Eco-Shop Marketing (ECOSHOP MK): GPM Expansion Outweighs SSSG Disappointment; BUY
Target Price (Return): MYR1.51 (+12%)
Price (Market Cap): MYR1.35 (USD1,834m)
ESG score: 3.2 (out of 4)
Avg Daily Turnover (MYR/USD): 23.7m/5.59m
Buy (Maintained)
Soong Wei Siang
+603 2302 8130
soong.wei.siang@rhbgroup.com
- Maintain BUY and TP of MYR1.51, 12% upside and 2% FY26F (May) yield. Eco-Shop Marketing’s FY25 results beat our expectation on strong GPM expansion. We foresee the dollar store industry continue the rapid growth by capitalising on consumer downtrading trends thanks to the wide value-for-money product range. With this, ECOSHOP offers earnings visibility, and, at the same time, robust earnings growth fostered by outlet expansion plans to extend its dominant market share. Such scarce investment case should justify the premium valuation.
- FY25 results were above our expectation. Core net profit of MYR214m (+17% YoY) met 105% of our full-year forecasts due to stronger-than-expected GPM expansion. Post-results, we make no material changes to our earnings forecasts and introduce FY28F (+12%). Our DCF-derived TP remains at MYR1.51 (inclusive of a 4% ESG premium), which implies a 31x 2026F P/E, or at a premium to the sector average.
- Results review. YoY, FY25 revenue jumped 16% to MYR2.8bn – underpinned by 74 net new store additions with SSSG flattish at -0.4% (4QFY25: -8% following the April price increase). On a positive note, the price increase expanded FY25 GPM by 1.8ppts to 28.2%, more than offsetting the rise in opex stemming from higher minimum wages. Correspondingly, FY25 core net profit surged 17% to MYR214m. QoQ, 4QFY25 revenue dipped 6% to MYR689m after volume declined in reaction to the price increase. Consequently, 4QFY25 core net profit fell 9% to MYR57m as GPM expansion (1.5-month impact of price increase) was insufficient to offset the topline weakness and higher opex (full impact of higher minimum wages). In addition, MYR5m expenses were incurred in 4QFY25 to replace price tags, banners, billboards and etc.
- Capturing the untapped opportunities. ECOSHOP is focused on opening at least 70 new outlets pa in order to penetrate the underserved markets and consolidate its market leadership in the burgeoning dollar store industry. Meanwhile, it recently launched targeted marketing campaigns (Figures 2-5) to drive footfall and SSSG by leveraging on the elevated GPM. Whilst volume has yet to recover fully following the price increase in April, we believe the model of dollar stores will continue to appeal to value-conscious consumers after acclimatising to the new pricing. On top of that, the group’s participation in the Sumbangan Asas Rahmah programme (168 outlets approved, 81 stores enabled) could be another effective lever to lift foot traffic.
- Risks to our recommendation include reputational risks, major delays in expansion plans and sharp spikes in input or operating costs.
Share Performance (%)
| YTD | 1m | 3m | 6m | 12m | |
|---|---|---|---|---|---|
| Absolute | 0.0 | 8.0 | 0.0 | 0.0 | 0.0 |
| Relative | 0.0 | 7.9 | 0.0 | 0.0 | 0.0 |
| 52-wk Price low/high (MYR) | 1.13 – 1.35 | ||||
Source: Bloomberg
Forecasts and Valuation
| May-24 | May-25 | May-26F | May-27F | May-28F | |
|---|---|---|---|---|---|
| Total turnover (MYRm) | 2,404 | 2,788 | 3,343 | 3,910 | 4,466 |
| Recurring net profit (MYRm) | 183 | 214 | 255 | 293 | 327 |
| Recurring net profit growth (%) | 73.8 | 17.0 | 19.4 | 14.8 | 11.5 |
| Recurring P/E (x) | 42.49 | 36.31 | 30.41 | 26.48 | 23.74 |
| P/B (x) | 14.0 | 7.8 | 6.9 | 6.1 | 5.4 |
| P/CF (x) | 45.95 | 24.29 | 19.16 | 17.29 | 15.08 |
| Dividend Yield (%) | 1.9 | 0.7 | 1.6 | 1.9 | 2.1 |
| EV/EBITDA (x) | 20.86 | 17.10 | 14.71 | 12.62 | 11.07 |
| Return on average equity (%) | 32.9 | 26.5 | 24.2 | 24.6 | 24.3 |
| Net debt to equity (%) | 5.3 | net cash | net cash | net cash | net cash |
E Score: 3.0 (GOOD)
S Score: 3.3 (EXCELLENT)
G Score: 3.3 (EXCELLENT)
Please refer to the ESG analysis on the next page
Source: Company data, RHB
Emissions And ESG
| Emissions (tCO2e) | May-23 | May-24 | May-25 | May-26 |
|---|---|---|---|---|
| Scope 1 | – | – | – | – |
| Scope 2 | – | – | – | – |
| Scope 3 | – | – | – | – |
| Total emissions | na | na | na | na |
Source: Company data, RHB
Latest ESG-Related Developments
Eco-Shop promotes energy efficiency through initiatives like LED lighting and passive building design at its Jementah Distribution Centre.
