AEON mulling REIT
Posted on | April 24, 2007 | No Comments
By THE EDGE
AEON Co (M) Bhd is looking into setting up a real estate investment trust (REIT) for seven of its shopping centres, a move widely seen as unlocking their value.
Its chairman Datuk Abdullah Mohd Yusuf said such a move would be sensible for AEON given the size of its operations, as it owns seven of the existing 16 shopping centres operated by the group in Malaysia.
Speaking to reporters after its AGM in Kuala Lumpur on April 24, he said shareholders had raised the issue at the meeting and expressed interest in such a move.
Aseambankers Equity Research, in a recent report, had said there could be more upside to its target price should AEON progressively unlock the value of its seven shopping centres which carry a net book value of RM2.75 per AEON share.
The research house had raised its target price of AEON to RM10.50 per share while raising its valuation from 13 times to 15 times financial year 2008 (FY08) price earnings ratio. On Tuesday, the counter ended the day’s trading at RM9.15.
Abdullah said the company was targeting to open up to three more stores this year to boost earnings growth.
“We are targeting to open our Sunway outlet in the third quarter of this year, Klang by year-end and Bandar Perda by year-end or early 2008.
“We are looking at opening a few more outlets in the Klang Valley, the northern region and the southern region, especially given the prospects of the Iskandar Development Region,” he said.
Abdullah said the company was also targeting to open three more D’Hati supermarket outlets this year.
He said although the company expects stiff competition in the retail consumer business, it hopes to exceed overall industry growth by at least 8%.
He expects AEON to post a revenue of over RM2 billion for the financial year ending Dec 31, 2007 compared with RM1.94 billion in FY06.
“Our current market share (in the retail consumer business) is 4% and combined with other major players, it totals only 20%. So there is more than 70% market share available,” Abdullah said.
On regional expansion, he said the company wanted to concentrate on its Malaysian operations before considering expanding into other Southeast Asian countries.
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