HLIB Research
PP 9484/12/2012 (031413)
7-Eleven Malaysia Holdings Bhd
14 May 2014
IPO Price: RM1.38
IPO NOTE
Biggest retail sector IPO
Highlights
Catalysts
 7-Eleven Malaysia Holdings Bhd (7-EH) is the leading
convenience store operator in Malaysia with 82% share of the
standalone convenience store segment (nearly 1,600 stores).
 The IPO of up to 530.3m shares represent 43% of 7-EH’s
enlarged share capital, comprising 490.8m shares under the
Institutional offering and 39.5m shares under Retail offering.
 The IPO is expected to raise a total of RM250.3m from the
Public Issue, which will be utilized to fund store expansion
and refurbishment, construction of a new combined
distribution center (CDC), and upgrade of IT systems.
 Store expansion and refurbishment. 7-EH is accelerating
new store openings, targeting 600 new stores over 3 years,
bringing the total network to over 2,000 stores by 2016, with
30-35% concentrated in the Klang Valley. 7-EH is also
accelerating store refurbishment plans on 600 existing outlets
(60% major upgrades, 40% minor), with the aim of targeting a
younger customer mix.
 Introduction of new products & services. In addition to
existing in-store services such as, mobile phone and online
gaming reloads, management plans to expand its Touch ‘n
Go reload services, and add utility bill payment and ecommerce facilities for online purchases at stores.
Management is also looking at improving product mix at
stores and increasing bundling promotions to boost sales.
 Improving
product
mix
targeting
higher-margin
commissions from in-store services & non-tobacco products.
 Investing in IT & supply chain improvements to improve
inventory management and cutting lead time by 40%.
 Low penetration levels. According to Vital Factor Research,
Malaysia has 131 convenience stores per millionth population
compared to Thailand’s 192, Japan’s 340, Taiwan’s 429 and
Korea’s 490. Malaysia’s convenience store annual sales per
capita was also relatively low in 2012, at RM116 compared to
Korea’s RM629, Taiwan’s RM1,242 and Japan’s RM1,691.
 Growing population, rising per capita income, and
increasing urbanization.
Risks







Earnings
 Driven by aggressive store expansion & refurbishment plans,
introduction of new products & services, and improvements in
product mix, we expect 7-EH to register revenue and EPS
CAGRs of 12.8% and 24.6% respectively from FY13-16F
(excluding one-off IPO expenses of RM22.8m).
Valuation
Page 1 of 15
Difficulties in executing expansion and refurbishment plans.
Deterioration in relationship with 7-Eleven USA.
Disruption in supply chain for products and services.
Malfunction of IT systems.
Theft and pilferage of goods and cash at stores.
Ability to obtain regulatory licenses, permits and approvals.
Weak consumer sentiment and spending.
Low Yee Huap, CFA
[email protected]
(603) 2168 1078
Share price
Indicative IPO Price
Indicative timetable
Opening of institutional offering
Opening of retail offering
Closing of institutional offering
Price determination date
Closing of retail offering
Balloting of retail offering
Allotment of IPO shares
Listing
RM1.38
8 May 2014
8 May 2014
15 May 2014
16 May 2014
5pm, 16 May 2014
20 May 2014
28 May 2014
30 May 2014
Source: IPO prospectus
IPO (million shares of 10 sen each)
IPO
530.32
Institutional offering:
- Bumiputra investors
141.84
- Institutional investors
348.94
Retail offering:
- Directors, employees
5.50
- Bumiputra retail investors
17.02
- Non Bumiputra retail investors
17.02
Source: IPO prospectus
Public issue proceeds (RMm)
Capital expenditure (within 36mths)
Working capital (within 36mths)
Listing fees & expenses (within 1mth)
Total gross proceeds
184.8
42.7
22.8
250.3
Source: IPO prospectus
Post IPO major shareholders (%)
Berjaya Retail Bhd (BRetail)
57.0*
*Assume over-allotment not exercised.
