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The Star
07-07-2025
- Business
- The Star
Eco-Shop expected to weather cost pressures
PETALING JAYA: Retailer Eco-Shop Marketing Bhd is set for a solid performance for its financial year ending May 31, 2026 (FY26), analysts say. This will be supported by its three-year compound annual growth rate (CAGR) in profit of 17.7% as well as its defensive positioning amid multiple emerging headwinds, said UOB Kay Hian Research (UOBKH Research). In a report on the retailer, the research house said Eco-Shop's profitability outlook remains intact despite cost pressures from the higher minimum wage, Employees Provident Fund (EPF) contributions for foreign workers, electricity tariffs and an expanded 8% sales and service tax on commercial rents. 'While most of these individual increases are not material to Eco-Shop's earnings, the combined impact is estimated at RM40mil annually, or about 7.6% of FY26's earnings before interest, tax, depreciation and amortisation,' the research house stated. UOBKH Research said that in order for the group to mitigate the impact of costs, it had raised its fixed pricing from RM2.40 to RM2.60 in April. This effort mirrors its 2022 strategy, when a similar adjustment led to a short-term drop in foot traffic before recovering within two months. UOBKH Research expects a similar trend to play out with the company's same-store sales growth (SSSG) rebounding into double digits in FY26. This will be supported by a planned store revamp. While the fourth quarter of FY25 (4Q25) may record flattish SSSG and sequentially softer earnings to RM62.3mil due to the immediate impact of the price change and Ramadan-related seasonality, full-year earnings are expected to meet projections. Additionally, the research house stated that the group's aggressive store expansion further supports growth. The group had exceeded its target with over 80 new stores opened in FY25. 'The abundance of premises and its growth off a low base have firmly positioned Eco-Shop to achieve its target of 70 new stores annually over the medium term. We also gather that it has already largely secured its sites for FY26,' it added. UOBKH Research made no changes to its earnings estimates on Eco-Shop and maintained a 'buy' call on the retailer with a target price of RM1.45 a share. 'Despite multiple headwinds, we expect Eco-Shop's earnings outlook to remain firmly intact,' it stated, adding that the projected three-year CAGR of 17.7% from FY24 to FY27 is nearly double than that of its peers 99 Speed Mart Retail Holdings Bhd and MR DIY Group (M) Bhd . The research house also said it valued Eco-Shop at 34.5 times FY26 earnings, placing it between 99 Speedmart and MR DIY in terms of growth and valuation appeal.
The Star
25-06-2025
- Business
- The Star
Buying frenzy of IGB-REIT amid rating upgrades
PETALING JAYA: IGB Real Estate Investment Trust 's (REIT) unit price hit an all-time high after the owner of Mid Valley Megamall announced the largest acquisition in the history of Malaysian REITs. At least six investment banks, including JP Morgan, have upgraded their ratings on the stock to 'buy'. This was following the news of IGB-REIT's proposed acquisition of the Mid Valley Southkey Mall (MVS) in Johor for RM2.65bil. Riding on the positive sentiment, shares of IGB-REIT's parent – IGB Bhd – also rose to a new record-high yesterday. The parent owns 47.87% of IGB-REIT. Analysts have revised their earnings forecasts of IGB-REIT upward, factoring in the future contributions from MVS Mall. As a result, target prices have also been raised. AmInvestment Research has the highest target price at RM2.81 per unit. IGB-REIT closed at RM2.49 yesterday after the stock rose by 9.2%. IGB Bhd, on the other hand, moved north by 6.4% to close at RM2.83. In a note, Kenanga Research said it is positive on the proposed acquisition, pointing out that it will strategically position IGB-REIT to benefit from key growth catalysts in Johor. The research house has maintained its earnings forecasts for the financial year of 2025 (FY25), considering the acquisition may only be completed in the fourth quarter ending Dec 31. Hence, the full earnings implication would be only seen from FY26. '(We) raise FY26's by 34% to incorporate the earnings contribution from the proposed acquisition. 'To exercise prudence, we are assuming flat growth in MVS Mall also to reflect macro headwinds such as the 8% sales and service tax on rental and upcoming RON95 subsidy removal. 'Based on our estimated FY26 net property income (NPI) of RM191mil from MVS Mall, it would make up 26% of IGB-REIT's NPI, behind Mid Valley Megamall's RM399.5mil (55%) and The Gardens Mall's RM137.7mil (19%),' Kenanga Research said. Kenanga Research has maintained its 'market perform' call on IGB-REIT, with a higher target price of RM2.40 per unit. Meanwhile, RHB Research upgraded its rating to 'buy' and raised the target price to RM2.60. 'We raise our FY26 to FY27 earnings forecasts by 36% for each year. 'However, after accounting for the higher share base, our distribution per unit estimates increased by 12.5% for FY26 to FY27.' RHB Research opined that the acquisition of the MVS Mall provides a key re-rating catalyst, offering IGB-REIT a significant bump via inorganic growth and the opportunity to diversify its earnings base in the long term. The acquisition of the property would significantly help diversify the REIT's earnings profile away from the more mature Klang Valley market to now include the growing Johor Baru market. Opened in 2019, MVS Mall has a net lettable area of 1.5 million sq ft as compared to Mid Valley Megamall's 1.8 million sq ft. On June 24, IGB-REIT announced that it will finance the acquisition of MVS Mall with a combination of borrowings and a unit placement. A total of RM1bil of the purchase price will be funded via medium-term notes, while the balance RM1.65bil will be raised from the issuance of 699 million new units at an issue price of RM2.36. Post-acquisition, IGB-REIT's gearing is expected to rise marginally to 0.26 times from 0.21 times at end-March. Regardless, Maybank Investment Bank Research (Maybank IB) said there will still be ample headroom for future acquisitions. 'We are upbeat on IGB-REIT's longer-term outlook, backed by its enlarged portfolio of high-quality retail assets. 'MVS Mall's injection has been long awaited. Its integration within the Southkey development, which includes office towers, hotels and residential units, is expected to drive consistent footfall and retail traffic, supporting occupancy and rental stability. 'Coupled with the mall's proximity to Singapore, we see upside to valuations over time.' Maybank IB raised its FY25, FY26 and FY27 net profit forecasts by 2.5%, 34.9% and 35.6%, respectively, to mainly reflect contributions from MVS Mall, offset partially by finance costs. It also upgraded its call to 'buy' and lifted target price to RM2.56 per unit.
