Bison’s 9M17 in line, potential long-term growth to be unlocked

KUCHING: Bison Consolidated Bhd’s (Bison) first nine months of 2017 (9M17) net profit is in line with expectations, with some analysts noting that the group’s potential long-term growth will be unlocked.

As per the group’s filing on Bursa Malaysia, Bison’s net profit for the nine-month period ended July 31, 2017 amounted to RM18.74 million, compared to RM13.83 million in the corresponding period of 2016.

Bison’s reported 9M17 net profit of RM18.7 million was within the research arm of Kenanga Investment Bank Bhd’s (Kenanga Research) and consensus expectations at 73 per cent and 77 per cent of total annual forecasts, respectively.

The group’s cumulative earnings were also in line with AmInvestment Bank Bhd’s (AmInvestment Bank) and consensus estimates, both at 78 per cent.

As expected by both AmInvestment Bank and Kenanga Research, no dividend was declared during the quarter.

According to Kenanga Research, Bison is targeting to open at least circa 70 new outlets per year over the next two years from financial year 2017 (FY17) to FY18 (FY16: 294 stores), translating into organic outlets growth of 24 per cent, which is higher than 7-Eleven Malaysia Holdings Bhd’s (7-Eleven) organic growth of nine per cent.

AmInvestment Bank noted that the group’s 9MFY17 cumulative store openings totalled 44.

However, the research firm expected that for the final quarter Bison will achieve the group’s intended store expansion of 70 for FY17.

“Notably, Bison commands higher gross margins against 7-Eleven Malaysia despite having only 16 per cent of 7-Eleven’s 2,122-strong stores and by extent, lower bargaining power with its suppliers.

“Therefore, further gross margin expansion is well within reach in tandem with Bison’s aggressive store expansion strategy,” it said.

Meanwhile, Kenanga Research noted that the expected commissioning of Bison’s sub-distribution centre (DC) in Johor by end-2017 will facilitate more outlets opening in Johor and Melaka with improvement in delivery time, and reduction in operating expenses.