RHB Investment Bank Bhd (RHB Research) maintained its BUY call on Eco-Shop Marketing Bhd while raising its target price to RM1.82 from RM1.80, with the new valuation implying 22% upside, after the retailer delivered an FY26 performance that met expectations.
RHB Research said Eco-Shop’s core net profit jumped 24% year-on-year to RM265 million, supported by higher gross profit margins and strong store expansion. The result accounted for 102% of both the research house’s and consensus forecasts.
The company’s FY26 revenue grew 5% to RM2.9 billion after opening 91 net new stores, although same-store sales growth remained weak at -10%. Despite this, gross profit margin improved by five percentage points following the price adjustment implemented in April 2025, which helped offset rising operating costs from higher wages and staff incentives.
RHB Research said the retailer’s recovery has continued into FY27, with transaction numbers showing improvement while Eco-Shop plans to add another 100 stores. The research house expects the company to benefit from continued consumer downtrading as shoppers look for more affordable options.
On margins, management has guided for a FY27 gross profit margin of 33% to 34%, slightly above RHB Research’s assumption of 32.9%. The analyst said cost pressures from ongoing geopolitical uncertainties could pose challenges, but Eco-Shop’s pricing strategy may help it maintain competitiveness against non-dollar store operators facing higher costs.
As of 10.17 am, the stock price gained 0.67% to RM1.50.
