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Friday, May 16, 2025

Resilient 99 Speedmart starts off FY2025 with a bang

 Minimarket operator posts a 7.5% rise in net profit to RM143 million in Q1 FY2025 despite the softening economic environment.

99 speedmart
99 Speedmart’s first quarter revenue rose 7.7% to RM2.61 billion as its network expanded to 2,833 outlets nationwide. (Facebook pic)
PETALING JAYA:
 Minimarket chain operator 99 Speed Mart Retail Holdings Bhd kicked off its first quarter ended March 31 (Q1 FY2025) with a robust 7.5% increase in net profit to RM143.18 million despite rising uncertainty in the economy.

Its revenue grew at a similar pace, rising 7.7% to RM2.61 billion from RM2.43 billion in Q1 FY2024, driven by stronger retail sales and network expansion.

It declared its first interim dividend of 2.25 sen per share, amounting to a total payout of RM189 million. As at end-Q1 FY2025, the group had cash and bank balances of RM779.62 million.

Analysts are generally bullish on the company’s prospects after it released its Q1 results yesterday and are confident it is in a good position to ride out any deterioration in economic conditions.

AmInvestment Bank (AmInvest) has maintained its “buy” call on the company with an unchanged target price (TP) of RM2.60.

“We continue to like 99 Speedmart for its defensive qualities, underpinned by its position as Malaysia’s largest minimarket chain.

“Amid tariff uncertainty, its essentials-driven model makes it a defensive pick. With no export exposure and a focus on value-for-money goods, it offers resilient earnings and steady growth even in an uncertain macro backdrop,” it said in a note today.

It said the 7.7% rise in Q1 revenue was supported by a 9.5% net increase in store count to 2,833 outlets nationwide.

AmInvest noted that total sales transactions in Q1 rose 7.8% year-on-year to 119.6 million, reflecting “solid footfall growth across the network”.

The average basket size held steady at RM21.80, suggesting sustained consumer spending despite cost-of-living pressures, it added.

Meanwhile, RHB Investment Bank (RHB) said 99 Speedmart’s domestic focus and stable earnings profile make it an attractive investment amid global uncertainties, particularly those arising from evolving US tariff policies.

It said the group’s long-term earnings growth is expected to be driven by its plans to broaden its market reach.

It also pointed to opportunities in underserved regions, which are likely to support the group’s physical store expansion and overall business scale. This could drive a three-year compound annual earnings growth rate of 9%, it added.

Consumer spending resilient

Moving forward, RHB expects consumer spending to remain resilient, underpinned by rising disposable income as a result of wage hikes and upsized government assistance packages for lower-income groups.

“Such an environment should benefit 99 Speedmart considering its extensive store network and consumer preference for minimarkets to shop for groceries,” said RHB, which maintained its “buy” call with a higher TP of RM2.45 from RM2.39 previously.

The stock closed one sen or 0.5% lower at RM2.18, valuing the group at RM18.3 billion. The shares have jumped 32% since 99 Speedmart was listed last September at an IPO price of RM1.65.

Lee Thiam Wah.

The listing was Malaysia’s largest in seven years and has catapulted its wheelchair-bound founder and CEO Lee Thiam Wah to billionaire status. Forbes ranks him at No 8 in its Malaysia’s 50 Richest list, with a net worth of US$4 billion (RM17.17 billion).

Lee, 61, who contracted polio as an infant, started his entrepreneurial journey by selling snacks by the roadside as a teenager.

He saved enough money to start a sundry shop in Klang in 1987 at the age of 23. As the business prospered, he eventually established the 99 Speedmart chain which transformed him into one of the richest individuals in Malaysia. - FMT

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