AEON (6599) Overview - AEON CO. (M) BHD

ya food stuffs sold at pasar pagi or pasar malam are not cheap anymore, AEON supermarkets offer similar fresh quality food at similar prices or cheaper. One fresh whole chicken for just RM8.90 per bird, anyone?

2022-07-05 10:48

Furthermore, with inflation running high and food stalls & restaurants raising prices, consumers may cut down on eating / dining out, and cook more at home to save costs. AEON is offering essential grocery items in RM50 or RM100 packs with great discounts, to help consumers reducing costs.

2022-07-05 10:50

DickyMe2

Post removed.Why?

2022-07-07 18:35

DickyMe3

Post removed.Why?

2022-07-08 20:20

Looks like AEON has hit a temporary bottom at 1.28. Hope it is on its way to retest previous high of 1.69 soon, possibly by August end when the June qtr result is out

2022-07-20 14:09

DickyMe4

Post removed.Why?

2022-07-22 16:06

dlau8899

Break 1.44 , 1.54 , 1.64

2022-07-28 17:01

unexpected strength today but sellers will likely cap it at 1.44 again

2022-08-11 14:15

https://klse.i3investor.com/web/blog/detail/dragon328/2022-08-12-story-h1627892545-IGBB_is_an_Awakening_Property_Giant_worth_at_least_RM6_75

2022-08-12 12:56

slowly inching up with steady volume indicating accumulation by investors / insiders. No sudden big surge in share price nor volume implies a gradual recovery path for at least another 2 weeks.

2022-08-16 09:42

TreeTopView

Is the current short position not a concern? Currently sitting at net shorts of 5,094,687.

Aeon has always been in my possible re-entry stock list since I sold in November last year. I just can't get enthusiastic about it yet. I'll still keep an eye on it for a potential purchase.

2022-08-16 10:41

I was not aware of such a short position in AEON but 5m shares are not big.

I suspect most of these short positions were entered into in May when AEON share price was trading at RM1.55-1.69 and daily volume exceeds 3.0 million shares. With the subsequent drop in share price to RM1.26-1.28, I think most of the short positions had been unwound then, left now with net 5.0m shorts.

I expect these shorts will be covered soon when the shorties see that share price is well supported and an excellent June quarterly result announcement is coming in 2 weeks.

2022-08-16 14:21

TreeTopView

Hi dragon......unfortunately your summation of the short position is not accurate.

The net short position has been gradually increasing for quite some time and has only stopped quite recently. This has been one of the reasons I decided not to enter into the stock, as there appeared to be another game at play going on.

Once it went above 5 million shorts it started to slow down, with not much covering going on. This is something worth watching daily to see if anything substantial changes, imo.

I'll keep watching :)

2022-08-16 14:55

@TreeTopView, thanks for highlighting the short positions.

To me, these shorties are just speculative. I do not see any big risk of share price collapsing anytime soon, unless another war would start at Taiwan straits or another MCO would be announced.

Too much gaming / betting on shorts and I do not want to spend much time analysing them, but rather focus on fundamentals.

2022-08-16 16:17

Looking at the just released June quarterly result of BJFood, I think AEON will follow suit and post a strong set of result for this June qtr

2022-08-16 21:06

AEON Bhd indeed posted a strong set of results for June quarter with revenue even surpassing the Dec 2021 qtr and profit before tax of RM92.3m, just shy of the record Dec 2021 qtr PBT of RM94.6m.

The disappointment came from the much higher than expected taxation rate of 48.75% vs the normal 25% registered in Q4FY2021.

2022-08-23 21:01

Operating cashflows before tax and capex was strong at RM283 million for 1H 2022, annualised to RM565 million. Again the cash tax was high at RM52 million, higher than usual 25% plus prosperity tax.
Anyway it is way higher than the operating cashflows of RM455m for FY2021.

2022-08-23 21:11

Recovery stocks, is this one still being ignored?

1 month ago

Pavreit, Sunway REIT, and more have delivered very good latest financial reports.
AEON Malaysia, with 24 malls across the country.
How much longer will it be ignored by investors?

1 month ago

firehawk

Q4,2002:
The Company registered a profit before tax of RM45.6 million for the quarter, as compared to a profit before tax in the corresponding quarter of RM94.6 million, which recorded a 51.8% decline, mainly due to the increase in promotional activities, maintenance costs and lower reversal of impairment of receivables.