Source: IPO prospectus
Summary earnings table
FYE Dec (RMm) 2013A 2014F 2015F 2016F
Revenue
1672.4 1910.6 2153.6 2399.1
Pre-tax Profit
72.9
85.9 109.0 131.8
Rpt. PATAMI
51.7 47.4*
81.7 100.2
Nom. PATAMI
51.7
64.5
81.7 100.2
Nom. EPS (sen)
4.2
5.2
6.6
8.1
Nom. P/E (x)
32.9
26.4
20.8
17.0
P/BV (x)
0.7
10.4
7.6
5.8
Gross DPS (sen)
0.0
2.1
2.7
3.2
Div. yield (%)
0.0
1.5
1.9
2.4
ROE (%)
70.0
39.2
36.6
33.9
ROA (%)
31.3
37.3
29.1
24.6
BV/share (RM)
2.11
0.13
0.18
0.24
*Includes one-off IPO expense of RM22.8m
Source: IPO prospectus, HLIB estimates
 Based on the indicative IPO price of RM1.38 per share, 7EH’s estimated prospective PER of 20.8x to Dec 2015 is in
line with the regional peer average PER of 20.3x. We
therefore view 7-EH’s IPO price of RM1.38 per share as fair.
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14 May 2014
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Background
7-Eleven Malaysia Holdings (7-EH) was incorporated as a private limited liability
company in Malaysia on 16 Aug 2013, and was converted to a public limited liability
company on 3 Sep 2013. On 3 Oct 2013, the company changed its name from Seven
Convenience Berhad to 7-Eleven Malaysia Holdings Berhad.
Largest convenience
store operator in Malaysia
7-EH is principally involved in operating and franchising of convenience stores under
the “7-Eleven” brand name and investment holding of shares in its wholly-owned
subsidiaries.
7-EH is the largest convenience store operator in Malaysia in terms of number of
stores, with a market share of 82% of the standalone convenience store segment as at
Mar 2014. As at 10 Apr 2014, the group had 1,583 stores throughout Malaysia serving
an estimated 900,000 people per day.
The stores are commonly located in high pedestrian and vehicle traffic areas and are
open 24 hours a day, seven days a week, with the exception of 19 stores which are
located in shopping malls and light rail transit stations.
1,583 stores throughout
Malaysia as at Apr 2014
Operates 24 hours a day,
seven days a week
7-EH opened 150 net new stores in 2013 and plans to accelerate its store opening
programme, targeting a total of 600 new store openings from 2014-2016.
The group is the sole operator of 7-Eleven convenience stores within Malaysia and
Brunei under an Area Licensing Agreement (ALA) dated 1 Dec 2003 with 7-Elven
USA. Under the ALA, 7-Eleven USA grants 7-EH the right to establish, operate, and
grant sub-franchises for 7-Eleven convenience stores in Malaysia and Brunei up to 30
Nov 2033, with options to extend for an additional 10 years each.
Figure 1.
Sole rights to operate 7Eleven stores in Malaysia
and Brunei up to 2033
Corporate structure after Pre-IPO reorganization
Source: IPO Prospectus
7-EH opened its first store in Kuala Lumpur in 1984. In 2001, Tan Sri Dato’ Vincent
Tan acquired 7-Eleven Malaysia via Berjaya Group.
First store opened in 1984
In 2004, the group opened its Combined Distribution Centre (CDC) to house its
integrated supply chain and IT systems. The CDC handles 53% of total inventory by
volume and delivers to stores in Peninsula Malaysia three times per week. It is located
in Shah Alam with 90,000 sq ft of usable space. The group plans to construct a new
and larger CDC to be opened by end-2015 with a higher capacity to support the
continued expansion in store network.
In 2008, the group celebrated its 25th anniversary with the opening of its 1000th store.