The Sun
23-05-2025
- Business
- The Sun
Eco-Shop Marketing targets 15-20% revenue, Patami growth in 2025
KUALA LUMPUR: Eco-Shop Marketing Bhd is targeting growth of 15%–20% in revenue and profit after tax and minority interest (Patami) in 2025, supported by business volume and consumer demand, despite recent price adjustments. Chief financial officer Chong Yew Kai said the company observed no negative reaction when it raised product entry prices from RM2.40 to RM2.60 last month. 'In terms of not only revenue but also Patami, we are looking at 15% to 20% of growth year-on-year. Last round we had this price increase in 2022. So similar trends. Things are moving as per our expectation,' he told a press conference after the company's listing on the Main Market of Bursa Malaysia today. CEO Jessica Ng said the listing marks a new chapter for the household products retailer, enabling it to scale growth and strengthen its market position. 'With enhanced capital, we are now better positioned to expand our nationwide footprint, strengthen our warehousing and distribution capabilities, and invest in technology to enhance operations and customer experience – all while staying true to our promise of delivering unbeatable everyday value.' She said Eco-Shop's business model is built on high volume and scale, which enables it to achieve operational efficiency while keeping prices ultra-affordable. Ng noted that about 75% of the company's products are house brands, many of which are custom-packaged in smaller quantities to maintain affordability and variety. 'We buy in bulk and break them down into smaller packs – like our sachet drinks – making them more accessible to our customers. Our focus remains on daily essentials and basic home living needs.' To enhance customer experience, Ng said, Eco-Shop has refreshed its store image and layout to provide a more comfortable and enjoyable shopping environment. Eco-Shop plans to open 70 new stores annually, including five to six outlets under its Ecoplus brand, a premium retail concept aimed at urban markets and located in shopping malls. Ecoplus offers an expanded range of products beyond the standard RM2.60 price point, with options priced at RM6, RM10 and RM20. Ng said the company is open to future expansion into the Asean market, although its current focus remains on Malaysia. 'The dollar shop segment is still relatively new in Asia. Outside of mature markets like the US and Japan, there's a lot of room to grow. We're the first in this segment to list, and if the opportunity arises, we will evaluate it.' Eco-Shop made its debut on the Main Market at RM1.25 with a 12 sen premium over its initial public offering (IPO) price of RM1.13, with 25 million shares traded. It closed at RM1.20, up 6.19% from its IPO price, with over 209 million shares changing hands, making it one of the most actively traded counters. The IPO raised RM419.87 million for Eco-Shop, whichhas allocated RM56.27 million (13.4%) to accelerate the expansion of its retail footprint nationwide, RM200 million (47.6%) to expand its distribution centres, RM10.90 million (2.6%) for investment in information technology hardware and software, RM100 million (23.8%) to repay bank borrowings and RM52.7 million (12.6%) for working capital purposes and to defray the cost of the IPO and listing. Eco-Shop's Patami has grown at a compounded annual growth rate of 156% over the last three financial years from May 31, 2022 to 2024. The company recently reported Patami growth of 36% year-on-year for the nine months ended Feb 28, 2025. Maybank Investment Bank Bhd is the principal adviser, joint global coordinator, joint bookrunner and sole underwriter for the IPO. UBS Securities Malaysia Sdn Bhd and UBS AG, Singapore branch, are joint global coordinators and Joint bookrunners, while RHB Investment Bank is also a joint bookrunner.
