SEM (5250) : CIMB Research maintains Hold on 7-Eleven
KUALA LUMPUR: CIMB Equities Research said 7-Eleven’s results for the nine months ended Sept 30, 2014 (9MFY14) came in below its forecast (68% of FY14 forecast) and consensus (70%).
It said on Monday the nine-month revenue increased by 12.9% due to a wider network and stronger same store sales growth, while net profit increased largely due to the higher other operating income.
“We cut our FY14-16 earnings forecasts and target price, which is based on a lower target price-to-earnings (P/E) of 23.6 times CY16 (CY15 previously, 20% premium over its peers’ average) or in line with the lower average peer P/E.
“Despite the cut its earnings, its growth remains above the sector’s average. We maintain our Hold call. For exposure to the local consumer sector, we prefer Berjaya Food that trades at a more attractive valuation but comes with much stronger earnings growth,” it said.
CIMB Research said net profit jumped 109% on-year, mainly due to the (1) higher other operating income, (2) substantially lower administrative and other operating expenses (-32% on-year) as the group incurred higher A&P cost for its “Hello Kitty” promotional campaign in August 2013, and (3) much lower effective tax rate.
Although 7-Eleven’s 9MFY14 results are better on-year, the growth is slower than expected, mainly due to the lower-than-expected commission income, other operating income and margin expansion.
“We also think that 7-Eleven may not be able to achieve its new openings target. In view of its weaker-than-expected 9M results and the slower consumer spending, we think that it is unlikely to achieve our previous forecast of strong three-year EPS CAGR of 29%,” said the research house.
http://www.thestar.com.my
KUALA LUMPUR: CIMB Equities Research said 7-Eleven’s results for the nine months ended Sept 30, 2014 (9MFY14) came in below its forecast (68% of FY14 forecast) and consensus (70%).
It said on Monday the nine-month revenue increased by 12.9% due to a wider network and stronger same store sales growth, while net profit increased largely due to the higher other operating income.
“We cut our FY14-16 earnings forecasts and target price, which is based on a lower target price-to-earnings (P/E) of 23.6 times CY16 (CY15 previously, 20% premium over its peers’ average) or in line with the lower average peer P/E.
“Despite the cut its earnings, its growth remains above the sector’s average. We maintain our Hold call. For exposure to the local consumer sector, we prefer Berjaya Food that trades at a more attractive valuation but comes with much stronger earnings growth,” it said.
CIMB Research said net profit jumped 109% on-year, mainly due to the (1) higher other operating income, (2) substantially lower administrative and other operating expenses (-32% on-year) as the group incurred higher A&P cost for its “Hello Kitty” promotional campaign in August 2013, and (3) much lower effective tax rate.
Although 7-Eleven’s 9MFY14 results are better on-year, the growth is slower than expected, mainly due to the lower-than-expected commission income, other operating income and margin expansion.
“We also think that 7-Eleven may not be able to achieve its new openings target. In view of its weaker-than-expected 9M results and the slower consumer spending, we think that it is unlikely to achieve our previous forecast of strong three-year EPS CAGR of 29%,” said the research house.
http://www.thestar.com.my