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Figure 2.
www.hlebroking.com
Timeline of major milestones
Source: IPO Prospectus
Catalysts
Store expansion and refurbishment
7-EH is accelerating new store openings, targeting 600 new stores over 3 years,
bringing the total network to 2,157 stores by 2016. Of total new store openings, 3035% will be concentrated in the high-traffic Klang Valley area. The total cost of 200
new store openings in 2014 is expected to reach RM46m, to be funded by IPO
proceeds.
Figure 3.
Accelerating new store
openings, targeting 600
new stores from 20142016
Network of stores as at 10 Apr 2014
State
Selangor
Wilayah Persekutuan
Johor
Perak
Pahang
Negeri Sembilan
Pulau Pinang
Melaka
Kelantan
Terengganu
Kedah
Sabah
Sarawak
Perlis
Total
Stores
471
264
178
100
86
82
73
70
68
57
56
38
30
10
1,583
As % of total
30%
17%
11%
6%
5%
5%
5%
4%
4%
4%
4%
2%
2%
1%
100%
Source: IPO Prospectus
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Figure 4.
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200 new stores planned for 2014
Peninsula Malaysia:
- Central region
- Northern region
- Southern region
- East coast
East Malaysia
Total
70
38
32
36
24
200
Source: IPO Prospectus
Aside from new store openings, the group is also accelerating its store refurbishment
plan on 600 existing stores, 60% of which will be major upgrades and the remaining
40% minor improvements. The accelerated refurbishment exercise is expected to cost
a total of RM24m in 2014 and is being put in place with the aim of targeting a younger
customer mix, given that 55% of the population was aged 29 years or younger in
2013.
Figure 5.
Aggressive refurbishment
plan for 600 existing
stores to target younger
customer mix
Younger population driving demand (2012)
Source: Department of Statistics
Introduction of new products & services
In addition to existing in-store services such as, mobile phone and online gaming
reloads, management plans to expand its Touch ‘n Go reload services, and add on
utility bill payment and e-commerce facilities for online purchases at stores.
Management is also looking at improving product mix at stores and increasing
bundling promotions to boost sales.
New products and
services…
Improving product mix
In an effort to improve product mix, management plans to implement clustering of
stores to be near places such as hospitals, offices, colleges and petrol kiosks. In doing
so, the group would be able to cater product ranges to suit each target market. For
example, stores near schools and colleges would carry more snacks and
confectionery whilst stores near tourist attractions would carry more alcohol, tobacco
and mobile reload services.
… and an improved
product mix to boost
margins
7-EH is also targeting to raise contributions from higher-margin commissions
generated from in-store services & non-tobacco products.
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Investing in IT and supply chain improvements
7-EH plans to spend RM60m in 2014 on improving its IT and supply chain systems.
The aim is to improve inventory management, targeting to cut lead time by 40% from 5
days currently to 1-2 days.
To cut inventory lead time
by 40%
Low penetration levels
According to Vital Factor Research, Malaysia has 131 convenience stores per
millionth population compared to Thailand’s 192, Japan’s 340, Taiwan’s 429 and
Korea’s 490 in 2012.
Malaysia’s convenience store annual sales per capita was also relatively low in 2012,
at RM116 compared to Korea’s RM629, Taiwan’s RM1,242 and Japan’s RM1,691.
Convenience stores per million persons
(2012)
Figure 6.
Relatively low penetration levels
Relatively low penetration
rates…
490
500
429
401
400
340
295
300
192
200
131
100
49
11
0
Source: Vital Factor Consulting
Figure 7.
Room to grow
Convenience store sales per capita
(RM)
3,000
… and spending per capita
on convenience stores
purchases
2,682
2,500
2,000
1,500
1,000
1,691
1,242
918
629
500
116
33
10
-
Source: Vital Factor Consulting
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Growing per capita income and urbanization rates
Aside from relatively low convenience store penetration rates and spending per capita
on convenience store purchases, Malaysia’s rising per capita income and increasing
urbanization rates are also expected to underpin future growth in the sector.