New Straits Times
23-05-2025
- Business
- New Straits Times
Eco-Shop positive about performance despite price hike
KUALA LUMPUR: Household retailer Eco-Shop Marketing Bhd remains optimistic about its performance despite hiking up product prices to RM2.60 from RM2.40 last month. Its chief financial officer Chong Yew Kai said the company raised prices to RM2.40 from RM2.20 in 2022 and saw no negative market reaction. "I see no changes in company performance (after the price increase), it was as per our expectation. So, we are not seeing any different kind of market reaction. "Of course, (we are in) a transition period (now). Moving forward, we are looking at a very strong performance," he told a press conference after today's listing. Recently, Eco-Shop posted a higher net profit of RM61.72 million for the third quarter of its financial year ending Feb 28, 2025 (3Q FY2025), compared to RM42.57 million in the same period a year ago. The revenue increased 17.2 per cent to RM736.35 million in 3Q FY2025 from RM628.41 million previously, driven by the expansion of the group's store network with the opening of 26 new outlets, bringing the total number of stores to 349 in 3Q FY2025 from 278 in 3Q FY2024. Meanwhile, Eco-Shop chief executive officer and executive director Jessica Ng said the company would evaluate their opportunities to venture into the ASEAN market in the future, as the dollar shop segment in the region is still new. Dollar shops offer a wide range of products at fixed, low prices and typically carry daily items like household goods, snacks, and personal care products, and may also include items like stationery and hardware. However, she said the group would likely focus their business expansion in Malaysia for now, so that more Malaysians would have access to affordable products. As of today, Eco-Shop has 358 stores in Malaysia, comprising 336 Eco-Shop stores and 22 Eco-Plus stores. Today, Eco-Shop debuted on the Main Market of Bursa Malaysia at RM1.25, a premium of 12 sen from its initial public offering (IPO) price of RM1.13, with 25 million shares traded. Under its listing exercise, the company had raised RM419.87 million, where RM200 million or 51 per cent would be utilised for distribution centre expansion, RM56.27 million (14.4 per cent) for new store opening, and RM8.52 million (2.2 per cent) for IT hardware and software. "RM100 million or 25.5 per cent would be utilised to repay bank borrowings, and RM27.32 million (7.0 per cent) for IPO and listing expenses," it said. At 5 pm, Eco-Shop closed the day trading at RM1.20, seven sen higher than its issue price of RM1.13, with the company also emerging as the most active stock for the day with 209.16 million shares changing hands.
New Straits Times
29-04-2025
- Business
- New Straits Times
Eco-Shop confident ahead of main market debut with RM420mil IPO
PETALING JAYA: Eco-Shop Marketing Bhd, which is en route to a listing on the Main Market of Bursa Malaysia Securities Bhd, remains confident in its prospects as underpinned by strong fundamentals despite uncertainties in market sentiment and the economy. Eco-Shop said its initial public offering (IPO) is set to be the largest IPO to be launched in the past eight months, with an estimated RM419.87 million to be raised through the public issuance of 347 million new shares, based on the IPO retail price of RM1.21 per share. The company will also offer 675.37 million shares to institutional investors at a price to be determined through a book-building process, it said in a statement. The IPO has secured ten investors acting as cornerstone investors, who collectively subscribed for 90.91 million shares or 90.31 per cent of the institutional offering, the firm said. Its chief executive officer and executive director Jessica Ng said that global market uncertainties have undoubtedly impacted both investor and consumer sentiment. However, she said Eco-Shop remains optimistic that its value proposition is timely and well-suited to the current environment. "Market forces are definitely one of the factors that we take into consideration (for listing). "However, in this tough situation (with market uncertainties), a business model like ours is even more needed. (Looking at the US tariffs) and the rising cost, we are very ultra-affordable," she told reporters during the press conference today, in conjunction with the launch of the IPO prospectus. She said Eco-Shop has consistently proven its business strength over the years, with strong sourcing capabilities and a competitive edge in bulk purchasing. "We also have solid operations and infrastructure, and the ability to buy in volume and repackage products into smaller sizes," she added. Eco-Shop's listing on the Main Market is set for May 23, 2025. In response to a question about the product price hike, Ng explained that the rise from RM2.40 to RM2.60 (starting April 14) was due to the increase in the minimum wage, but she emphasised that most of its workers fall within the B40 income group. "The majority of EcoShop employees are under the B40 group. So, we will have to make this adjustment to help our employees as well. "While the basic pay is RM1,700, Eco-Shop pays a basic wage of RM1,800. So, the decision was made as we have to balance between taking care of the stakeholders in the right way," she said. Meanwhile, commenting on the IPO proceeds utilisation, Ng said Eco-Shop has allocated RM56.27 million (13.4 per cent) to accelerate the expansion of its retail footprint nationwide and RM200 million (47.6 per cent) to expand its distribution centres. She added that RM10.90 million (2.6 per cent) is earmarked for investment in information technology hardware and software, RM100 million (23.8 per cent) towards repaying bank borrowings, and RM52.70 million (12.6 per cent) for working capital purposes and defraying the costs of the IPO and listing. "We are targeting 70 stores per year for the next five years, and currently, the under-penetrated market will be the Klang Valley as well as East Malaysia.
