Share
THE BUZZ
AEON has entered into a Sale and Purchase Agreement with Seroja Mulia SB and Antero Harapan SB for the purchase of 3 pieces of leasehold land and 2 pieces of state land for RM27,129,168 to construct a shopping centre. The pieces of land, totaling some 753,588 sq.ft, are situated in Mukim Hulu Kinta, Daerah Kinta, in Perak.
OUR TAKE
Another mall in Ipoh. The purchase is in line with the group’s strategy to maintain its market dominance and penetrate untapped markets. Based on the size of the land bought, the mall could be one of the biggest to be owned/leased by AEON. With the acquisitions of the said land, AEON would have 2 shopping malls in a relatively small city. Based on the (i) encouraging performance from AEON Ipoh, which is one of the best performing outlets and (ii) the larger population base in Ipoh of 710,798 people versus Cheras (200,000 people) - where AEON operates 2 malls, (iii) the dearth of shopping malls in the city, there being only two shopping malls currently, i.e. AEON and Ipoh Parade, we believe the possibility of cannibalization is minimal. Given that the construction of the mall would usually takes about 15-18 months, it will most probably open in FY11 at the earliest.
Reasonable purchase price. A comparison with previous land acquisitions undertaken by the group and the recent asking prices for land in Ipoh indicates that the purchase price of RM36 per square foot is fair. Financing will not be an issue as AEON is in a strong cash position of RM175.2m.
Maintain BUY. Given that the mall, which will be erected on the land acquired, would only be opened in the next two years, we are not making changes to our forecast at this juncture. Our net profit forecasts for FY10 and FY11 remain at RM151.8m and RM169.0m respectively. We value AEON at RM5.62, which is based on 13x FY10 EPS.
AEON has entered into a Sale and Purchase Agreement with Seroja Mulia SB and Antero Harapan SB for the purchase of 3 pieces of leasehold land and 2 pieces of state land for RM27,129,168 to construct a shopping centre. The pieces of land, totaling some 753,588 sq.ft, are situated in Mukim Hulu Kinta, Daerah Kinta, in Perak.
OUR TAKE
Another mall in Ipoh. The purchase is in line with the group’s strategy to maintain its market dominance and penetrate untapped markets. Based on the size of the land bought, the mall could be one of the biggest to be owned/leased by AEON. With the acquisitions of the said land, AEON would have 2 shopping malls in a relatively small city. Based on the (i) encouraging performance from AEON Ipoh, which is one of the best performing outlets and (ii) the larger population base in Ipoh of 710,798 people versus Cheras (200,000 people) - where AEON operates 2 malls, (iii) the dearth of shopping malls in the city, there being only two shopping malls currently, i.e. AEON and Ipoh Parade, we believe the possibility of cannibalization is minimal. Given that the construction of the mall would usually takes about 15-18 months, it will most probably open in FY11 at the earliest.
Reasonable purchase price. A comparison with previous land acquisitions undertaken by the group and the recent asking prices for land in Ipoh indicates that the purchase price of RM36 per square foot is fair. Financing will not be an issue as AEON is in a strong cash position of RM175.2m.
Maintain BUY. Given that the mall, which will be erected on the land acquired, would only be opened in the next two years, we are not making changes to our forecast at this juncture. Our net profit forecasts for FY10 and FY11 remain at RM151.8m and RM169.0m respectively. We value AEON at RM5.62, which is based on 13x FY10 EPS.
SHARE
