99 Speed Mart Retail Holdings Report
Soong Wei Siang
+603 2302 8130
soong.wei.siang@rhbgroup.com
| Share Performance (%) | ||||||
|---|---|---|---|---|---|---|
| YTD | 1m | 3m | 6m | 12m | ||
| Absolute | 1.2 | 12.1 | 14.7 | 19.0 | 0.0 | |
| Relative | 4.7 | 8.2 | 13.9 | 19.0 | 0.0 | |
52-wk Price low/high (MYR) 1.65-2.61
Price Close —Relative to FBM KLCI (RHS)
(Chart data: 2.7, 2.5, 2.3, 2.1, 1.9, 1.7 for price scale and 173, 160, 146, 133, 120, 106 for RHS scale, with dates from Sep-24 to Aug-25)
Leveraging On An Increasing Scale; Stay BUY
- Maintain BUY, with new TP of MYR2.81 from MYR2.45, 12% upside and c.2% FY26F yield. 99 Speed Mart Retail Holdings’ 1H25 results outperformed expectations on stronger-than-expected profit margin. Opportunities in the underserved regions should continue to support the company’s outlet network expansion and expand its scale, thereby fuelling a 3-year earnings CAGR of 10% ahead. We also like 99SMART’s domestic-centric and resilient earnings profile, which will appeal to investors amidst the uncertainties brought about by the US tariff policy.
- 1H25 results were deemed above expectations. Net profit of MYR296m (+15% YoY) accounted for 51% of our and consensus full-year estimates. That said, we anticipate a stronger earnings momentum in 2H25 in view of the robust margin and extension of operation hours effective July, which has received encouraging response. Post results, we raise FY25F-27F earnings by 3%, 3%, and 2%. Correspondingly, our DCF-derived TP rises to MYR2.81 (including a 0% ESG premium/discount) after we roll over the valuation base year. This implies 36x FY26F P/E which is in line with the valuation ascribed to large-cap consumer staple counters under our coverage.
- Results review. YoY, 1H25 revenue grew 10% to MYR5.3bn, underpinned by 248 net new stores and SSSG of +3.7%. 99SMART recorded increased transaction volumes on the back of a pick-up in consumer purchasing power post the minimum wage hike. Meanwhile, other operating income surged 14% YoY to MYR430m, suggesting stronger bargaining power in tandem with its robust network expansion. Correspondingly, net profit jumped 15% to MYR296m. QoQ, 2Q25 revenue and net profit grew 4% and 7% respectively supported by continuous new store additions (+61 outlets) and higher other operating income (+10%).
- Outlook. 99SMART is well-positioned to benefit from the rising disposable income of the lower income groups as well as the downtrading consumption trends as a result of elevated inflationary pressures. This is considering its extensive store network and consumer preference for mini-markets to shop for groceries. Meanwhile, we believe earnings growth over a longer term will also be sustained by 99SMART’s strategies to expand its addressable markets. These include diversifying its sourcing options to enhance its product offerings, and developing its bulk sales platform to entice customers it is unable to serve well enough with the retail model.
- Downside risks to our recommendation include reputational or brand risks, and a structural switch in consumer preferences.
Forecasts and Valuation
| Dec-23 | Dec-24 | Dec-25F | Dec-26F | Dec-27F | |
|---|---|---|---|---|---|
| Total turnover (MYRm) | 9,214 | 9,982 | 10,860 | 11,673 | 12,498 |
| Recurring net profit (MYRm) | 401 | 517 | 603 | 653 | 688 |
| Recurring net profit growth (%) | 150.6 | 28.8 | 16.8 | 8.2 | 5.4 |
| Recurring P/E (x) | 52.35 | 40.64 | 34.80 | 32.16 | 30.51 |
| P/B (x) | 38.8 | 13.3 | 11.9 | 10.7 | 9.7 |
| P/CF (x) | 28.31 | 43.21 | 23.70 | 21.47 | 20.41 |
| Dividend Yield (%) | 2.3 | 0.5 | 2.0 | 2.2 | 2.3 |
| EV/EBITDA (x) | 25.04 | 20.47 | 16.84 | 15.42 | 14.54 |
| Return on average equity (%) | 69.2 | 46.2 | 36.1 | 35.1 | 33.4 |
| Net debt to equity (%) | net cash | net cash | net cash | net cash | net cash |
Overall ESG Score: 3.0 (out of 4)
E Score: 3.1 (EXCELLENT)
S Score: 3.0 (GOOD)
G Score: 2.7 (GOOD)
Please refer to the ESG analysis on the next page
See important disclosures at the end of this report
Emissions And ESG
Trend analysis
na
| Emissions (tCO2e) | Dec-22 | Dec-23 | Dec-24 | Dec-25 |
|---|---|---|---|---|
| Scope 1 | na | na | 13,443 | na |
| Scope 2 | na | na | 183,487 | na |
| Scope 3 | na | na | 19,038 | na |
| Total emissions | na | na | 215,968 | na |
Latest ESG-Related Developments
Started tracking and reporting Scopes 1, 2, and 3 greenhouse gas (GHG) emissions in FY24. Installed solar photovoltaic or PV systems at 15 data centres and 65 outlets, achieving a 34% energy replacement rate.
