Broker: Maybank Investment Bank Berhad
Date of Report: August 26, 2025
AEON Co. (M) Berhad: Navigating Rising Costs While Leveraging Resilient Property Management Growth
Investment Summary: BUY Maintained Despite Headwinds
AEON Co. (Malaysia) Berhad stands as a key player in the Malaysian consumer discretionary sector, operating general merchandise stores, supermarkets, and shopping malls. Despite a challenging operating climate marked by rising expenses, Maybank Investment Bank Berhad maintains its BUY rating with a 12-month target price (TP) of MYR2.00, representing a substantial 51% upside from the current share price of MYR1.35. The company’s robust property management services (PMS) segment continues to anchor earnings, offsetting near-term pressures from increased operating and interest expenses.
Key Highlights
- Target Price: MYR2.00 (unchanged); 51% upside potential
- Current Price: MYR1.35
- Major Shareholders: AEON Co., Ltd. (51.0%), Employees Provident Fund (6.1%), Permodalan Nasional Bhd. (4.9%)
- Market Capitalisation: MYR1.9 billion (USD450 million)
- Free Float: 40.2%
Financial Performance: 2Q25 Results and Outlook
AEON’s second quarter of FY25 delivered a net profit of MYR12 million, down 56% year-on-year (YoY) and 82% quarter-on-quarter (QoQ), bringing 1H25 net profit to MYR80 million (down 6% YoY). This performance accounted for 48% of full-year estimates, in line with market expectations. Notably, no interim dividends were declared, consistent with the company’s historical pattern of year-end payouts.
| Metric |
2Q25 |
2Q24 |
1Q25 |
YoY Change |
QoQ Change |
| Net Revenue (MYR m) |
999.6 |
1,020.9 |
1,244.8 |
-2.1% |
-19.7% |
| EBITDA (MYR m) |
149.9 |
170.7 |
241.9 |
-12.2% |
-38.0% |
| EBIT (MYR m) |
40.7 |
66.8 |
133.4 |
-39.1% |
-69.5% |
| Net Profit (MYR m) |
12.3 |
27.7 |
68.1 |
-55.6% |
-81.9% |
| EBIT Margin (%) |
4.1 |
6.5 |
10.7 |
-2.5 ppts |
-6.6 ppts |
Segment Analysis: Property Management Lifts, Retail Weakens
- Group revenue for 1H25: Rose 3% YoY, driven by retail (+2% YoY) and PMS (+7% YoY) amidst improved consumer spending, higher mall occupancy, and stronger tenant sales.
- Group EBIT for 1H25: Fell 5% YoY, mainly due to a sharp 52% YoY drop in retail segment EBIT (margin down 1.6 ppt), partially offset by a robust 12% YoY increase in PMS EBIT (margin up 1.6 ppt), thanks to higher rental reversion rates (estimated high single-digit percentage).
| Segment |
2Q25 Revenue (MYR m) |
2Q24 Revenue (MYR m) |
YoY Change |
1H25 EBIT (MYR m) |
1H24 EBIT (MYR m) |
YoY EBIT Change |
| Retailing |
805.4 |
836.8 |
-3.8% |
26.1 |
54.2 |
-51.8% |
| Property Management Services |
194.2 |
184.1 |
+5.5% |
165.1 |
147.8 |
+11.7% |
Rising Cost Pressures: SST and Interest Expense Headwinds
AEON faces higher operating expenses in the second half of 2025 due to:
- An 8% Sales and Service Tax (SST) imposed on rental and leasing services starting July 2025, estimated to have a net annual cost impact of MYR9.1 million after accounting for SST exemptions on 57% of net lettable area (NLA) under B2B transactions.
- Increased interest expenses following the issuance of MYR200 million Islamic Medium-Term Notes (IMTN) in August 2025.
As a result, the company’s core net profit forecasts for FY25E, FY26E, and FY27E have been prudently lowered by 5-7%.
| Financial Metric |
FY25E (Revised) |
FY26E (Revised) |
FY27E (Revised) |
% Change from Previous |
| Revenue (MYR m) |
4,362 |
4,605 |
4,853 |
0% |
| Core Net Profit (MYR m) |
158 |
167 |
179 |
-5% to -7% |
| EBIT Margin (%) |
8.2 |
8.4 |
8.4 |
-0.2 to -0.3 ppts |
Valuation and Forecasts
AEON is valued at 17x FY26E PER, which is aligned with its mean historical valuation. Despite the near-term earnings adjustment, the company is projected to deliver a steady recovery in core earnings from FY26 onwards, supported by resilient PMS revenue and an expected rebound in retail spending during festive and school holiday periods.
| FYE Dec (MYR m) |
FY23A |
FY24A |
FY25E |
FY26E |
FY27E |
| Revenue |
4,129 |
4,262 |
4,362 |
4,605 |
4,853 |
| EBITDA |
710 |
715 |
776 |
784 |
791 |
| Core Net Profit |
137 |
161 |
158 |
167 |
179 |
| Core EPS (sen) |
9.8 |
11.5 |
11.2 |
11.9 |
12.7 |
| Net Dividend (sen) |
4.0 |
4.5 |
4.0 |
4.0 |
4.0 |
| Net Dividend Yield (%) |
3.7 |
2.9 |
3.0 |
3.0 |
3.0 |
Key Financial Ratios and Metrics
| Metric |
FY23A |
FY24A |
FY25E |
FY26E |
FY27E |
| Core P/E (x) |
11.2 |
13.7 |
12.0 |
11.3 |
10.6 |
| P/BV (x) |
0.8 |
1.1 |
0.9 |
0.9 |
0.8 |
| ROAE (%) |
6.3 |
6.7 |
7.9 |
8.0 |
8.1 |
| Net Gearing (%) |
17.2 |
12.8 |
1.2 |
net cash |
net cash |
Risks to Outlook
Key risks that could affect AEON’s earnings, target price, and rating include:
- Underperformance in the retail segment’s revenue
- Higher-than-anticipated operating expenses
- Rising competition and weak consumer sentiment
Strategic Focus and Expansion
AEON continues to rejuvenate and expand its mall footprint, with PMS expected to remain the core earnings driver. The company is prudently managing cost escalations and is well-positioned to benefit from a cyclical upswing in consumer spending during key shopping periods in 4Q25.
Conclusion: Steady Growth with Strong Downside Protection
Despite a challenging operating environment, AEON Co. (M) Berhad’s resilient PMS segment and strategic cost management provide stability and growth visibility. The stock remains attractively valued, with a robust dividend yield and a solid balance sheet poised to transition into a net cash position. Investors seeking exposure to Malaysia’s consumer and retail property sectors will find AEON’s consistent execution and defensive attributes compelling for long-term portfolio inclusion.
