PETALING JAYA: Retail and convenience stores operator MyNews Holdings Bhd is well positioned for earnings growth in the near future, say analysts.
This comes after MyNews third-quarter ended July 31, 2024 (3Q24) earnings had seen an improvement in terms of both revenue and net profit. The company was able to turn around from being loss-making to posting a net profit of RM2.63mil in the quarter.
Revenue also increased by 11.67% year-on-year (y-o-y) to RM207.47mil in the quarter.
On that note, CGS International (CGSI) Research stated the growth in consumption and tourism will boost convenience store sales – consequently adding to MyNews’ revenue.
CGSI Research stated the key drivers for consumer sentiment and spending over the next six to nine months will be contributed by the flexible EPF Account 3 withdrawals, monthly cash handouts to lower income households, higher civil servant salaries from December this year and the stronger ringgit.
“All these drivers, in our view, should support the demand for lower value goods, such as those sold by MyNews. Further growth in domestic and foreign tourism should provide added revenue support,” the research house stated in a report on the company.
It expects to see a sharp recovery in MyNew’s net profit and foresees valuations rerating upwards once investors gain confidence in the sustainability of the earnings recovery.
CGSI Research reiterated its “add” call on MyNews with an unchanged target price (TP) of RM1.18 per share.
Sharing its view, Maybank Investment Bank (Maybank IB) Research noted MyNews is well positioned to showcase consistent earnings growth in sequential quarters alongside growing product demand and margin accretion from changes to its product mix and stringent cost management.
Additionally, it added the group’s CU Mart operations have turned a profit, which should further reassure investors about MyNew’s unimpeded medium-term earnings turnaround.
CU Mart stores are on track to break even by the end of 4Q24 on the back of increasing average sales, better food wastage management and product mix management.
However, Maybank IB Research said MyNews’ initial target of opening more than 100 stores in financial year 2024 (FY24) is unlikely to be met. This could be due to MyNews’s efforts on revamping and increasing productivity at its existing MyNews and CU stores this year.
“We believe this pause was much needed in order to streamline back-end processes across its brand,” it stated.
“With a steadier operational footing, MyNews will be able to resume its store expansion plans of 100 plus stores in FY25,” it added. It reiterated a “buy” call on MyNews with an unchanged TP of 80 sen per share.
