Journey to Wealth
AEON CO. (M) BHD - Acquisition of Land
News Aeon has entered into a joint development and sale and purchase agreement with Lebar Daun Development S/B and Perbadanan Kemajuan Negeri Selangor ("PKNS") on a piece of vacant land held in Bandar Shah Alam that measuring approximately 7.602 hectare or 818,273.2 square feet at the purchase price of RM90m.
The purpose of the proposed land acquisition is to construct and operate a shopping centre and a departmental store cum supermarket.
The amount of the acquisition is based on the rate of RM110 per sq ft on an estimated area of 818,273.2 sq ft of the Sale Property after considering the valuation carried out by the company's valuer, VPC Alliance (KL) Sdn Bhd.
The acquisition will be fully funded by cash and internal generated funds.
The company will not be assuming any liabilities including contingent liabilities and guarantees pursuant to the acquisition.
Comments We understand the key rationale of the proposed acquisition is to accelerate the expansion of its retail business through opening of new shopping centres and outlets.
While we believe the upcoming new store on the newly acquired land will enhance its retail business going forward, we have yet to impute the potential earnings' impact into our financial model for conservative purpose.
The proposed land acquisition cost of RM90m via internal fund is not a concern to us judging the group has recorded a strong cash position of RM343m as of 9M12.
Outlook Outlook remains neutral as the group may potential affected by the global economy weakness despite Aeon continues to expand its outlet network in the next three years.
Forecast Maintain FY12-13E net profit at RM223.2mRM251.8m.
Rating MAINTAIN UNDERPERFORM
We believe the company will maintain its 3% SSSG (Same Store Sales Growth) rate in FY13, a similar pace that targeted to record in FY12.
Valuation Maintain TP of RM11.30, based on FY13E PER of 15.8x (+2SD from its historical 5-year mean).
Risks Delay in expansion of new outlets.
Weakness in global economy uncertainties.
Source: Kenanga
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