Recruited 100% local employees at branch level and 130 differently abled individuals. Achieved a local product sourcing rate of 99%.
ESG Unbundled
Overall ESG Score: 3.0 (out of 4)
Last Updated: 15 May 2025
ESG Rating History
See important disclosures at the end of this report
Financial Exhibits
Asia
Malaysia
Consumer Non-cyclical
99 Speed Mart Retail Holdings
99SMART
Buy
Valuation basis
Discounted Cash Flow
Key drivers
- Outlet expansion;
- Strong growth in disposable income;
- Positive traction of bulk sales platform.
Key risks
- Reputational or brand risks;
- Intense competition;
- Sharp rise in opex.
Company Profile
99 Speed Mart Retail Holdings operates the well-known “99 Speedmart” chain of mini-markets involved in the retailing of fast-moving consumer goods or FMCG across Malaysia.
Financial summary (MYR)
| Dec-23 | Dec-24 | Dec-25F | Dec-26F | Dec-27F | |
|---|---|---|---|---|---|
| Recurring EPS | 0.05 | 0.06 | 0.07 | 0.08 | 0.08 |
| DPS | 0.06 | 0.01 | 0.05 | 0.05 | 0.06 |
| BVPS | 0.06 | 0.19 | 0.21 | 0.23 | 0.26 |
| Return on average equity (%) | 69.2 | 46.2 | 36.1 | 35.1 | 33.4 |
Valuation metrics
| Dec-23 | Dec-24 | Dec-25F | Dec-26F | Dec-27F | |
|---|---|---|---|---|---|
| Recurring P/E (x) | 52.35 | 40.64 | 34.80 | 32.16 | 30.51 |
| P/B (x) | 38.8 | 13.3 | 11.9 | 10.7 | 9.7 |
| FCF Yield (%) | 2.8 | 1.5 | 3.5 | 3.9 | 4.1 |
| Dividend Yield (%) | 2.3 | 0.5 | 2.0 | 2.2 | 2.3 |
| EV/EBITDA (x) | 25.04 | 20.47 | 16.84 | 15.42 | 14.54 |
| EV/EBIT (x) | 34.59 | 27.63 | 22.44 | 20.63 | 19.45 |
Income statement (MYRm)
| Dec-23 | Dec-24 | Dec-25F | Dec-26F | Dec-27F | |
|---|---|---|---|---|---|
| Total turnover | 9,214 | 9,982 | 10,860 | 11,673 | 12,498 |
| Gross profit | 1,030 | 1,104 | 1,282 | 1,401 | 1,500 |
| EBITDA | 804 | 950 | 1,147 | 1,244 | 1,309 |
| Depreciation and amortisation | (222) | (246) | (286) | (315) | (330) |
| Operating profit | 582 | 704 | 861 | 930 | 979 |
| Net interest | (44) | (45) | (45) | (47) | (49) |
| Pre-tax profit | 538 | 659 | 816 | 883 | 930 |
| Taxation | (138) | (168) | (212) | (229) | (242) |
| Reported net profit | 400 | 490 | 603 | 653 | 688 |
| Recurring net profit | 401 | 517 | 603 | 653 | 688 |
Cash flow (MYRm)
| Dec-23 | Dec-24 | Dec-25F | Dec-26F | Dec-27F | |
|---|---|---|---|---|---|
| Change in working capital | 244 | (328) | (61) | (30) | (32) |
| Cash flow from operations | 742 | 486 | 886 | 978 | 1,029 |
| Capex | (160) | (171) | (153) | (165) | (165) |
| Cash flow from investing activities | (159) | (363) | (153) | (165) | (165) |
| Dividends paid | (391) | (200) | (422) | (457) | (482) |
| Cash flow from financing activities | (530) | 238 | (666) | (724) | (758) |
| Cash at beginning of period | 85 | 138 | 698 | 765 | 854 |
| Net change in cash | 53 | 361 | 67 | 89 | 106 |
| Ending balance cash | 138 | 498 | 765 | 854 | 960 |
Balance sheet (MYRm)
| Dec-23 | Dec-24 | Dec-25F | Dec-26F | Dec-27F | |
|---|---|---|---|---|---|
| Total cash and equivalents | 138 | 698 | 765 | 854 | 960 |
| Tangible fixed assets | 479 | 576 | 643 | 713 | 776 |
| Total investments | 774 | 866 | 928 | 970 | 1,005 |
| Total assets | 2,666 | 3,561 | 3,867 | 4,178 | 4,494 |
| Short-term debt | 5 | 3 | 5 | 5 | 5 |
| Total long-term debt | 47 | 0 | 0 | 0 | 0 |
