99 Speedmart Poised To Weather Macroeconomic Challenges
Analysts said 99SMART delivered solid earnings driven by festive demand, continued outlet expansion and better operating efficiencies, with all three houses noting that the RM143 million core net profit – up 7–8% year-on-year (YoY) – came in within expectations, representing around a quarter of full-year forecasts.
RHB Research remarked that the strong topline growth of 8% YoY to RM2.6 billion was supported by the addition of 246 new outlets over the past year, bringing the total to 2,833 stores. Improved gross profit margin of 12%, aided by supplier-driven promotional incentives, helped counteract higher operating expenses stemming from the implementation of the new minimum wage.
The research house reported its DCF-derived target price was raised from RM2.39 to RM2.45, implying 35x FY25F P/E, supported by the group's domestic-centric profile and resilience amid external policy uncertainties such as the US tariff outlook.
CIMB Securities also kept its projections intact, noting that while EBITDA margin dipped 0.2 percentage points YoY to 10% due to wage-related cost pressure, this was offset by top-line growth and a better sales mix. Analysts anticipate FY25 core earnings to grow 11.9% YoY, underpinned by 8.8% revenue growth from a projected 250 new store openings and same-store sales growth of 1.4%.
CIMB Securities maintained its target price at RM2.60 based on a 33x CY26F P/E, arguing the premium valuation is justified by superior return on equity (ROE) and its essential goods-focused product offering.
HLIB echoed the positive sentiment, highlighting that 99SMART's 1Q25 core profit of RM142.7 million showed a 12% quarter-on-quarter (QoQ) growth and 7% YoY improvement, also backed by festive-related sales and supplier incentives.
With expansion plans to add 250 more outlets in 2025 and a new distribution hub in Cyberjaya to bolster logistics, HLIB expects the group's growth momentum to remain intact. Its RM2.98 target price is pegged to a 45x FY25 P/E multiple, reflecting confidence in the group's scale advantage and recurring revenue model.
The company declared an interim dividend of 2.25 sen per share for the quarter. Analysts noted that this was consistent with expectations, with CIMB highlighting that part of the payout may reflect deferred FY24 dividends following 99SMART's listing in September 2024.
Looking ahead, all three research houses said that 99SMART is poised to benefit from rising disposable income amid higher minimum wages and stronger government support for lower-income households.
The analysts believe the group's wide-reaching store network and positioning as a value-for-money essential goods retailer place it in a favourable spot to weather macroeconomic challenges and shifting consumer preferences. Related
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