SEM (5250) : 7-Eleven to refurbish 200 stores by end-2014
7-Eleven Malaysia Holdings Bhd
(Nov 26, RM1.61)
Maintain “buy” with target price (TP) of RM2.00: We attended 7-Eleven’s briefing for the third quarter ended Dec 31, 2014 (3QFY14) yesterday and gathered some updates on the drivers behind its recent quarterly performance and progress on its business expansion plan.
Maintain “buy” and RM2 TP (a 25% upside), derived from 28 times FY15 earnings estimates.
7-Eleven remains confident of achieving net store openings of 600 stores by 2016 and expanding its margins via an improved products mix. Management guided that its net store openings may be slightly lower than 200 stores this year, in view of higher store closures year-to-date. However, 7-Eleven reiterated its target to achieve net store openings of 600 stores by end-2016.
On the progress of store refurbishments, 137 stores have undergone renovation as at end-3Q14 and the company is well on track to achieve its target of refurbishing 200 stores by end-2014.
Existing in-store Touch ‘n Go services continue to grow monthly, with 7-Eleven working closely with Touch ‘n Go Sdn Bhd to ramp up its marketing activities.
For bill payment services, it has signed contracts with Telekom Malaysia Bhd and Astro Malaysia Holdings Bhd, and is looking for a pilot to be launched in December.
Management is still re-evaluating its initial plan to build its own combined distribution centre, as it needs more time to monitor its product demand and change in its products mix.
To support the planned expansion into food services, 7-Eleven is exploring various options, which include fresh food and logistics for chilling food.
We believe the lower-than-expected net store openings this year will have an immaterial impact on our earnings assumptions (that is, less than 0.5%). — RHB Research, Nov 26
http://www.theedgemarkets.com
7-Eleven Malaysia Holdings Bhd
(Nov 26, RM1.61)
Maintain “buy” with target price (TP) of RM2.00: We attended 7-Eleven’s briefing for the third quarter ended Dec 31, 2014 (3QFY14) yesterday and gathered some updates on the drivers behind its recent quarterly performance and progress on its business expansion plan.
Maintain “buy” and RM2 TP (a 25% upside), derived from 28 times FY15 earnings estimates.
7-Eleven remains confident of achieving net store openings of 600 stores by 2016 and expanding its margins via an improved products mix. Management guided that its net store openings may be slightly lower than 200 stores this year, in view of higher store closures year-to-date. However, 7-Eleven reiterated its target to achieve net store openings of 600 stores by end-2016.
On the progress of store refurbishments, 137 stores have undergone renovation as at end-3Q14 and the company is well on track to achieve its target of refurbishing 200 stores by end-2014.
Existing in-store Touch ‘n Go services continue to grow monthly, with 7-Eleven working closely with Touch ‘n Go Sdn Bhd to ramp up its marketing activities.
For bill payment services, it has signed contracts with Telekom Malaysia Bhd and Astro Malaysia Holdings Bhd, and is looking for a pilot to be launched in December.
Management is still re-evaluating its initial plan to build its own combined distribution centre, as it needs more time to monitor its product demand and change in its products mix.
To support the planned expansion into food services, 7-Eleven is exploring various options, which include fresh food and logistics for chilling food.
We believe the lower-than-expected net store openings this year will have an immaterial impact on our earnings assumptions (that is, less than 0.5%). — RHB Research, Nov 26
http://www.theedgemarkets.com
