Foreign Fund Managers Pursue Aeon

The Ubiquitous Aeon Sign

To best the competition, Aeon Co (M) Bhd will now diversify into electronic and furniture stores.

Aeon Malaysia formed a joint venture with Thailand’s furniture retailer Index Living Mall Co in September to set up shops in Malaysia

Aeon's focus thus far is on enlarging its domestic operations through shopping centers, department stores and pharmacies in the country.

According to Aeon, this strategic move is driven by competition in the retail industry and changing consumer behaviour. According to its spokesman, there is an ample increase in retail space in 2013 and it’s going to increase further in the next two or three years. 

Aeon’s competition in Malaysia includes Tesco Plc, the UK’s largest grocer.

Retailers in the Southeast Asian nation are seeking new ways to lure customers as price increases on fuel, power and sugar slow private consumption. Aeon Malaysia plans to spend RM 1.4 billion (US$435 million) this year and next to open more stores and refurbish existing ones as it prepares for a goods and services tax that it says may hurt sales for three months after implementation in April.

Private-sector consumption expanded 7.1 per cent in the first quarter from a year earlier, after climbing 7.4 per cent in the last three months of 2013, according to BNM data. 

“Aeon Malaysia has been one of our core holdings for the past 15 years,” said Gerald Ambrose, managing director of Aberdeen Asset Management Sdn Bhd, which owns shares in the stock. “The company does seem to have the ability to grow their business.”

Shares of Kuala Lumpur-based Aeon rose 1.9 per cent at 11.52 am local time, extending gains for a seventh day. The stock is headed for its highest close since June 4, 2013. It earlier surged as much as 4.6 per cent. Stock purchases on Aeon were mainly from foreign funds.

Aeon shares went down to a low of RM 3.69 after it ex-all and found sustainable traction recently above RM 3.80. It has been advancing ever since due to new fund  interests. 

The ex-all theoretical  price was RM 3.75 . At today's price of RM 4.23, a shareholder of 4000 shares ex, would have made a clean profit of  RM  1,6,92 if he sells. 

If Aeon shares are chased upwards to RM 5 in the next few weeks, then our shareholder would have gained RM 5,000;an equivalent return of 33% within 60 days.