| Total liabilities | 2,125 | 1,982 | 2,107 | 2,222 | 2,332 |
| Total equity | 542 | 1,579 | 1,760 | 1,956 | 2,162 |
| Total liabilities & equity | 2,666 | 3,561 | 3,867 | 4,178 | 4,494 |
Key metrics
| Dec-23 | Dec-24 | Dec-25F | Dec-26F | Dec-27F | |
|---|---|---|---|---|---|
| Revenue growth (%) | 14.1 | 8.3 | 8.8 | 7.5 | 7.1 |
| Recurrent EPS growth (%) | 150.6 | 28.8 | 16.8 | 8.2 | 5.4 |
| Gross margin (%) | 11.2 | 11.1 | 11.8 | 12.0 | 12.0 |
| Operating EBITDA margin (%) | 8.7 | 9.5 | 10.6 | 10.7 | 10.5 |
| Net profit margin (%) | 4.3 | 4.9 | 5.6 | 5.6 | 5.5 |
| Dividend payout ratio (%) | 122.6 | 20.4 | 70.0 | 70.0 | 70.0 |
| Capex/sales (%) | 1.7 | 1.7 | 1.4 | 1.4 | 1.3 |
| Interest cover (x) | 13.2 | 15.6 | 19.1 | 19.8 | 20.1 |
Results At a Glance
Figure 1: 99SMART’s results review
| FYE Dec (MYRm) | 2Q24 | 1Q25 | 2Q25 | QoQ (%) | YoY (%) | 1H24 | 1H25 | YoY (%) | Comments |
|---|---|---|---|---|---|---|---|---|---|
| Revenue | 2,419.9 | 2,611.6 | 2,707.8 | 3.7 | 11.9 | 4,845.8 | 5,319.4 | 9.8 | Added 248 net new stores YoY to bring the total to 2,894 outlets. |
| Gross profit | 287.5 | 314.5 | 325.0 | 3.4 | 13.0 | 570.0 | 639.5 | 12.2 | |
| Gross margin | 11.9 | 12.0 | 12.0 | (0.0) | 0.1 | 11.8 | 12.0 | 0.3 | |
| Other op. income | 183.8 | 205.0 | 225.3 | 9.9 | 22.6 | 376.9 | 430.3 | 14.2 | |
| /revenue (%) | 7.6 | 7.9 | 8.3 | 0.5 | 0.7 | 7.8 | 8.1 | 0.3 | |
| Operating expenses | (296.4) | (328.4) | (348.2) | 6.0 | 17.5 | (588.3) | (676.5) | 15.0 | |
| /revenue (%) | 12.2 | 12.6 | 12.9 | 0.3 | 0.6 | 12.1 | 12.7 | 0.6 | |
| EBIT | 180.6 | 201.7 | 215.0 | 6.6 | 19.0 | 369.9 | 416.7 | 12.6 | |
| EBIT margin (%) | 7.5 | 7.7 | 7.9 | 0.2 | 0.5 | 7.6 | 7.8 | 0.2 | |
| Finance costs | (11.1) | (11.5) | (12.0) | 4.4 | 7.8 | (22.0) | (23.5) | 6.7 | |
| Pre-tax profit | 169.5 | 190.2 | 203.0 | 6.7 | 19.8 | 347.9 | 393.2 | 13.0 | |
| Pre-tax margin (%) | 7.0 | 7.3 | 7.5 | 0.2 | 0.5 | 7.2 | 7.4 | 0.2 | |
| Tax | (43.9) | (47.1) | (49.8) | 5.8 | 13.3 | (89.2) | (96.8) | 8.5 | |
| Effective tax rate (%) | (25.9) | (24.7) | (24.5) | 0.2 | 1.4 | (25.6) | (24.6) | 1.0 | |
| Net profit | 125.5 | 143.2 | 153.2 | 7.0 | 22.0 | 258.7 | 296.4 | 14.6 | At 51% of the forecasts. |
| Net margin (%) | 5.2 | 5.5 | 5.7 | 0.2 | 0.5 | 5.3 | 5.6 | 0.2 |
Recommendation Chart
Data points for Price Close: 2.7, 2.5, 2.3, 2.1, 1.9, 1.7 on Y-axis with dates from Sep-24 to Jul-25.
Recommendations:
| Date | Recommendation | Target Price | Price |
|---|---|---|---|
| 2025-05-16 | Buy | 2.45 | 2.18 |
| 2025-04-17 | Buy | 2.39 | 2.18 |
See important disclosures at the end of this report
RHB Guide to Investment Ratings
| Buy | Share price may exceed 10% over the next 12 months |
|---|---|
| Trading Buy | Share price may exceed 15% over the next 3 months, however longer-term outlook remains uncertain |
| Neutral | Share price may fall within the range of +/- 10% over the next 12 months |
| Take Profit | Target price has been attained. Look to accumulate at lower levels |
| Sell | Share price may fall by more than 10% over the next 12 months |
| Not Rated | Stock is not within regular research coverage |
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| Analyst | Company |
|---|---|
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