RHB Research has maintained a “Buy” recommendation for Mynews Holdings Bhd at MYR1.22 TP, implying a 42% upside.
It said that its DCF-derived MYR1.22 TP is unchanged, implying a 29x FY22F P/E, which is around its 5-year mean and at a slight discount to 7-Eleven Malaysia’s (SEM MK, BUY, TP: MYR1.85) valuation of 31x FY22F P/E.
It said that it continues to like Mynews as an attractive proxy to the recovery theme, having yet to benefit from the full-fledged and sustained reopening of the economy, expected to take place next year.
Meanwhile, It said that it remains upbeat on CU’s aggressive expansion plans, with its scalability and synergistic benefits expected to underpin earnings growth in the medium to long term.
RHB said that retail sales have only seen a mild improvement for the quarter – due to the gradual relaxation in movement restrictions – and it believes that the prospects of a sustained recovery have yet to translate to a full-fledged recovery in foot traffic and sales performance for Mynews.
“With the expectation of a return in office crowds and the reopening of international borders in 2HCY22, we can expect earnings recovery to be much stronger in FY22, as most Mynews stores are located in the Klang Valley,” it said.
RHB said that it also like the scalability prospects of its CU brand, which should underpin earnings growth in the medium to long term – corroborated by its aggressive expansion plans (with over 40 outlets at the time of writing). “Considering the brand’s positive reception, we do not rule out the possibility of a shorter gestation period and positive contribution to earnings,” it said.