Kuala Lumpur, 22 August 2025 – CIMB Investment Bank Bhd has reaffirmed its REDUCE rating on 7-Eleven Malaysia Bhd, maintaining a target price of RM 1.63, amid mounting concerns over elevated operating costs and stretched valuation metrics.
In its first-half 2025 results, 7‑Eleven Malaysia delivered a core net profit of RM 35.4 million—a modest decline of 1.3% year-on-year. While this performance fell largely in line with expectations, it accounted for just 56% of CIMB’s full-year forecast and 54% of market consensus, indicating a less-than-steady earnings trajectory.
On the topline, the convenience chain recorded an 8.7% year-on-year increase in revenue, driven in part by the addition of 58 new stores and sustained consumer spending. However, this sales growth was tempered by rising cost pressures. Operating expenses surged 9.4%, reflecting increases in rent, staffing, and utilities. CIMB noted that these cost pressures were so significant that they overshadowed earnings performance despite solid revenue gains.
In the second quarter, a similar pattern emerged. Revenue rose 7.2% compared to the prior year, supported again by network expansion and higher foot traffic during the Hari Raya period. Still, operating cost growth accelerated to 9.5%, leading to a contraction of the EBITDA margin by 1.9 percentage points to 11.4%. The elevated costs were attributed to longer operating hours and staffing demands tied to the increased store base.
Beyond the near-term pressures, CIMB remains wary of the company’s valuation. Even with steady revenue growth and earnings expansion, the convenience retailer trades at a price-to-earnings multiple well above its historical norm—raising concerns about the stock’s attractiveness given the heightened competition and cost headwinds in the sector.
What this means for 7-Eleven Malaysia’s outlook: Despite promising top-line growth and expanding presence, rising operational costs and a high valuation multiple continue to challenge investor optimism. For long-term value recovery, analysts suggest that the company will need to contain expenses, maximise operational efficiency, and justify its premium valuation through stronger and more consistent profitability.
