Daifuku rated AEON (0984.HK) as a buy, with a target price of HK$12.30, which is equivalent to 10 times the predicted price-earnings ratio for fiscal year 09.

Daifuku said that AEON was able to fund its expansion through internal resources because of its strong cash position (net cash of HK$1.4 billion by the end of 2008), adding that the economic downturn would only have a moderate impact on AEON's sales. Since necessities of life dominated AEON's turnover, food sales accounted for 42% of turnover in 2008.

As a result, AEON is not actually affected by the financial crisis and may benefit from increased market opportunities, Daifuku said. Daifuku also said that the increase in the contribution of southern China may offset the impact of poor profit prospects in the Hong Kong market.

The stock rose 0.64% yesterday to close at HK$9.46.