renewal within the Property Management Services (PMS) revenue, as well as efficient cost management practices. Sequentially, the uptick in topline performance by +8.1%qoq can be attributed to heightened consumer spending during festive and year-end sales periods, and an improvement in the occupancy rate and rental revenue within the PMS segment. Consequently, core PATANCI more than doubled from RM14.9m in the 3QFY23 to RM35.9m in the 4QFY23.
Cumulatively, the group’s revenue declined marginally by -0.3%yoy to RM4.13b, primarily attributed to reduced revenue in the retail segment owing to a high base effect and partial store closures for renovations. However, improved occupancy rates and effective rental renewals in the PMS segment countered the decrease in retail sales, resulting in a +2%yoy increase in core PANTANCI to RM120.5m.
The house makes no changes to its FY24-25F earnings forecast, given that the FY23 core PATANCI came in within expectations. It has factored in the continuous weaker consumer sentiment in retail sales, and the potential effect of fiscal restructuring slated for introduction in FY24. These policies include low-value goods tax, high-value goods tax, increased services tax, and potential fuel subsidy rollouts, that may affect consumer discretionary income.
MIDF maintains its NEUTRAL call as it turned cautious on Aeon’s FY24F outlook. The house anticipates a sluggish consumer spending on discretionary items such as softline, hardline, and wellness, given the expected high inflationary pressure in 2024. On a positive note, it 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. Downside risk/(re-rating catalyst) is weaker/(stronger)-than expected consumer sentiment that reduces/(increases) spending at retail and tenant stores, hence lowering/(increasing)
revenue