1 month ago

You are quoting
"Q4,2002"???
Did Aeon exist then?

1 month ago

65 sen coming soon!

1 month ago

No worries, dividend 4c can support share price. Expecting better next quarter.

1 month ago

Chinjason

can we get cheap ticket tomorrow?

1 month ago

October to December 2022:
Revenue RM1,062 million
Profit RM25 million
EPS: 1.77c
This is actually much better than previous quarter.

July to September 2022:
Revenue RM982 million
Profit RM11 million
EPS: 0.78c

Tomorrow, up.

1 month ago

Dubious!

1 month ago

disastrous performance in Q4, super high tax rates, high lease liabilities payments, non-responsive management, lousy finance and tax department, high maintenance costs, and costly promotional activities that yielded no result.

The business and brandname itself is good, but the local management team is lousy. Can't help it.

1 month ago

I will stop following this company until a change in the management to the better.

1 month ago

The only saving grace is a final 4.0 sen dividend, which can support a share price of RM0.70.

Operating cashflows are still strong but a lot were spent on high maintenance costs, high lease liabilities and useless promotional activities

1 month ago

i3lurker

dragon328

I disagree with you.
I would say management is fair, comparable to high end Isetan.
The difference is that some products Isetan sells, Aeon dun sell due to policy differences.

Aeon Big is still an issue coz the previous Carrefour got bankrupted by mind blowing hyper super extreme shoplifting costing hundreds of millions RM per year, year after year non-stop. Syndicates took more than RM1 Billion from Carrefour.

Aeon itself all along umpteen years never had any problem with shoplifting due to tight internal controls. Virtually zero cost.

1 month ago

"Aeon itself all along umpteen years never had any problem with shoplifting due to tight internal controls. Virtually zero cost."
===============================

Am I living in dreamland? Kick me!

1 month ago

"Operating cashflows are still strong but a lot were spent on high maintenance costs, high lease liabilities and useless promotional activities"
------------------------------------------------------------

This is the standard modus operandi to siphon money from any listed company

1 month ago

i3lurker

Dickyme
have you looked at the financials?
have you been inside Aeon before?
Do you know that there is a Aeon?

1 month ago

There is something called ANNAL Report which gives a peek into the financial status.
I have been to Aeon, just for shopping essential.
Yes, I do
Did that answer the questions?

1 month ago

Chinjason

flyflyfly tomorrow

1 month ago

i3lucker

Your point on AEON having reduced issue of shoplifting compared to the old Carrefour may be right, but we should not overlook the other shortcomings of the current AEON management.

The utmost responsibility of the management of a listed company is to safeguard shareholders' interests and manage the company well to create more value for the shareholders. Otherwise why bother with listing?

The current management seems to have focused on the wrong things without clear strategy on how to expand and improve earnings.

They have spent millions of dollars on digital transformation which has obviously yielded little result (note online revenue was only RM24m for 2022, not even 1% of the annual revenue). Though it may have incorporated and digitised data from hundreds of suppliers but this has not transformed into any apparent saving in bulk purchase. Total revenue may have increased by 6% in Q4 but earnings fell over 60% from last year.

The management has not got the maintenance and expenses in check, allowing it to eat into the profit (net profit fell 65% from Q4 2021) as well as cashflows (capex has doubled to over RM110 million in 2022 compared to RM65m in 2021).

They have replaced a local good capable MD in Samsuddin with 3 Japanese (1 MD and 2 deputy MDs), obviously the salary and remuneration package is different for these 3 expats, and they seem to be irreplaceable (one of them is the son of AEON founder) and are here to stay for years.

They may not be well verse with the local retails market and hence the strategy being implemented has resulted in much higher expenses and lower profits.

1 month ago

The current management is particularly weak in corporate finance and taxation.

This is visible from the super high taxation rate of 45.4% in Q4 2022, and unbelievably high cash tax rate of 62.7% in 2022. Just imagine, for RM211.4 million of pretax profit registered for 2022, AEON paid cash tax of RM132.5 million. I checked with AEON public relation officer and the reply was that the high taxation rate was due to cukai makmur and some disallowed items for tax deduction. That simply did not explain a thing.

