CIMB: Sales boost for 99 Speed Mart with longer hours
The firm noted that the extended hours will enhance customer convenience and drive higher revenue per outlet.
"This will support our annual same-store sales growth forecast of 1.4 per cent for financial years 2025 to 2027 (FY25–27), with growth already tracking at 1.7 per cent in the first quarter of 2025," it said in a note.
The mini-market operation recently announced that all its outlets nationwide will start opening earlier, from 9am to 10am daily, effective July 1. The move is in line with its goal of enhancing customer convenience and adapting to evolving shopping patterns.
CIMB noted that about 80 per cent to 85 per cent of 99 Speed Mart's 2,883 outlets had already been following the revised operating hours for nearly a year.
The recent announcement, it said, formalises the standardisation of these hours across all locations.
"Assuming that 15 per cent to 20 per cent of the company's outlets will be positively affected by the one-hour extension to operating hours, we estimate a potential topline uplift of 1.0 per cent to 1.2 per cent in FY25–27," the firm added.
CIMB Securities said it is maintaining its earnings per share forecasts for FY25–27, along with its "Buy" rating and target price of RM2.60 for 99 Speed Mart.
The firm said the company's current premium price-to-earnings (P/E.) valuation of 32 times, compared to the consumer sector average of 28 times, is justified.
This is supported by 99 Speed Mart's stronger earnings growth prospects with a three-year compound annual growth rate of 14.3 per cent from 2024 to 2027, a superior return on equity (ROE) of 32–34 per cent for FY25-27 and its dominant market share in Malaysia's mini-market retail segment.
The firm noted that the downside risks include weaker-than-expected consumer sentiment, increased competition leading to weaker-than-expected sales and a sharp dip in gross profit margins due to a ramp-up in promotional activities or stiffer competition.
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