Wednesday, 21 March 2018

AEON 4th quarter 2017 Financial Report


Today, I would like to talk about my first love~
Ohhh....
Please don't misunderstand,
I meant the first love in shares market,
which was the first company that I invested at, AEON.

 Since the GST is launched few years ago,
consumer sentiment dropped drastically,
together with other negative factors,
the financial result of AEON became worse and worse,
the shares price also dropped from around RM4 to around RM1.5 somehitng.......

 However,
the financial report which released last month,
seems like there might be a turning point:

 The profit was better than the year before~

 By the way,
everytime when I read the financial report of AEON,
I always put extra attention at the Cashflow Statement,
because it is quite interesting:

Did you see it?

 If no,
please compare the Profit before tax at the upper side and the Net cash generated from operating activities at the lower side.
How?
Did you find out the the cashflow was more than the profit?

 The main reason was because of depreciation.

 That's why for so many years,
even the profit of AEON is not very high,
but still able to build more and more shopping malls~

 Let's continue with the Cashflow Statement:

 Different than previous year,
the Net cash used in investing activities is much lower,
maybe AEON also realized that they over-expanding~
Seems like less new mall will be opened at the future..........

 So what will AEON do with those extra money?
Distribute it to shareholders as dividend?
Please don't dream..........
Need to pay the debt first:

AEON expanded so much last time,
even borrow money for expansion,
now is time to pay back.

 Anyway,
there are a few things that happened last year which we need to know:
First,
AEON finally sold the shopping centre at Mahkota Cheras,
so will have extra income~

 Second,
AEON changed the way they operating with Thailand furniture company Index Living Mall,
from 70% owned to 49% now,
so there was extra expense~

 Still remember few years ago..........
the previous MD Nur Qamarina Chew was so passionate and work together with Index Living Mall,
but now....................aiks.................

 Except that,
one more news also caught my attention:
Let's see who will hold the AEON Mall Bukit Tinggi at the end............
AEON or WCT ?

 Lastly is the future prospects:
The company expects its performance for year 2018 to be improved~
Wow.........sounded so confident~

 Also, the dividend:
The dividend is raised to 4sen from 3sen.

 However, we can't be very happy about it.
Last time when business was really good,
AEON distributed dividend as much as 5.5sen,
so now is still recovering.....

 Actually the operation of AEON can be divided into two segments:
Retailing and Property Management services (PMS):


The profit of PMS rose due to more rental income from newly completed mall~

 As for retailing,
there were some improvements if comparing with previous year,
or maybe I should say that previous year was just very bad,
that's why now seems like improved a lot...........

 Anyway,
most of the profit actually came from the rental income for leasing shoplots,
so even online shopping is growing,
it will only affect the retailing segment more.

 You can choose to buy daily supplies online, instead of going to AEON to buy.
But can you choose to rent a shop online instead of renting a shop at AEON?
........
.........
...........
Of course can !!

 However,
will everyone choose to watch movie at online cinema?
Instead of going to cinema inside AEON?

 Will everyone choose to workout at online gym?
Instead of going to the Fitness Center inside AEON?

 Will everyone choose to sing at online karaoke?
Instead of going to the karaoke inside AEON?

 Will everyone choose to eat at online restaurant?
Instead of going to have food at restaurants inside AEON?

 Personally,
even online shopping is growing strong,
but I still think that those shopping mall which do not rely heavily on retailing will going to survive.

 Just think like this........
When weekend nothing to do, where will everyone go?

 Other countries have 4 seasons, not everyday hot like oven,
so the people can go to parks, or some other outdoor activities.
However,
the weather at Malaysia is hot for 365 days per year,
plus the safety issue,
is there any other places we can easily go to except shopping mall?
Is everyone willing to just stay at home?

 Whenever financial result of shopping mall dropped,
people always comment that:
"Online shopping is the trend now! All shopping mall are going to extinct soon, no more shopping mall at the future, no more~ no more~"

 Now AEON released a better financial result, and they all diam diam already.
(I meant they didn't comment anything......)

 Of course,
I am not saying that online shopping will not affect shopping mall,
just that...............
There are so many factors which can influence the financial result,
for examples like increasing basic salaries, or higher electric fees.

 Whenever we saw the financial result of shopping mall became worse,
then we straight away said the reason was because online shopping is the trend.
Isn't that a bit of just looking at the surface only?
Isn't that being a bit of ignorance to the deeper reasons?

 Investment is about doing own thinking, making own decision.

 Thanks for reading.






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