AEON: Property Management Strength Drives Stable Performance, Target Price Raised Amidst ‘BUY’ Call
| Investment Bank | TA SECURITIES |
|---|---|
| TP (Target Price) | RM0.25 (+25.0%) |
| Last Traded | RM0.20 |
| Recommendation |
A leading retail and property management group has demonstrated robust performance in its Property Management Segment (PMS), anchoring a stable outlook despite moderate retail turnover in the fourth quarter of FY25. The positive trajectory has led TA Securities to reaffirm its ‘BUY’ recommendation, setting a new target price of RM0.25, reflecting a significant upside.
Performance Review
For the full financial year 2025, the group reported a 4.5% year-on-year increase in net profit, primarily driven by the strong showing of its Property Management Segment. The PMS EBIT margin significantly expanded to 40.9% in FY25, a 2.6 percentage point improvement from the previous year. This growth was attributed to higher footfall, sustained occupancy rates, effective marketing initiatives, and continuous optimisation of tenant mix, alongside successful mall renovation activities and an expansion of F&B and entertainment offerings.
However, the retail segment experienced a moderation in turnover, declining 3.7% year-on-year in 4QFY25, largely due to the later timing of Chinese New Year in 2026. On a full-year basis, retail segmental revenue remained flat at RM3.5 billion. Higher sales volumes were offset by a lower average basket size (ABS) of RM54.1, down from RM55.8 in FY24. The softer ABS was primarily due to an increased contribution from foodline products, which typically carry lower average selling prices.
Future Outlook and Strategic Initiatives
Management anticipates an improvement in sales quarter-on-quarter heading into 1QFY26, bolstered by stronger consumer spending during the upcoming festive periods, including Chinese New Year and Hari Raya. The foodline segment is expected to remain a key driver of retail sales, while the group continues to expand its higher-margin in-house brands through increased SKUs and diversified product offerings to support retail margins. Private-label brands, which constitute 18% of total retail sales in FY25, are projected to support stable retail EBIT margins, expected to hover around 1.0% in FY26.
The group’s FY26 outlook is further supported by the continued strength of its PMS. Management expects PMS EBIT margin to remain resilient at approximately 41%, backed by stronger footfall, a stable occupancy rate of 96%, and a rental reversion rate of 4%. Strategic collaborations, such as the initiative with Tourism Malaysia for Visit Malaysia Year (VMY) 2026, are expected to significantly boost mall traffic and tenant performance. Ongoing renovation initiatives and tenant mix optimisation efforts in various regions are also underway to enhance the overall shopping experience.
ESG Commitments
In line with its sustainability objectives, the group continued to strengthen its ESG commitments in FY25. This includes the energisation of an additional mall with solar photovoltaic (PV) systems, bringing the total to 12 malls powered by green energy. Furthermore, the group added two EV charging bays, increasing the total across 18 malls to 64 bays in FY25, underscoring its commitment to reducing its carbon footprint.
Analyst Rating and Target Price
TA Securities maintains its ‘BUY’ recommendation for the stock, with a target price of RM0.25, representing an upside of 25.0% from its last traded price of RM0.20. The firm notes that while FY26-28F earnings forecasts were slightly revised down (0.6-4.5%) due to the delayed opening of a new mall, the overall valuation remains attractive based on a Dividend Discount Model (DDM) approach.
