AEON's 9MFY12 earnings were within consensus and our forecasts. Its revenue and  core  net  profit  grew  10.5%  and  12.3%  y-o-y  respectively,  driven  by  better numbers  from  its  retail  and  property  management  divisions.  Encouragingcontributions  from  its  new/existing  stores  and  aggressive  members'  days promotions boosted retail sales; while the opening of new shopping malls, higher sales commission and rental rates propelled its property management income. We are  keeping  our  FY12/FY13  forecasts  at  RM199.6m/RM225.6m  respectively. Maintain NEUTRAL, with FV unchanged at RM10.28. 
 
No  surprises.  AEON's topline and core net profit (excluding net insurance gain of RM10.9m for 9MFY11) climbed 10.5% and 12.3% y-o-y to RM2,382.8m and RM127.2m respectively,  underpinned  by  better  performance  at  its  retailing  and  property management  services  segments.  Retail  revenue  grew  9.6%  y-o-y  on  the  back  of contribution  from  new  stores,  higher  sales  from  existing  stores,  as  well  as  increasing sales  days  for  loyalty  card  members.  The  group's  turnover  from  the  property management  services  accelerated  16%  y-o-y,  largely  attributed  to  the  opening  of  new shopping  centres,  better  sales  commission,  and  higher  rental  rates  arising  from  store revamps  in  its  shopping  centres.  Vis-''-vis  last  quarter,  revenue  rose  11.3%  to RM844.7m while earnings jumped 34.6% to RM51.4m.

Slight drop in margin. Weighed down by higher operating costs (including initial costs) from  new  stores  operations,  the group's EBIT  margin  nudged  down  10bps  to  7.5%.  A surge in operating expenses (+10.5%) toned down its healthy revenue growth.

Maintain  NEUTRAL. We  expect  AEON's 4Q performance to  be  well  supported  by  the upcoming festive seasons  of Christmas and New  Year as  well as school holidays.  The group  plans  to  open  a  two-level  outlet  in  Sri  Manjung,  Perak  with  a  net  lettable  area (NLA) of 477k sq ft in December this year, followed by another new mall in Kulai, Johor next  year.  In  view  of  its  strong  fundamentals,  prominent  brandname  and  new  stores expansion,  we  expect  the  company  to  continue  delivering  satisfactory  results  going forward. We are keeping our FY12/FY13 earnings forecasts untouched given its decent results. Maintain NEUTRAL, with a RM10.28 FV, based on 16x FY13 EPS.

 Source: OSK