MYNEWS’s 9month results beat expectations due to stronger-than expected rebound in sales on the economy reopening. Quarter 3 net loss narrowed to RM1.5m from the RM10.2m posted in the preceding quarter. Kenanga reduced its FY22F net loss by 35% and raise FY23F net profit by 3%. It has also raised the TP by 4% to RM0.52 (from RM0.50) and upgraded the stock to OUTPERFORM from UNDERPERFORM.
The losses for the year up to 9 months came in narrower than expectations, versus Kenanga’s full-year net forecast of RM33m and the full-year consensus net loss estimate of RM25.5m. The variance againstforecast came largely from a stronger-than-expected rebound in sales on the economy reopening. Overall revenue grew by 52%, driven by a strong rebound in sales as the economy reopened, and the addition of 90 new CU outlets.
- Meanwhile, the lnarrowing of loss was attributed to a better product mix with high-margin CU fresh food and improved inventory wastage control.
- Outlook for Mynews continues to improve its topline by expanding its CU business by opening new outlets and longer operating hours, ramping up its utilization rate of the food processing center and is on track to meet the 70% breakeven by end-2022. The research house expects better earnings contribution from WH Smith stores due to reopening of international borders.
- Going forward, a strong topline growth fuelled by higher consumer traffic and better product mix should mitigate additional costs incurred in the opening of new stores and promoting CU stores.
