[MARC] MARC Ratings affirms AA- rating on 7-Eleven Holdings’ MTN Programme

MARC Ratings has affirmed its AA- rating on 7-Eleven Malaysia Holdings Berhad’s (7-Eleven Holdings) RM600.0 million Medium-Term Notes (MTN) Programme with a stable outlook. The programme has an outstanding of RM350.0 million.

7-Eleven Holdings’ entrenched market position in the domestic convenience store segment and its long operating track record remain key rating strengths. These strengths are moderated by a thin operating margin, which is inherent in the convenience store business. The group is attempting to improve profit margins through the continued rollout of its 7CAFé format stores that offer higher margin ready-to-eat products. Meanwhile, rising competition in the convenience store space will necessitate ongoing investment in stores and product differentiation to sustain market leadership.

7-Eleven Malaysia Sdn Bhd, a wholly-owned subsidiary of 7-Eleven Holdings which has operated in Malaysia under an exclusive licence since 1984, has grown into the largest convenience store network in the country. The group operated 2,646 stores as at end-March 2025 (end-2024: 2,635) and is targeting to grow to more than 2,700 stores by end-2025. MARC Ratings views positively the group’s continuous store upgrades and 7CAFé store rollouts in its efforts to adapt to changing consumer preferences. As at end-March 2025, there were 592 7CAFé stores, up from 247 as at end-2023, with plans to open another 244 7CAFé stores by end-2025, primarily through the conversion of classic stores.

The rating agency notes that the planned RM756.0 million capex between 2025 and 2027, mainly for store openings, upgrades and refurbishments, will be largely funded through internal funds which also includes the remaining RM202.8 million proceeds from the disposal of Caring Pharmacy Group Berhad in 2023.

Following the RM100.0 million MTN repayment on 24 June 2025, group borrowings reduced to about RM470.0 million from RM572.7 million as at end-March 2025. Consequently, the adjusted debt-to-equity ratio — excluding the reorganisation deficit — is expected to improve to below 0.30x from 0.34x. As at end-1Q2025, group revenue rose by 10.4% y-o-y to RM755.2 million, driven by higher customer counts and transaction sizes, supported by a product mix that includes higher-value fresh foods and the increase in the number of stores. However, operating profit was lower, reflecting increased operating expenses due to higher store operation-related expenses driven by longer store operating hours, as well as the addition of new stores. Operating profit before interest, tax, depreciation and amortisation interest coverage stood at 5.0x during 1Q2025 and is expected to improve further, following the anticipated reduction in interest costs after the MTN repayment as at end-June 2025.

During 2024, group operating profit rose 1.5x y-o-y to RM142.4 million, supported by a higher revenue base. This was further aided by a 19.3% y-o-y increase in other operating income to RM192.6 million, primarily driven by higher marketing income.

Vanessa Leong, +603-2717 2931/ xinyue@marc.com.my
Cyndy Goh, +603-2717 2941/ cyndy@marc.com.my
Taufiq Kamal, +603-2717 2951/ taufiq@marc.com.my