KUALA LUMPUR: The closure of Aeon Sunway Pyramid is not expected to have a material impact on Aeon Co. (M)'s financial performance.
Hong Leong Investment Bank (HLIB) Research said in its note that, Aeon's management advised that contribution from the outlet only stood at 2 per cent of its retail segment revenue.
"We expect the loss of sales will be partially mitigated by the opening of new store Aeon IOI City Mall in Feb 2023," HLIB Research said.
Aeon's retail segment recorded softer revenue for the second quarter of financial year 2023 (2Q23) registering a decline of 8 per cent quarter-on-quarter and year-on-year, on a decline in softline (apparel, stationary, kids) and hardline (home related products, electrical) segment despite the uptick seen in foodline.
Average basket size fell to RM63.60 in 1H23 from RM73.90 in 1H22.
Aeon's property management segment's financial performance is expected to hold up with an increase in occupancy rate to 93 per cent by year end, and better rental renewal rate.
Additionally the resumption of business of Aeon Ayer Keroh and Aeon Cheras Selatan should support the growth.
"We expect retail sales to remain soft at current levels as the group ramp up efforts by increasing promotional activities and enhance product range to brace through the seasonally slow quarter before the start of festive period in 4Q," HLIB Research said.
It reiterated its BUY call with a lower target price of RM1.48 (from RM1.61). FY23/24/25 forecasts however were reduced by 8 per cent/8 per cent/7 per cent respectively as it tweaked its tax and margin assumptions for the company.
