CGS International has downgraded 99 Speedmart Retail Holdings Bhd, despite the company posting positive results in the second quarter following a continued high valuation.
The firm said it preferred MR DIY Group (M) Bhd for exposure in the consumer discretionary segment, where both retail giants operate.
99 Speedmart's net profit rose 22.1% to RM153.2 million for the quarter ended June 30 compared to RM125.5 million in the same period last year.
Furthermore, second-quarter revenue rose 11.9% to RM2.71 billion compared to RM2.42 billion a year ago, while first-half revenue jumped 9.8% to RM5.32 billion.
The increase was also supported by new outlet openings, higher transaction volumes and strong consumer purchasing power following the minimum wage hike and government social assistance.
99 Speedmart shares also fell 5 sen or 2% to RM2.45, taking the group's market value to RM20.58 billion.
MR DIY shares closed unchanged at RM1.55, down 17% this year and 3% lower than their IPO price of RM1.60.