It enhances emissions management by optimising logistics routes and adding low-emission vehicles with AdBlue technology.
The group also supports waste reduction by eliminating plastic bags and complying with environmental regulations without any recorded breaches.
ESG Unbundled
Overall ESG Score: 3.2 (out of 4)
Last Updated: 24 July 2025
E Score: 3.0 (GOOD)
ECOSHOP promotes sustainability through energy-saving initiatives, efficient logistics with low-emission vehicles, and waste reduction efforts like eliminating plastic bags, all while complying with environmental regulations.
S Score: 3.3 (EXCELLENT)
ECOSHOP promotes inclusive hiring, continuous employee training, and workplace safety. It supports communities through CSR efforts, ensures product quality, and enhances customer experience through service excellence and loyalty programmes.
G Score: 3.3 (EXCELLENT)
ECOSHOP upholds strong governance through anti-corruption policies and MCCG compliance. It enhances supply chain efficiency via digital systems, prioritises local sourcing, and safeguards customer data through robust privacy measures.
ESG Rating History
The ESG rating history chart shows a rating of 3.2 as of Jul-25.
Source: RHB
Financial Exhibits
Financial summary (MYR)
| May-24 | May-25 | May-26F | May-27F | May-28F | |
|---|---|---|---|---|---|
| Recurring EPS | 0.03 | 0.04 | 0.04 | 0.05 | 0.06 |
| DPS | 0.03 | 0.01 | 0.02 | 0.03 | 0.03 |
| BVPS | 0.10 | 0.17 | 0.19 | 0.22 | 0.25 |
| Return on average equity (%) | 32.9 | 26.5 | 24.2 | 24.6 | 24.3 |
Valuation metrics
| May-24 | May-25 | May-26F | May-27F | May-28F | |
|---|---|---|---|---|---|
| Recurring P/E (x) | 42.49 | 36.31 | 30.41 | 26.48 | 23.74 |
| P/B (x) | 14.0 | 7.8 | 6.9 | 6.1 | 5.4 |
| FCF Yield (%) | 1.1 | 2.6 | 1.0 | 3.9 | 4.7 |
| Dividend Yield (%) | 1.9 | 0.7 | 1.6 | 1.9 | 2.1 |
| EV/EBITDA (x) | 20.86 | 17.10 | 14.71 | 12.62 | 11.07 |
| EV/EBIT (x) | 28.87 | 23.83 | 20.51 | 17.75 | 15.73 |
Income statement (MYRm)
| May-24 | May-25 | May-26F | May-27F | May-28F | |
|---|---|---|---|---|---|
| Total turnover | 2,404 | 2,788 | 3,343 | 3,910 | 4,466 |
| Gross profit | 636 | 786 | 1,020 | 1,185 | 1,340 |
| EBITDA | 373 | 439 | 522 | 605 | 684 |
| Depreciation and amortisation | (103) | (124) | (148) | (175) | (203) |
| Operating profit | 269 | 315 | 374 | 430 | 481 |
| Net interest | (22) | (25) | (23) | (27) | (32) |
| Pre-tax profit | 242 | 281 | 351 | 403 | 449 |
| Taxation | (64) | (77) | (96) | (110) | (123) |
| Reported net profit | 177 | 204 | 255 | 293 | 327 |
| Recurring net profit | 183 | 214 | 255 | 293 | 327 |
Cash flow (MYRm)
| May-24 | May-25 | May-26F | May-27F | May-28F | |
|---|---|---|---|---|---|
| Change in working capital | (126) | (21) | (21) | (46) | (47) |
| Cash flow from operations | 169 | 319 | 405 | 449 | 514 |
| Capex | (83) | (118) | (331) | (146) | (152) |
| Cash flow from investing activities | (120) | (520) | (331) | (146) | (152) |
| Dividends paid | (150) | (150) | (128) | (146) | (163) |
| Cash flow from financing activities | (81) | 0 | (241) | (266) | (301) |
| Cash at beginning of period | 94 | 100 | 366 | 200 | 237 |
| Net change in cash | (32) | (200) | (167) | 37 | 61 |
| Ending balance cash | 62 | (100) | 200 | 237 | 298 |
Balance sheet (MYRm)
| May-24 | May-25 | May-26F | May-27F | May-28F | |
|---|---|---|---|---|---|
| Total cash and equivalents | 100 | 366 | 200 | 237 | 298 |
| Tangible fixed assets | 709 | 830 | 1,136 | 1,240 | 1,322 |
| Total investments | 11 | 11 | 11 | 11 | 11 |
| Total assets | 1,276 | 1,851 | 2,028 | 2,266 | 2,507 |
| Short-term debt | 129 | 124 | 124 | 124 | 124 |