Figure 8.
Growing per capital income
45.0
38.8
Per capita income (RM'000)
40.0
34.2
35.0
30.0
29.7
30.8
31.7
2012
2013E
Rising per capita
income…
26.9
25.0
20.0
15.0
10.0
5.0
2010
2011
2014F
2015F
Source: Bank Negara Malaysia, Economic Planning Unit, Prime Minister's Department
Figure 9.
Rising urbanization rate
90.0
80.0
72.0
77.9
67.6
70.0
Urbanization rate (%)
75.4
… and increasing
urbanization rates to
underpin future growth
62.0
60.0
50.0
40.0
30.0
20.0
10.0
0.0
2000
2005
2010
2015F
2020F
Source: Vital Factor Consulting
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RISKS
Difficulties in executing expansion and refurbishment plans
Challenges the group may face in executing its aggressive store expansion plan of
opening 600 new stores over 2014-2016 include being able to secure ideal store
locations and commercially-viable rental rates, and being able to employ suitable
workforce to man these new outlets.
The group’s extensive store refurbishment plan on 600 existing stores may have an
impact on sales as customers may not be comfortable visiting these stores even as
they stay open for business during the refurbishment process.
Deterioration in relationship with 7-Eleven USA
A deterioration in relationship with 7-Eleven USA could have an adverse impact on 7EH’s operations as 7-Eleven USA has the right to terminate the Area License
Agreement (ALA), which is valid until 30 Nov 2033, in the event of a breach by 7Eleven or its controlling principals who are direct and indirect shareholders.
Relationship with 7Eleven USA crucial for
success and longevity of
business operations
Although the ALA has an option to be renewed for an additional 10 years, there is no
assurance that the ALA will not be revoked or terminated prior to its expiry.
Disruption in supply chain for products and services
The group currently relies on a single Combined Distribution Centre (CDC) in Shah
Slam to supply 53% of its product volume to all stores in Peninsula Malaysia. Any
disruption in the supply chain or any natural disasters at the CDC would therefore
affect operations at the group’s stores.
Expanding CDC to
minimize supply chain
disruptions
The group is planning to construct a new CDC to distribute up to 75% of its products
by volume in Peninsula Malaysia, at a cost of RM15m to be funded by IPO proceeds.
Malfunction of IT systems
7-EH’s higher margin commissions business comes from the provision of services
such as mobile phone reloads, online gaming reloads, and Touch ‘n Go reloads. A
malfunction of IT systems at the stores would render the service terminals unusable
and hence impact negatively on the group’s overall earnings performance in our view.
Low margins and keen competition
As a convenience store operator, 7-EH typically experience low margins given the low
mark-up on products. From 2010-2013, the average PBT and PAT margins for the
group ranged between 2.8-4.4% and 2.1-3.1%, respectively.
Keen competition in high
traffic areas
Aside from low margins, 7-EH also faces keen competition from several other
convenience store operators such as KK Super Mart, Orange Mart, QE, Happy Mart
and MyMart. Although these operators are far smaller in size in terms of their store
network, they are competing head-on with 7-EH at the key high-traffic areas.
Figure 10.
7-Eleven
KK Super Mart
Orange Mart
QE
Happy Mart
MyMart
Circle K
Keen competition in high traffic areas
No. of stores~
>1,000
<500
<100
<100
<100
<100
<100
Coverage in Malaysia
Nationwide
Selangor, KL, Negeri Sembilan, Malacca
Sabah
Selangor, KL, Negeri Sembilan
Penang
Selangor, KL, Perak, Terengganu
Selangor, KL,
~ As at Mar 2014
Source: Vital Factor Consulting
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Theft and pilferage of goods and cash at stores
Convenience store premises are typically open to the public and operate extended
hours where sales are largely cash-based. As a result, convenience stores are
exposed to risk of theft, shoplifting and robbery.
