PP 7767/09/2010(025354)

Malaysia
29 June 2010
Corporate Highlights RHB Research
Institute Sdn Bhd
A member of the
RHB Banking Group
News Upda te Company No: 233327 -M

29 June 2010
MARKET DATELINE

AEON Co Share Price

Fair Value
:
:
RM4.90
RM5.80
Acquisition Of Land in Kinta, Perak For RM27.1m Recom : Outperform
(Maintained)

Table 1 : Investment Statistics (AEON; Code: 6599) Bloomberg: AEON MK

Turnover Net Profit EPS Chg PER C. EPS^ P/NTA Net gearing ROE Gr. Div.
FYE Dec
(RMm) (RMm) (sen) (%) (x) (sen) (x) (x) (%) Yld. (%)
2009a 2,808.2 133.5 38.0 10.7 13.1 - 1.8 0.1 13.8 2.4
2010f 2,997.3 145.2 41.4 8.7 12.0 41.0 1.6 Net cash 13.5 2.4
2011f 3,275.8 158.8 45.2 9.4 11.0 45.0 1.4 Net cash 13.2 2.4
2012f 3,734.7 180.2 51.3 13.5 9.7 48.0 1.3 Net cash 13.5 2.4
Main Market Listing / Trustee Stock / Syariah-Approved Stock By The SC ^ Consensus Based On IBES Estimates

Issued Capital (m shares) 351

♦ 5 pieces of land acquired for RM27.1m. AEON has entered into S&P Market Cap (RMm) 1719.9
agreements with Seroja Mulia SB, Antero Harapan SB and Kemboja Iringan SB Daily Trading Vol (m shs) 0.3
for the purchase of approximately 17.3 acres of land, consisting of 3 pieces of 52wk Price Range (RM) 4.08-5.50
leasehold lands and 2 pieces of state lands, located in Kinta, Perak (RM36psf) Major Shareholders: (%)
for cash consideration of RM27.1m. Following the completion of the acquisitions, AEON Co Ltd 51.0
Aberdeen Asset Mgt PLC
AEON will be required to surrender the lands to the relevant authorities for the 9.8
Aberdeen Asset Asia Ltd 6.4
amalgamation / surrender and realienation of the lands into one piece of land,
for the issuance of a separate document of title for AEON to construct a FYE Dec FY10 FY11 FY12
shopping mall. The purchase consideration will be financed through the group’s EPS chg (%) - - -
internally-generated funds. Var to C.EPS (%) 1.0 0.1 7.4

PE Band Chart
♦ In line with AEON shopping centre and Jusco departmental store
expansion plans. The acquisition is expected to be concluded within 6 months
PER = 18x
and we expect the construction to be completed around 3Q/4Q2011. We expect PER = 15x
operations to begin, earliest possibly by 4QFY12/11. This will be AEON’s 2nd mall PER
PER
=
=
12x
9x
in Perak.

♦ Purchase consideration deemed to be on higher end. We believe that the

purchase consideration for the land of RM36psf is seemingly on the higher end
based on previous transactions of about RM20-30psf. However, as Kinta area
has approximately 20 shopping malls with occupancy rate of >85% and a Relative Performance To FBM KLCI
population size of 850,000, we believe there is still demand for shopping malls
in the Kinta area.
AEON Co

♦ Forecast. No change to our net profit forecasts, as we have already projected

2 new stores into our forecasts for FY11 which are included in our capex FBM KLCI
assumptions of RM150-200m p.a. for FY10-12. AEON will have no problem
financing the land cost in view of its net cash of RM175m at 1QFY12/10 and
estimated operating cash flow of RM300-350m p.a. in FY12/10-12.

♦ Risks. The risks include: 1) eroding market share due to intensifying

competition; and 2) a weakening of domestic economic conditions which could
lead to a decline in consumer sentiment.

♦ Investment case. Our indicative fair value is maintained at RM5.80 based on

unchanged 14x FY12/10 PER (average PER fore retail sector). We are
maintaining our Outperform rating on the stock.
Hoe Lee Leng
(603) 92802239
Please read important disclosures at the end of this report. hoe.lee.leng@rhb.com.my

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 29 June 2010

Table 2. Earnings Forecasts Table 3. Forecast Assumptions

FYE Dec (RMm) FY09a FY10F FY11F FY12F FYE Dec FY10F FY11F FY12F

Turnover 2,808.2 2,997.3 3,275.8 3,734.7 Number of new stores 2 2 2

(Jusco and MaxValu)
Turnover growth (%) (18.2) 6.7 9.3 14.0 Same store sales growth (%) 3.5 5.0 5.0

Cost of Sales (1,913.6) (2,051.7) (2,255.8) (2,583.9)

Gross Profit 894.6 945.6 1,020.0 1,150.8

EBITDA 347.3 361.5 381.6 422.9

EBITDA margin (%) 12.4 12.1 11.6 11.3

Depr&Amor (150.0) (148.1) (150.6) (155.0)

Net Interest (2.8) (3.0) (0.9) (3.0)

Pretax Profit 194.4 210.4 230.1 265.0

Tax (60.8) (65.2) (71.3) (84.8)
Net Profit 133.5 145.2 158.8 180.2
Source: Company data, RHBRI estimates*

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Industry/Sector Ratings

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