| Total liabilities | 723 | 861 | 911 | 1,003 | 1,080 |
| Total equity | 552 | 990 | 1,117 | 1,264 | 1,427 |
| Total liabilities & equity | 1,276 | 1,851 | 2,028 | 2,266 | 2,507 |
Key metrics
| May-24 | May-25 | May-26F | May-27F | May-28F | |
|---|---|---|---|---|---|
| Revenue growth (%) | 20.8 | 16.0 | 19.9 | 17.0 | 14.2 |
| Recurrent EPS growth (%) | 73.8 | 17.0 | 19.4 | 14.8 | 11.5 |
| Gross margin (%) | 26.4 | 28.2 | 30.5 | 30.3 | 30.0 |
| Operating EBITDA margin (%) | 15.5 | 15.7 | 15.6 | 15.5 | 15.3 |
| Net profit margin (%) | 7.4 | 7.3 | 7.6 | 7.5 | 7.3 |
| Dividend payout ratio (%) | 84.6 | 28.1 | 50.0 | 50.0 | 50.0 |
| Capex/sales (%) | 3.4 | 4.2 | 9.9 | 3.7 | 3.4 |
| Interest cover (x) | 11.2 | 10.5 | 12.3 | 12.1 | 11.8 |
Source: Company data, RHB
Results At a Glance
Figure 1: Results review
| FYE May (MYRm) | 4QFY24 | 3QFY25 | 4QFY25 | QoQ (%) | YoY (%) | FY24 | FY25 | YoY (%) | Comments |
|---|---|---|---|---|---|---|---|---|---|
| Revenue | 640.7 | 736.4 | 689.0 | (6.4) | 7.5 | 2,404.0 | 2,787.5 | 16.0 | Underpinned by net new store opening of 74 outlets; FY25 SSSG: -0.4% |
| Gross Profit | 174.5 | 206.2 | 220.1 | 6.7 | 26.1 | 635.5 | 786.4 | 23.8 | |
| GPM (%) | 27.2 | 28.0 | 31.9 | 3.9 | 4.7 | 26.4 | 28.2 | 1.8 | Strong expansion driven by price increase |
| Other income | 11.7 | 16.3 | 10.4 | (36.5) | (11.3) | 50.8 | 51.7 | 1.8 | QoQ fall due to the timing of the anniversary celebration |
| Opex | (94.1) | (131.1) | (155.4) | 18.5 | 65.1 | (422.2) | (532.6) | 26.1 | |
| Selling & distribution | (88.0) | (101.9) | (128.1) | 25.7 | 45.6 | (351.0) | (434.5) | 23.8 | In reflection of higher minimum wages |
| % of sales | 13.7 | 13.8 | 18.6 | 4.7 | 4.9 | 14.6 | 15.6 | 1.0 | |
| Admin | (6.2) | (29.2) | (27.4) | (6.3) | 341.5 | (71.2) | (98.1) | 37.7 | |
| % of sales | 1.0 | 4.0 | 4.0 | 0.0 | 3.0 | 3.0 | 3.5 | 0.6 | |
| Operating profit | 92.1 | 91.3 | 75.0 | (17.9) | (18.6) | 264.1 | 305.5 | 15.7 | |
| EBIT margin (%) | 14.4 | 12.4 | 10.9 | (1.5) | (3.5) | 11.0 | 11.0 | (0.0) | |
| Finance income | 0.7 | 1.2 | 0.9 | (22.9) | 26.2 | 2.5 | 5.2 | 109.0 | |
| Finance cost | (6.7) | (7.8) | (7.8) | 0.2 | 17.3 | (24.1) | (29.9) | 24.3 | |
| PBT | 86.2 | 84.8 | 68.2 | (19.6) | (20.9) | 241.7 | 280.9 | 16.2 | |
| Tax | (22.9) | (23.1) | (18.7) | (18.7) | (18.2) | (64.4) | (76.6) | 18.9 | |
| Effective tax rate (%) | 26.6 | 27.2 | 27.5 | 0.3 | 0.9 | 26.7 | 27.3 | 0.6 | |
| Net profit | 63.3 | 61.7 | 49.4 | (20.0) | (21.9) | 177.3 | 204.3 | 15.3 | |
| EI | (0.2) | (0.6) | (7.6) | (5.3) | (9.4) | Stripping off the IPO expenses | |||
| Core net profit | 63.4 | 62.3 | 57.0 | (8.5) | (10.1) | 182.5 | 213.7 | 17.1 | At 105% of our forecasts |
| Core net margin (%) | 9.9 | 8.5 | 8.3 | (0.2) | (1.6) | 7.6 | 7.7 | 0.1 | Declared DPS of 1 sen |
Source: Company data, RHB
Figure 2: Ongoing “Sama Bantu” campaign
All F&B products are priced at MYR2.40 during the promotional period.
Figure 3: PWP promotion
Customers can buy selected products at MYR1 with spending of over MYR20 in one receipt.
Figure 4: Biscuits at promotional price
Figure 5: Beverages at promotional price
Source: RHB
Recommendation Chart
| Date | Recommendation | Target Price | Price |
|---|---|---|---|
| 2025-07-25 | Buy | 1.51 | 1.31 |
Source: RHB, Bloomberg
RHB Guide to Investment Ratings
Buy: Share price may exceed 10% over the next 12 months
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Take Profit: Target price has been attained. Look to accumulate at lower levels
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Not Rated: Stock is not within regular research coverage
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