KUALA LUMPUR: Mynews Holdings Bhd is expected to stage a potential turnaround in the financial year ending 31 October 2022 (FY22) and record better performance in the coming quarters, CGS-CIMB Research noted.
The research firms said the upward earnings growth would be mainly driven by the aggressive expansion of South Korea’s convenience store brand, CU stores, from five CU stores as of 1 October to 41 currently, with a target of 150 by end-FY22.
Secondly, Mynews’s turnaround of its food
processing centre (FPC), showing a breakeven utilisation rate (UR) of 70 per cent at end-FY22, on higher take-up of fresh food items and ready-to-eat (RTE) meals.
Further, high earnings projection will also be attributed to the company’s strong footfall recovery post the reopening of the economy with the lifting of lockdown measures since early October 2021, where interstate travel is allowed.
On earnings, Mynews’ revenue increased by 10.9 per cent quarter-on-quarter (QoQ) to RM104.1 million in Q4 FY21 on gradual footfall recovery due to the easing of movement restrictions post-Full Movement Control Order (FMCO) in mid-August 2021.
With flat operating costs QoQ, Mynews’ Q4 FY21 core net losses narrowed to RM7.2 million compared to a net loss of
RM14.2 million in Q3 FY21, partly aided by an increase in other income due to RM1.2 million from the government’s Wage Subsidy Programme.
“We estimate that average quarterly revenue per store recovered 11 per cent QoQ to RM201,000 compared to the pre-pandemic level of higher than RM270,000,” CGS-CIMB Research said.
Mynews’ FPC also reported narrower losses of RM3.47 million in Q4 FY21 than RM3.66 million in Q3 FY21 due to a higher UR.
CGS-CIMB Research also noted that the average number of operating outlets was lower at 518 in FY21 than 526 in FY20, as MyNews shuttered underperforming stores.
“We reiterate our Add rating with a target price of RM1.16 in line with its pre-pandemic average price-to-earnings (P/E).
“We continue to like Mynews as a strong recovery play in the consumer value stores (CVS) segment via its rapid CU expansion,” it said.
Re-rating catalysts include a faster-than-expected turnaround of its FPC on strong CU store outperformance while downside risks are the re-imposition of lockdown measures due to the new Omicron variant.
Source: New Straits Times
