• Bonia’s 6MFY21 core net profit of RM13m (-11.3% YoY) came in above our expectations.
• We make no changes to our FY21-22 earnings estimates as we are expecting FY21 to be a challenging year for Bonia with the reintroduction of MCO in Malaysia.
• Upgrading to a BUY rating with a higher TP of RM0.95 based on a PER of 9.8x, -1SD its 5-year mean (from 8x previously)

2QFY21 PBT Improved 11.8% Qoq to RM9m

Bonia’s 2QFY21 revenue came at RM83m (-35.2% yoy) on the back of lower sales volume for its retailing segment – Malaysia (-38% yoy), Singapore (-41% yoy), and Vietnam (-67% yoy) from softer consumer spending due to Covid-19. Its Indonesia segment however improved by 22% yoy due to pent-up consumer demand. On a QoQ basis, revenue and PBT came in higher by 6.5% and 11.8% to RM83m and RM9m respectively due to the higher demand during the seasonally stronger Holiday and YearEnd Sales period.

1HFY21 Impacted by the Pandemic

On a cumulative basis, Bonia’s 6MFY21 revenue declined 27.6% yoy to RM161.1m due to the impact of rising Covid-19 cases and the reintroduction of Conditional MCO in Malaysia during the quarter, affecting footfall in Bonia’s retail segment. Nevertheless, Bonia’s investment property development segment recorded a 45% yoy increase in contribution due to higher income received during the period. Excluding one-offs, Bonia’s 6MFY21 core net profit declined by 11.3% yoy to RM13m – above our and consensus expectations. Notably, 6MFY21 EBITDA margin improved 3.4ppt yoy to 24.5% attributable to cost control efforts, rental rebates and government subsidies received. Bonia announced a dividend of 2 sen (vs 0.5sen in 6MFY20).

Upgrade to BUY With a Higher TP of RM0.95

Despite better 6MFY21 results, we make no changes to our 2021-23E earnings as we expect FY21 to continue to be a challenging year for Bonia with the reintroduction of MCO in Malaysia. However, we remain cautiously optimistic on the longer term with the global roll-out of vaccination programs. Upgrade to BUY, with a higher TP of RM0.95 (from RM0.77 previously), now pegged to a higher CY21E PER of 9.8x, -1SD below its 5-year mean (from 8x previously). We are comforted that the group remains prudent in resources management and continues its efforts on brand-building to improve the brand’s image in the longer term. Downside risks to our call include: i) longer-than-expected containment of Covid-19, ii) sharp fall in retail traffic, and iii) further deterioration in macro conditions and consumer sentiment.

Source: Affin Hwang Research - 26 Feb 2021