Mynews Holdings Bhd’s (Mynews) operating outlook is improving as in-store sales rise on better product offerings, as well as increasing store footfall during the festive season and school holiday period, according to Maybank Investment Bank (Maybank IB).
“The expected turnaround in the group’s CU (convenience store chain) and its food processing centre (FPC) may also aid in the group’s earnings performance in FY24E,” it said in its briefing update today (Dec 26).
Hence, the research house leaves its earnings estimates, BUY call and TP of 62 sen (1.7x FY24E PBV, -1SD to mean) unchanged.
“The eventual turnaround in both CU and its FPC will also remove existing roadblocks towards a sustainable positive earnings growth
trajectory, in our view,” it added.
At Mynews’ 4QFY23 results briefing for analysts, Maybank IB said management shared that average sales per store at both Mynews and CU have been steadily improving.
“Average ticket sizes for both brands are currently above RM10 and the group will continue to focus on rolling-out new fresh food stock keeping units (SKUs) to align with consumer preferences.
“Separately, the group has indicated its intention to open a dedicated outlet for Maru Kafe sometime in FY24E but did not share any store opening targets at this juncture,” the research house added.
Post briefing, Maybank IB said it understood that CU has not broken even in 4QFY23 but the convenience store chain’s performance is on track with internal targets.
“Mynews is in the midst of merging various departments such as marketing and merchandising, which may see potential cost savings coming through in the next 6 to 12 months, we believe.
“Meanwhile, its FPC is still loss making, with a loss of RM1.7 million in 4QFY23. However, Mynews is confident that it will turn profitable in FY24E.”
The risks to Maybank IB’s calls are poor execution or inability to find suitable store locations, which could hinder new store openings and revenue growth.
“Additionally, slower consumption demand growth could result in falling same store sales growth. Higher operating expenses from higher minimum wage and higher rental could also adversely impact earnings,” it added.
