KUALA LUMPUR: Eco-Shop Marketing Bhd is poised to benefit from the expanded Sumbangan Asas Rahmah (Sara) programme under the 2026 Budget, amid rising demand from value-seeking consumers, said RHB Investment Bank Bhd (RHB Research).
The research firm said Eco-Shop’s growing participation in the Sara initiative, which provides targeted cash aid to low-income households, could enhance brand visibility and complement its ongoing network expansion.
“As of the fourth quarter of the financial year ended May 31, 2025 (FY25), 159 of Eco-Shop’s 371 outlets were activated for Sara and management aims to expand this footprint further.
“We raise FY27–28 earnings forecasts by four per cent annually, as we expect more significant contributions from Sara once the network becomes more prominent,” it said in a note.
Following this, RHB Research lifted its discounted cash flow-derived target price to RM1.63 from RM1.51.
However, it downgraded Eco-Shop to “Neutral” from “Buy”, citing limited upside potential following a strong share price rally.
Beyond Sara, Eco-Shop continues to grow its footprint, having secured over 70 new locations for upcoming outlets.
About 20 older stores are also being refurbished with refreshed concepts and improved layouts to enhance shopping experience and boost sales productivity.
RHB Research said management is also prioritising product innovation, particularly through the introduction of seasonal and attractive products to lift spending per customer.
On the cost side, potential pressures from the Sales and Service Tax on rental and the Employees Provident Fund contribution for foreign workers, effective October, should remain manageable, supported by margin resilience.
“We expect the underpenetrated dollar store industry to continue its rapid growth by capitalising on consumer downtrading trends.
“This provides a long expansion runway for Eco-Shop. That said, we believe its valuation is fair at this juncture after the recent rally and advocate to accumulate on share price weakness,” it said.
© New Straits Times Press (M) Bhd