Ability to obtain regulatory licenses, permits and approvals
The stores require a number of licences to operate and sell their products, including
licences to sell certain controlled goods, trading licences and advertising and signage
licences. The group’s operational performance would be affected in the event stores
are unable to obtain all the requisite licences or fail to renew existing licences as they
lapse.
Weak consumer sentiment and spending
The level of consumer confidence in the economy will have an impact on consumer
spending and in turn, the stores’ operational performance.
Figure 11.
Consumer sentiment will
impact operational
performance
Consumer sentiment index for Malaysia
200
10
180
0.3
3.5
0
160
-10.7
140
118.7
120
-7.0
-10
-19.2
122.9
109.7
-20
-30
102.0
100
82.4
-40
80
-50
60
40
-60
20
-70
0
-80
4Q2012
1Q2013
2Q2013
CSI (LHS)
3Q2013
4Q2013
Growth rate (RHS)
Source: MIER
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Earnings and forecasts
Earnings track record
The group’s revenue from 2010-2013 was largely derived from food and beverage
sales, followed by tobacco products, non-good & media items and commissions.
Figure 12.
Revenue by product
Tobacco and F&B
products contribute bulk
of revenue of profits
100.0%
90.0%
80.0%
70.0%
60.0%
50.0%
40.0%
30.0%
20.0%
10.0%
0.0%
2010
Commission
2011
Non-food & media
2012
Food & beverage
2013
Tobacco
Source: IPO Prospectus
The overall gross profit breakdown (net of rental, adjustments and trade rebates)
differed slightly in that commissions account for a relatively higher percentage given
that it generates greater profitability compared to lower-margin tobacco products.
Figure 13.
Gross profit net of rental, adj. & trade rebates
100.0%
90.0%
80.0%
70.0%
60.0%
50.0%
40.0%
30.0%
20.0%
10.0%
0.0%
2010
Commission
2011
Non-food & media
2012
Food & beverage
2013
Tobacco
Source: IPO Prospectus
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7-EH’s revenue and earnings track record has been positive from 2010-2013 as shown
in the charts below:
Figure 14.
Group revenue
1800
1672.5
1579.1
1600
1462.4
1400
Revenue (RMm)
Revenue CAGR of 8.4%
from FY2010-2013
1313.7
1200
1000
800
600
400
200
0
2010
2011
2012
2013
Source: IPO Prospectus
Figure 15.
Gross profit and gross margins
500
425.2
450
27.9
384.2
400
350
28.5
467.1
342.5
Gross profit CAGR of
10.9% from FY2010-2013
28.0
27.5
300
27.0
26.9
250
26.5
200
26.3
26.1
150
26.0
100
25.5
50
0
25.0
2010
2011
2012
Gross profit (RMm) LHS
2013
Gross margin (%) RHS
Source: IPO Prospectus
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Figure 16.
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EBITDA and EBITDA margins
120
10.0
113.4
EBITDA CAGR of 12.2%
from FY2010-2013
9.0
99.9
100
8.0
81.6
80.4
80
6.8
6.3
6.1
7.0
6.0
5.6
60
5.0
4.0
40
3.0
2.0
20
1.0
0
2010
2011
2012
EBITDA (RMm) LHS
2013
EBITDA margin (%) RHS
Source: IPO Prospectus
Figure 17.
Net profit and net margins
70
3.5
3.1
60
Net profit CAGR of 23.8%
from FY2010-2013
3.0
51.8
2.6
50
2.1
40
30
27.3
2.1
2.5
40.5
2.0
30.1
1.5
20
1.0
10
0.5
0
2010
2011
2012
Net profit (RMm) LHS
2013
Net margin (%) RHS
Source: IPO Prospectus
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Forecasts & assumptions
Looking ahead, we expect 7-EH’s revenue to register a CAGR of 12.8% from FY20132016F, largely supported by new store openings and higher commissions from in-store
services.
