KUALA LUMPUR: Aeon Co (M) Bhd expects a strong fourth quarter (Q4) of the financial year 2022 (FY22) driven by a shopping spree ahead of festivities, including Christmas, Chinese New Year, and the new school term in January 2023.
Kenanga Research said that Aeon expects its Q3 FY22 performance to soften sequentially, which was understandable after bumper second quarter (Q2) FY22 earnings.
To recap, Aeon's Q2 FY22 performance was buoyed by the full economy opening for the first time since the start of the pandemic in 2020, coupled with the Hari Raya Aidilfitri shopping spree.
"We continue to like Aeon for being a reopening play underpinned by the return of shopping in person, shopping in malls and the office crowd, its customer base that is skewed towards the M40 group whose spending power is less impacted by high inflation and its digital transformation, particularly, the introduction of self-checkout for customers," it said in a note today.
Meanwhile, Kenanga said Aeon's average occupancy rate at its malls would rise to 90−92 per cent in Q4 FY22 (versus 89.9 per cent in the first half of FY22) as the unoccupied space is gradually taken up by new tenants, including food and beverage (F&B), fashion outlets, service and entertainment stores, and other businesses.
"Apart from a higher overall occupancy rate, rental incomes will be boosted by an improved tenant mix as we believe the contribution will stem from a rising number of high-yielding F&B, fashion and entertainment outlets versus low-yielding hardware, and book and stationery shops.
"Aeon's total quarterly rental income of RM157.2 million in Q2 FY22 was already at 90 per cent of the RM175 million in Q2 FY19 before the pandemic," it said.
Kenanga has maintained its 'Outperform' call on Aeon, with an unchanged target price of RM1.95.