KUALA LUMPUR: Maybank Investment Bank Bhd (Maybank IB) research, which has a Hold call on 7-Eleven Malaysia Holdings Bhd, expects its move up the value chain to help it deal with a slowdown in consumer spending.
"We believe that 7-Eleven's priority in moving up the value chain with higher margin fresh food items in its 7-café stores will help mitigate a general slowdown in consumer spending in the near-term," the firm said in its report today.
For its convenience store (CVS) business, the firm said ongoing expansion of its 7-Café store format should gradually improve its product mix due to its focus on fresh food.
"7-Eleven Malaysia's Q3 2023 revenue grew 7 per cent year on year (YoY) led by positive CVS sales from higher store footfall and average sales per store. "As at end Q3 2023, there were a total of 2,532 stores of which 186 were 7-café stores," the research firm said.
Separately, it does not expect any significant net profit impact to the group after the disposal of Caring Pharmacy given higher group interest cost savings. It has a RM2.10 a share target price for the stock.
Including Caring Pharmacy's earnings contribution, 7-Eleven reported a core net profit of RM14 million (+5 per cent year-on-year (YoY), -43 per cent quarter-on-quarter (QoQ)) for the third quarter ended Spetember 30, 2023, bringing core net profit for the nine-month period to RM55 million (-13 per cent YoY).
The nine months figures represent 74 per cent/61 per cent of its and consensus estimates for financial year 2023FY23E. The disposal of Caring Pharmacy is expected to be completed by end of the fourth quarter of 2023.
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