Figure 18.
Projected revenue CAGR
of 12.8% from FY20132016F…
Revenue assumptions
FYE Dec
No. of stores:
- at beginning of year
- opened during year
- closed during year
Total at end of year
Net new additions
2012A
2013A
2014E
2015E
2016E
1328
84
(5)
1407
1407
34
(17)
1424
17
1424
200
0
1624
200
1624
200
0
1824
200
1824
200
0
2024
200
Ave. rev./store (RMm)
1.1
1.2
1.2
1.2
1.2
1,528.4
7.7
50.4
17.0
0.2
1,579.1
1,614.8
5.6
57.4
13.8
0.2
1,672.4
1,841.6
14.0
68.7
19.7
0.3
1,910.6
2,068.4
12.3
84.9
23.5
0.3
2,153.6
2,295.2
11.0
103.7
22.1
0.3
2,399.1
Rev. breakdown(RMm):
- merchandise sales
YoY growth (%)
- commissions
YoY growth (%)
- rental income
Total revenue
… supported by store
network expansion and
higher commissions
Source: IPO Prospectus, HLIB estimates
At the EPS level, excluding the one-off IPO expense of RM22.8m in FY2014F, we are
projecting a CAGR of 24.6% from FY2013-2016F, supported by the following:
1. A larger network of stores;
2. Bigger contribution from high-margin commissions as the group targets to
provide a wider range of in-store services such as mobile and online gaming
reloads, Touch n’ Go reloads, and potentially facilities to enable utility bills and
online purchase payments. Commissions from these in-store services
generate almost 100% margins;
3. Increasing operational efficiency leading to lower operating expenses going
forward, on the back of improving inventory management, new and improved
IT systems, and better store layouts;
4. The factors above are expected to more than offset the absence of interest
income derived from advances to holding companies, which was classified
under other operating income. Interest income derived from advances to
holding companies averaged between RM12-15m per annum from 2010-2013,
and were generated from RM180m worth of advances extended to holding
company, Berjaya Retail (BRetail). According to the IPO prospectus, all
amounts owing by BRetail have been fully settled in cash and via the issuance
of promissory notes.
Figure 19.
FYE Dec (RMm)
EBITDA margin (%)
EBIT margin (%)
PBT margin (%)
Net margin (%)
Projected EPS CAGR of
24.6% from FY2013-2016
Larger network of stores,
higher commissions and
increasing operational
efficiency to more than
offset absence of interest
income from advances to
holding companies
Margin assumptions
2012A
6.3
4.2
3.6
2.6
2013A
6.7
4.8
4.4
3.1
2014E
7.5
4.9
4.5
3.4
2015E
8.0
5.5
5.1
3.8
2016E
8.5
6.0
5.5
4.2
Source: IPO Prospectus, HLIB estimates
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Valuations
At the indicative IPO price of RM1.38 per share, 7-EH’s FY2015F PER of 20.8x is in
line with the regional peer average of 20.8x. It therefore appears that the indicative IPO
price of RM1.38 per share for 7-EH is fair on a relative basis.
Figure 20.
IPO price of RM1.38/share
appears fair on relative
basis
Comparative valuations
Company
Bloomberg
SP @ 9-May
Mkt. cap.
Mkt. cap.
CP All
Lawson Inc
President Chain Store
Seven & I
Sheng Siong Group
Wumart Stores
CPALL TB
2651 JT
2912 TT
3382 JT
SSG SP
1025 HK
(lcy)
THB42.50
JPY7170.00
TWD226.00
JPY4021.00
SGD0.62
HKD6.36
(in m, lcy)
381,782
719,151
234,955
3,567,000
858
8,149
(in m, USD)
11,704
7,065
7,801
35,043
686
1,051
Simple average
7-Eleven Msia Hldgs
Premium to ave. (%)
RM1.38
1,702.06
527
Op.
