Industry Trend Analysis - Convenience Store Formats More Popular As Incomes Rise - APR 2018

BMI View: Rising disposable income and a large millennial consumer base that demands greater convenience and easy accessibility are leading to the success of convenience stores in Malaysia. On the back of these factors, 7-Eleven Malaysia has reported 66.5% growth in profits for Q417 (ending December 2017). Spending growth on food and drink and an expanding urban population will lead to even greater competition in the country's convenience store market.

Rising disposable incomes and greater demand for convenience is leading to the popularity and growth of convenience stores in Malaysia. Convenience store chain, 7-Eleven Malaysia has reported robust growth in the company's financial results for Q417 (ending December 2017) and we project convenience stores to continue to do well in 2018 and beyond. The company reported robust growth in their financial results for Q417, with net profit growing by 66.5% y-o-y. In the final quarter, group revenue reached MYR546.2mn (USD138.9mn), growing 4.3% y-o-y in Q417. 7-Eleven opened 126 new stores in 2017, and we expect the company to continue its expansion plans. 7-Eleven in Malaysia has been revamping its offerings at the 2,225 stores it operates in Malaysia by bringing new layouts, ready-to-eat meals and a wide range of payment services since entering the market in 2014.

Malaysia is one of our favourite Consumer markets in Asia, with consumer spending forecast to grow by an average of 5.2% annually between 2018 and 2022 in real terms. When looking at where consumers are spending in Malaysia, we note that food and non-alcoholic drink spending will continue to retain its dominance in consumer spending, accounting for almost 21% of total spending out to 2022. The segment will expand by an average 7.7% annually between 2018-2022, with total spending reaching MYR247bn in 2022, up from MYR185bn in 2018.

Strong Growth For 7-Eleven Malaysia
Profits After Tax, % y-o-y
Source: 7-Eleven Company Filings

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