Eco-Shop to get revenue boost
PETALING JAYA: Eco-Shop Marketing Bhd 's plan to open 70 new stores annually and achieve same-store sales growth (SSSG) of 2% to 3% from financial year 2026 (FY26) to FY28 may boost its revenue by around 12% to 21% per year, according to Maybank Investment Bank Research.
'Our estimated three-year (FY25 to FY28) net profit compound annual growth rate (CAGR) of 20% is premised on a three-year revenue CAGR of 17%, and a lift in pre-tax profit margins to 11% to 12% in FY26 to FY28, on stronger gross profit margins of about 31% (FY25: 28%).
'Our earnings estimates have imputed for 70 new stores per annum.
'We have also assumed for positive but muted SSSG of 2% to 3% from FY26 to FY28, cognisant of gradual sales volume improvements from government stimulus announcements amid stretched spending capabilities of low-income consumers,' the research firm said a report, initiating coverage on the stock.
Maybank Investment Bank Research said stronger consumer disposable income would drive overall retail sales growth in Malaysia, adding that the group stood to benefit from consumer down-trading trends as customer's leaned towards lower-price point items.
On the downside, it noted the supply disruptions and currency volatility given that the group imports about 69% of its stock keeping units from China and other countries.
It had a 'buy' rating and a target price of RM1.45 per share.
At the time of writing, the stock was trading at RM1.30, up 8.33% since the start of the year.
Eco-Shop Marketing is the largest dollar store chain in Malaysia, with an estimated 68% revenue market share as at end-February.
As at end-May, it had 371 stores across Malaysia, including 22 Eco-Plus store formats. The group also has 29 house-brands which made up an average 10,000 different product items, most of which are sourced from end-suppliers in China.
It operates flat-priced and tiered pricing stores under the Eco-Shop and Eco-Plus brands.
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
New Straits Times
16 hours ago
- New Straits Times
PLUS, UEM Lestra eye large-scale solar project in Melaka
KUALA LUMPUR: UEM Group Bhd's subsidiaries PLUS Malaysia Bhd and UEM Lestra Bhd have signed a memorandum of understanding (MoU) to explore a large-scale solar (LSS) project on PLUS-owned land in Ayer Keroh, Melaka. The plan involves developing a solar farm on a 200-acre site under Phase 2 of PLUS' Ayer Keroh Land Conceptual Master Plan. The overall 136.74-hectares wsite has been earmarked for mixed development, including mobility-related retail and residential components under Phases 1 and 3. The MoU signals an initial step towards turning PLUS' land into a platform for renewable energy projects and other sustainable developments. The MoU also encompasses joint efforts to identify other suitable sites for the implementation of sustainable projects aimed at reducing greenhouse gas (GHG) emissions and supporting Malaysia's sustainability agenda. PLUS managing director Datuk Nik Airina Nik Jaffar said the partnership reflects its commitment to playing a proactive role in sustainable development. This is by leveraging on its winfrastructure and strategic land assets for the harnessing of renewable energy and supporting the nation's net zero target. "This initiative also supports PLUS' long-term strategy towards a safe, sustainable and smart highway, further reinforcing our role as a nation-building partner, driving innovation and environmental stewardship," she said in a statement. UEM Lestra chief executive officer Harman Faiz Habib Muhamad said the collaboration marks another important milestone in its strategic expansion into Malaysia's renewable energy sector. "By leveraging our technical expertise and project management capabilities, we are committed to delivering a sustainable and impactful large scale solar farm on PLUS' land in Ayer Keroh and other similar initiatives," he added. UEM Lestra, recognised for its proven renewable energy portfolio and technical capabilities, will lead in the planning and feasibility assessment of the LSS project.