margin
(%)
4.1
40.5
5.1
7.3
6.4
0.4
ROE
PER
FY1
(x)
38.1
18.9
29.2
13.9
21.1
14.1
PER
FY2
(x)
28.5
18.3
25.1
18.8
19.4
11.7
P/BV
(%)
32.7
16.1
36.1
8.8
26.4
12.7
Invent.
t/over
(x)
16.4
13.6
13.2
20.3
15.5
11.7
(x)
12.2
2.9
9.9
1.7
6.1
1.8
Div.
yield
(%)
2.1
3.4
2.7
1.7
4.2
4.9
10.6
22.1
15.1
22.5
20.3
5.8
3.2
4.9
39.2
12.7
26.4
17.2
20.8
2.5
10.4
79.8
Source: Bloomberg, HLIB
Page 13 of 15
NOT FOR DISTRIBUTION OUTSIDE MALAYSIA
14 May 2014
HLIB Research | 7-Eleven Malaysia Holdings
www.hlebroking.com
Financial Projections for 7-Eleven Malaysia Holdings (IPO)
Income statement
FYE Dec (RMm)
2012A
Revenue
1579.1
EBITDA
99.4
Dep. & Amort.
(33.8)
EBIT
65.6
Interest income
0.5
Finance costs
(9.6)
JV & Associates
0.0
Pre-tax profit
56.6
Taxation
(16.1)
Minorities
0.0
PATAMI
40.5
Issued sh capital (m)
35.0
Basic EPS (sen)
3.3
2013A
1672.4
112.8
(31.8)
81.0
0.6
(8.6)
0.0
72.9
(21.2)
0.0
51.7
35.0
4.2
2014E
1910.6
142.6
(49.5)
93.1
2.7
(9.8)
0.0
85.9
(21.5)
0.0
64.5
1233.4
5.2
2015E
2153.6
172.6
(54.7)
117.9
2.0
(11.0)
0.0
109.0
(27.2)
0.0
81.7
1233.4
6.6
2016E
2399.1
202.9
(60.1)
142.8
1.3
(12.2)
0.0
131.8
(31.6)
0.0
100.2
1233.4
8.1
Balance sheet
FYE Dec (RMm)
Fixed assets
Other LT assets
Cash
Receivables
Inventory
Other ST assets
Total Assets
Payables
ST debt
Other ST liabilities
LT debt
Total Liabilities
Share capital
Reserves
Shareholders' funds
Minorities
Others
2012A
166.4
0.9
32.2
330.4
124.9
0.4
655.2
386.5
99.1
4.3
10.2
500.1
35.0
104.6
139.6
0.0
15.5
2013A
194.8
0.9
47.8
250.9
133.0
1.4
628.8
415.6
119.6
0.3
6.0
541.5
35.0
38.9
73.9
0.0
13.4
2014E
268.8
145.1
134.2
106.6
150.9
1.6
807.1
471.5
136.6
28.9
6.0
643.0
123.3
41.1
164.4
0.0
0
2015E
298.3
258.6
102.2
120.2
168.9
1.8
950.0
527.7
154.0
39.0
6.0
726.7
123.3
99.9
223.2
0.0
0
2016E
327.8
398.1
64.9
133.9
186.9
2.0
1113.5
583.7
171.6
56.8
6.0
818.1
123.3
172.1
295.4
0.0
0
Cashflow
FYE Dec (RMm)
EBIT
Dep. & Amort.
