PETALING JAYA: Bonia Corp Bhd is expected to post stronger-than-expected sales for the third quarter (3Q) of its financial year ending June 30, 2022 (FY22).

       This was mainly driven by the company’s ongoing brand-building exercises through investments in digital marketing as well as more marketing events.

       According to CGS-CIMB Research, Bonia will likely see small dip in sales of 20% quarter-on-quarter (q-o-q) compared with its earlier expectations of a 50% q-o-q decline.

       The brokerage raised its earnings estimates for Bonia for FY22-24 by 19.7% to 38.5% to account for higher-than-expected sales and better economies of scale.

       Reiterating its “add” recommendation, CGS-CIMB Research also raised its target price for Bonia to RM3 from RM2.50 previously.

       “We view Bonia as a strong proxy for a recovery in consumer discretionary spending,” said the brokerage, which recently went on a meeting-cum-site visit to Bonia outlets.

       Since FY19, Bonia has been streamlining its outlet/counter count, with a 17% decline since then to 555 outlets (across Malaysia and other overseas markets), shuttering those incurring losses due to slow brand growth and high operating costs.

       “With the closures, Bonia is able to shed loss-making outlets while implementing an omni-channel strategy (including venturing into e-commerce) to grow its business. Particularly in Malaysia, Bonia aims to open more boutique-type stores (four to six new outlets in the next two years), especially in strategic locations (high footfall). The outlets will carry contemporary designs to boost consumer appeal as part of its ongoing rebranding exercise,” CGS-CIMB Research said.