The Star
20 hours ago
- The Star
First and last-mile connectivity to improve under 13th Malaysia Plan
KUALA LUMPUR: First and last-mile connectivity across major cities nationwide is set to improve under the 13th Malaysia Plan (13MP), says Datuk Seri Anwar Ibrahim. The Prime Minister said this would involve adding 300 demand-responsive transit (DRT) vans and 1,200 buses to strengthen public transport links within urban areas. 'There will also be an additional 217 passenger train sets to improve the frequency of train services,' he said when tabling the 13MP in the Dewan Rakyat on Thursday (July 31). Anwar added that connectivity across rural roads will not be neglected, with around 2,800km set to be built and upgraded. This includes the main road from Nanga Serau to Nanga Seranau in Kapit, Sarawak; the road from the Sungai Air Tawar bridge to Hutan Melintang in Bagan Datuk, Perak; and the Pos Sinderut road in Lipis, Pahang. Large-scale infrastructure development will continue as part of efforts to enhance connectivity and spur growth. Projects include the East Coast Rail Link (ECRL), connecting Kelantan, Terengganu, Pahang, and the west coast of the peninsula; the Gemas-Johor Bahru double track; the elevated autonomous rapid transit system (E-ART) in Iskandar, Johor; and the LRT Mutiara Line project in Penang. 'These initiatives also speed up transit-oriented development, combining transport elements with housing, commerce, and public service counters,' he said. Anwar also announced upgrades to existing routes. This includes the Senai Utara-Machap route in Johor and the Juru-Sungai Dua route in Penang, both located along the PLUS Malaysia Berhad (PLUS) Highway. Also of focus is the construction of the Lingkaran Tengah Utama Expressway; the Pan Borneo Highway in Sabah and the Trans Borneo Highway in Sarawak. The Prime Minister added that the road-to-rail initiative aims to shift a large portion of cargo off roads, increasing rail usage from 6% to 13%. 'This will reduce the risk of road accidents,' he said.
The Star
a day ago
- The Star
DXN to be driven by its expansion plans
Maybank IB Research believes DXN's growth prospects lie in its continued geographic expansion into Brazil and Argentina. PETALING JAYA: Analysts are upbeat about DXN Holdings Bhd 's growth prospects despite its first-quarter earnings coming in below expectations. According to RHB Research, the company is attractive in terms of valuations, given that its business will be driven by its expansion plans and healthy cash flow generation. 'DXN's earnings growth will be supported by the relentless growth momentum in major markets. The core strategies to recruit new members and enhance the members' productivity will continue to revolve around member engagements, complemented by quality new product launches,' it explained. The research house added that the recent capacity expansion could help the company to capture the rising demand and roll out new product categories to broaden the addressable markets. 'The consequent efficiency gain together with annual price adjustments will sustain the high gross profit margin of 80%, notwithstanding the rising input and overhead costs,' it said. The research house expected a significant earnings contribution from its venture into Brazil in the next three to four years, leveraging on DXN's existing network in the Latin American region. It maintained a 'buy' call on the stock but with a lower target price of 80 sen (from 88 sen), signifying a 58% upside and 7% financial year 2026 yield. RHB Research said the valuation was below the consumer sector average to take into account the highly regulated direct selling industry DXN is in. The research house pointed out that DXN's results for the first quarter of FY26 (1Q26) missed forecasts due to unfavourable foreign exchange (forex) movements and ongoing currency crisis in Bolivia, which is a key market. It said DXN's net profit of RM74mil, down 14% year-on-year (y-o-y), met only 19% of the research house's and consensus forecasts, mainly due to the unfavourable forex, prompting it to cut FY26 to FY28 earnings by 9%, 6% and 5%, respectively. Maybank Investment Bank Research has kept its 'buy' call and target price of 72 sen as well as its FY26 to FY28 earnings estimates unchanged, pending DXN's 1Q26 results briefing. It said DXN's 1Q26 results came in below expectations mainly due to lower-than-expected sales on unfavourable forex movements against the ringgit. Similarly, Maybank Investment Bank Research has kept its 'buy' call and target price of 72 sen as well as its FY26–FY28 earnings estimates unchanged, pending DXN's 1QFY26 results briefing. It said DXN's 1QFY26 results came in below expectations mainly due to lower-than-expected sales on unfavourable forex movements against the ringgit. 'We caution that the persistent strength in the ringgit may continue to suppress the group's overall sales growth potential. 'Pressure on DXN's overall sales may persist if the ringgit continues to strengthen against the currencies of its core markets (like Latin America), given that its sales in Malaysia is estimated to account for 10% of total group sales, with the remainder in foreign currency,' Maybank IB Research said. Nevertheless, the research house believes DXN's growth prospects lie with its continued geographic expansion into Brazil and Argentina, which it hopes to replicate the successes it achieved in Peru and Bolivia.