Others
Working Capital
Operating cashflow
Tax paid
Financing
Cash earnings
Dividends
Capex
Asset sales
Investment & others
Change in sh capital
Others
Free Cash Flow
2012A
65.6
33.8
0.0
89.7
189.1
(17.0)
(9.0)
163.1
0.0
(24.5)
0.0
(26.1)
0.0
(173.7)
164.6
2013A
81.0
31.8
0.0
(100.4)
12.4
(24.5)
(8.1)
(20.2)
(117.5)
(63.8)
0.0
(150.1)
0.0
200.8
(51.4)
2014E
93.1
49.5
0.0
(182.3)
(39.7)
(21.2)
(7.1)
(68.0)
(18.0)
(148.0)
0.0
(46.3)
0.0
303.3
(187.7)
2015E
117.9
54.7
0.0
(24.7)
147.9
(21.5)
(9.0)
117.5
(22.9)
(59.0)
0.0
(53.3)
0.0
(84.9)
88.9
2016E
142.8
60.1
0.0
(24.4)
178.5
(27.2)
(10.9)
140.3
(28.1)
(59.0)
0.0
(66.2)
0.0
(108.2)
119.5
Page 14 of 15
Ratios
FYE Dec (RMm)
EPS (sen)
PER (x)
Gross DPS (sen)
Div. yield (%)
BV/share (RM)
P/B (x)
FCF/share (sen)
Net gearing (%)
Enterprise value
EV/ EBITDA (x)
ROE (%)
ROA (%)
2012A
3.3
42.0
0.0
0.0
3.99
0.3
470.3
55.2
1779.1
17.9
29.0
17.4
2013A
4.2
32.9
0.0
0.0
2.11
0.7
(146.8)
105.2
1779.8
15.8
70.0
31.3
2014E
5.2
26.4
2.1
1.5
0.13
10.4
(15.2)
5.2
1710.6
12.0
39.2
37.3
2015E
6.6
20.8
2.7
1.9
0.18
7.6
7.2
25.9
1759.8
10.2
36.6
29.1
2016E
8.1
17.0
3.2
2.4
0.24
5.8
9.7
38.1
1814.7
8.9
33.9
24.6
Assumptions
FYE Dec (RMm)
EBITDA margin (%)
EBIT margin (%)
PBT margin (%)
Net margin (%)
2012A
6.3
4.2
3.6
2.6
2013A
6.7
4.8
4.4
3.1
2014E
7.5
4.9
4.5
3.4
2015E
8.0
5.5
5.1
3.8
2016E
8.5
6.0
5.5
4.2
1328
84
(5)
1407
1407
34
(17)
1424
17
1.2
1424
200
0
1624
200
1.2
1624
200
0
1824
200
1.2
1824
200
0
2024
200
1.2
Number of stores:
- at beg. of yr.
- opened during yr.
- closed during yr.
Total at end of yr.
Net new additions
Ave. rev./store (RMm)
1.1
NOT FOR DISTRIBUTION OUTSIDE MALAYSIA
14 May 2014
HLIB Research | 7-Eleven Malaysia Holdings
www.hlebroking.com
Disclaimer
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(a) -.
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following securities covered in this report:
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Equity rating definitions
BUY
TRADING BUY
HOLD
TRADING SELL
SELL
NOT RATED
Positive recommendation of stock under coverage. Expected absolute return of more than +10% over 12-months, with low risk of sustained downside.
Positive recommendation of stock not under coverage. Expected absolute return of more than +10% over 6-months. Situational or arbitrage trading opportunity.
Neutral recommendation of stock under coverage. Expected absolute return between -10% and +10% over 12-months, with low risk of sustained downside.
Negative recommendation of stock not under coverage. Expected absolute return of less than -10% over 6-months. Situational or arbitrage trading opportunity.
Negative recommendation of stock under coverage. High risk of negative absolute return of more than -10% over 12-months.
No research coverage, and report is intended purely for informational purposes.
Industry rating definitions
OVERWEIGHT
NEUTRAL
UNDERWEIGHT
Page 15 of 15
The sector, based on weighted market capitalization, is expected to have absolute return of more than +5% over 12-months.
The sector, based on weighted market capitalization, is expected to have absolute return between –5% and +5% over 12-months.
The sector, based on weighted market capitalization, is expected to have absolute return of less than –5% over 12-months.
NOT FOR DISTRIBUTION OUTSIDE MALAYSIA
14 May 2014