MORNING CALL:25/7/23 - video Dailymotion

Skip to player Skip to main content Skip to footer

7/24/2023

Kenanga thinks 7-Eleven got a Caring deal

Category

Transcript

Display full video transcript

00:00 Following its big news last week, we take a look at convenience store operator 7E, where

00:05 Kenanga Research is keeping its outperformed call after 7-Eleven said it was selling caring

00:10 pharmacy.

00:11 Kenanga did up its target price by 9% to RM2.59.

00:15 TLDR, 7E is selling its 75% stake in caring pharmacy to Big Pharmacy Healthcare for RM637.5

00:23 million cash at a RM850 million valuation in its entirety.

00:29 The deal values the retail pharmacy chain at 19.6 times its historical FY22 PER.

00:36 7-Eleven stated that its cost of investment in the stake is RM423.2 million.

00:42 This implies a disposal gain of RM214.3 million or RM1.30 per share.

00:48 Kenanga is positive on the disposal as it sees little synergy between 7E's CVS operation

00:53 and retail pharmacy business in the first place and believes 7E will be better off redeploying

00:59 its capital and resources towards growing its CVS business.

01:03 In the absence of caring pharmacy sales, Kenanga cuts its FY24 top-line forecast by 54%.

01:09 However, the disposal will be earnings accretive at the net level of 11% on a reduction in

01:15 interest expenses.

01:17 Analyst opinions are mixed on 7E.

01:19 Looking at BOOMberg data, there are two sells, one hold and one buy, which is Kenanga's.

01:24 Target price works out to RM2.12 or 12 cents more than its last close, a possible 6% up

01:29 side which makes sense given the two underperformed calls.

01:32 Thanks for watching.

Recommended

1:51

Up next

MORNING CALL:2/2/23

2/1/2024

6:06

NEWS: JF Tech’s Foong Wei Kuong named EY Entrepreneur of the Year

12/18/2023

1:33

MORNING CALL:18/12/23

12/17/2023

6:50

EVENING 5: Low value goods sales tax kicks in Jan 1

12/15/2023

3:19

Jalan Jalan Old Pudu

12/15/2023

1:39

MORNING CALL:15/12/23

12/14/2023

6:43

EVENING 5: Tenaga names Megat Jalaluddin as next president and CEO

12/14/2023

1:40

MORNING CALL:14/12/23

12/13/2023

7:37

EVENING 5: Sime Darby CFO Mustamir takes the helm at UMW

12/13/2023

1:34

MORNING CALL: 13/12/23

12/12/2023

6:55

EVENING 5: PM Anwar shakes up Cabinet

12/12/2023

1:05

NEWS: DAP not the biggest winner in Cabinet rejig, says Loke

12/12/2023

1:18

NEWS: Ramkarpal voluntarily vacated position, says Loke

12/12/2023

0:34

NEWS: Dr Dzul’s experience needed in MoH

12/12/2023

1:13

NEWS: PM splits Communications and Digital Ministry

12/12/2023

0:52

NEWS: EPF CEO confirmed as finance minister II

12/12/2023

10:15

NEWS: Amir Hamzah in, V Sivakumar out in Cabinet rejig

12/12/2023

2:09

MORNING CALL: 12/12/23

12/11/2023

7:03

EVENING 5: EPF CEO tipped to be finance minister II

12/11/2023

2:01

EDGE WEEKLY: No quick solution to old-age poverty ‘time bomb’

12/11/2023

5:43

NEWS: Matrix Concepts shoots for the stars

12/11/2023

1:21

MORNING CALL:11/12/23

12/10/2023

7:01

EVENING 5: YTL Power strikes deal with NVIDIA

12/8/2023

1:59

NEWS: Pacific Senior Living launches Acacia

12/8/2023

0:51

Former Aide Claims She Was Asked to Make a ‘Hit List’ For Trump

9/27/2023