99 Speed Mart outlook to stay positive in 2H25
RHB Research, which maintained a 'buy' call on the home-grown mini market chain retailer, lifted its TP to RM2.81 from RM2.45 after a 1H25 net profit of RM296.39mil from 99 Speed Mart came in at 51% of both its and consensus full-year forecasts, driven by stronger-than-expected margins.
The research house expects earnings momentum to strengthen in 2H25 on the back of robust margins and extended operating hours (opening at 9am instead of 10am) introduced in July, which have seen 'encouraging response'.
Post-results, it raised earnings estimates on the retailer for the financial year ending Dec 31, 2025 (FY25), FY26 and FY27 by 3%, 3% and 2%, respectively.
RHB Research said opportunities in underserved regions will continue to support outlet expansion and scale, fuelling a three-year earnings compound annual growth rate of 10%.
It also noted 99 Speed Mart's domestic-centric and resilient profile, which should appeal to investors amid uncertainties from the US tariff policy.
'99 Speed Mart is well-positioned to benefit from the rising disposable income of lower income groups and downtrading trends from elevated inflationary pressures, given its extensive store network and consumer preference for mini-markets,' it said.
'We believe earnings growth over a longer term will also be sustained by 99 Speed Mart's strategies to expand its addressable markets.'
CIMB Research also kept its 'buy' call and raised its TP to RM2.80 a share from RM2.60.
It expects earnings resilience in 2H25 despite weaker consumer sentiment, supported by new store openings, stronger demand for daily necessities, extended operating hours and government handouts under the Sumbangan Asas Rahmah (Sara) scheme.
CIMB Research said its revised TP of RM2.80 is now based on 35 times FY26 price-to-earnings (PE) versus 33 times previously.
'Our revised multiple reflects a 20% premium (up from 10% previously) to the current weighted average PE of large Malaysian consumer caps (29.1 times), justified by stronger earnings growth prospects, 99 Holdings' positioning as a key beneficiary of consumer downtrading and government cash assistance schemes, and its entrenched leadership in Malaysia's mini-market retail segment,' it said.
Meanwhile, Hong Leong Investment Bank (HLIB) Research reiterated its 'buy' call on 99 Speed Mart with an unchanged TP of RM2.98, based on 45 times FY25 PE.
The research house said it remains upbeat on the group's outlook, underpinned by consistent execution and structural growth drivers.
'99 Speed Mart continues to deliver steady top and bottom line expansion, anchored by its aggressive store rollout strategy, with at least 250 new outlets targeted in 2025 and an imminent 3,000 outlet milestone,' it said.
HLIB Research added that extended hours and recent promotional campaigns should 'further entrench its value-for-money positioning and reinforce customer stickiness, particularly among cost-conscious households.'
On the macro front, the research house expects private consumption to remain resilient, supported by rising disposable incomes from wage adjustments and enhanced fiscal support.
Notably, it pointed to the RM100 Sara credit programme, which now extends beyond the B40 segment, as a meaningful near-term catalyst for retail spending.
'Taken together, we believe 99 Speed Mart is well positioned to capture incremental wallet share, leveraging both its expansive footprint and value led proposition,' it said.
'We like 99 Speed Mart due to its strong market presence and extensive store network, with competitive pricing that is well-positioned to drive stable and recurring revenue.'
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