The company accounting team has allowed the lease liabilities to balloon to a whopping RM1.612 billion, almost reaching 90% of total equity of RM1.80 billion. The reply from the company was that these lease liabilities are capitalised long term leases from third party shopping malls. They charged out total RM258.7 million of lease liability interests and payments into cashflows statements in 2022. This implies an averaged 6 year of leases being capitalised. One would question why they need to capitalise so much of such lease liabilities and whether such practice has unintentionally increased the cash tax payments to the taxman while increasing the accounting profits.

1 month ago

Chinjason

Hopefully budget 2023 to be announced tmr will benefit Aeon indirectly

1 month ago

Giant hypermart closing down Malaysia chapter.

1 month ago

Blue Tulip

If Kenanga ask to BUY, you must consider SELLING.

4 weeks ago

i3lurker

I had blacklisted Giant after many instances of packaged seafood items I bought were not fresh.
Reached home just throw away.
Have not been to Giant for more than 10 years.
Prefer to pay more at Isetan and guaranteed can be eaten

Posted by DickyMe > 1 hour ago | Report Abuse

Giant hypermart closing down Malaysia chapter.

4 weeks ago

I think this stock is showing sign of declining with latest bad QR announced. A 4c dividend proposed also can't move up the share price.
I guess I should wait for the opportunity at better price to exit.

2 weeks ago

danabartlett

I love Fireboy and Watergirl https://fireboyand-watergirl.co

2 weeks ago

Rambutan9

D328,I like some of your comments, any more to share?Why the share keeps going south contrary to what you have predicted?

1 week ago

Rambutan9, the share price movement of Aeon is a reflection of what the company has achieved in terms of financial performance. As I said above, the Q4 qtrly result was a disaster with no visible improvement on any of the areas I suggested before, i.e.
- the high taxation rate
- the increasing lease laibilities
- the accounting policy that capitalises a lot of these lease liabilities
- the weak corporate finance team that fails to adopt sound finance practices
- an uncontrolled capital expenditure program on digitisation which has so far yielded no visible result
- an incompetent management that is not willing and possibly incapable of carrying out material corporate restructuring to a leaner REIT structure that minimises tax and improve cash holdings
- a weak economy and a competitive retail landscape which limits growth
- uncertain external factors and weakening ringgit
- foreign funds pulling out of Bursa

AEON has a good business model and the underlying business generates good operating cashflows. However, without a determined and capable management, the company is going nowhere.

I will only revisit it when there is a change in the management or a change in the attitude of the management, or share price drops below RM1.00.

1 week ago

We should invest in a company with good management that always tries to improve shareholders' value. No matter how much earnings the company makes or how much cash the company has, if the management does not do what is best for company shareholders, eg. spending big on unnecessary capex program that yields no visible result, paying high rentals to third party shopping mall owners, contented with high amounts of debts and serve increasing interest expenses, etc, then there is no point putting your money into such a company stock. You won't see growing earnings nor dividends.

I would rather put my money into other retail companies with net cash position and capable management like Padini who knows how to contain costs and expand at the right time to improve earnings. Even Bonia and SEM do much better than AEON in terms of growing shareholders' value. AEON management is getting too complacent, if it continues going on like that, its market share will sooner or later be eaten up by other retailers.

1 week ago

I had earlier projected a net profit of RM202 million and operating cashflows of RM660 million for FY2022. AEON ended up with a net profit of RM111.2 million and operating cashflows of RM434 million only. The shortfall was due to:

- higher than expected taxation rate of 47.4% for FY2022 vs expected 35%
- substantially higher unallocated expenses of RM120 million vs expected RM87 million
- lower EBIT of RM224m from the retailing segment vs expected RM241m (as a result of thinner margin and higher expenses on digitisation)
- lower EBIT of RM219m for Property Management segment vs expected RM232m (as a result of lower savings in electricity and higher leases)
- substantial increase in capex to RM118.4m in FY2022 from RM67m in FY2021

Though FY2022 revenue actually went up by 4.4% vs expected and by 14% vs FY2021, the management has so far failed to translate the higher revenue into higher earnings mainly due to its ineffective capital/corporate structure and ineffective capex program/IT initiatives.

There is nothing we as minority shareholders can do if the management is happy to pay out almost 50% of earnings to the tax man and pay about RM260 million of lease liabilities payments to other parties. Net Profit will remain low and dividends remain low and no growth ensues.

1 week ago