PETALING JAYA: MyNews Holdings Bhd expects stronger sales for the financial year 2025 (FY25) led by improvement in consumer spending, in line with higher civil service salaries and minimum wage increases.
Its ongoing efforts to constantly improve its sales mix to attract more consumers also contribute to the positive outlook, said CIMB Securities Research.
It expects the food processing centre’s (FPC) turnaround to sustain, driven by higher volume from outlet expansion.
The research house also said MyNews’ management indicated that FPC’s production has increased despite lower wastage led by its meticulous inventory management and the selection of optimal store keeping units (SKUs).
WHSmith delivered its strongest performance in the fourth quarter of FY24 (4Q24).
It expects continued improvement, supported by the rebound in tourist arrivals.
Meanwhile, Maybank Investment Bank (Maybank IB) Research’s MyNews FY25 earnings growth projection of 102% year-on-year has already imputed for stronger sales volume from consumer sentiment improvements, and better group margins in absence of losses from its FPC and CU stores.
As at end-October 2024, MyNews had 644 stores – MyNews with 482, CU with 141, Maru Coffee with one and WH Smith with 20 – and it targets 100 new stores in FY25.
CIMB Research in a report said the group has managed to largely optimise its back-end operations and is confident that its current operations are capable of supporting a larger store network.
The research house had imputed total net new store additions of 50, 40 and 30 into FY25, FY26 and FY27 earnings forecasts, respectively. RHB Research, meanwhile, believes the effective tax rate (ETR) for 4Q24 was lower at 18.9% due to adjustments to tax provisions finalised following the auditors’ review.
The FY24 ETR was elevated at 44.6%, mainly due to CU’s losses.
Its forecast is for FY25 ETR at 24%, in line with the pre-pandemic average during profitable years, as it expects CU to achieve a turnaround in FY25.
All three brokerages maintained their “buy” calls on the stock with Maybank IB Research and CIMB Research’s target prices (TP) at 80 sen, while RHB Research has a TP of 81 sen per share.
RHB Research noted the key risks to its call include delays in CU’s turnaround, weaker-than-expected consumer sentiment and higher-than-expected operating costs.
At 18.3 times FY25 price earnings ratio, CIMB Research believes that MyNews’ valuations are attractive, given its robust earnings growth profile with a three-year net profit compounded annual growth rate of 48.3% across FY24 to FY27 after returning to the black in FY24.
Its established brand name in Malaysia’s convenience store segment, and the more inelastic demand experienced by convenience store operators, including MyNews, owing to their essential nature.
