PETALING JAYA: After posting its first quarterly loss since its listing in 2016, MyNews Holdings Bhd is geared up for a better set of performance towards the end of the year.
Although at this juncture, the second-largest convenience store chain in the country after 7-Eleven is not ready to divulge its strategies and future plans, it has earmarked some pertinent areas which would propel its growth and strengthen its position in the market.
Group CEO Dang Tai Luk told StarBiz the company is taking extensive measures to introduce new business models and enhance its concept, as well as improving infrastructures for efficiency.
“Unfortunately, we are not able to share our strategies and forward plans.
“You will see our improvements as we implement them. Basically, drastic actions in specific areas are being taken to improve earnings.
“This includes improvements in store concepts and product offerings, cost-cutting measures, infrastructure improvement for efficiency and long-term needs, continuous growth and increased marketing efforts to regain lost revenue, ” he said.
There are ongoing initiatives to improve and re-align our position, he said, adding that the company is opening a new brand bigger format store named myNEWS Supervalue in Alor Setar and Melaka to begin with.
Dang noted it would continue to do so in selected locations throughout the country.
From experience, during the movement control order (MCO), he said that in some locations, customers needed more than just the grab-and-go convenience items.
“This bigger format store carries a larger selection of day-to-day essential items to cater to the new norm at selected locations.
“We are continually improving and changing and you will be able to see that happening from time to time, ” he noted.
Mynews posted a net loss of RM2.33mil in the second quarter ended April 30,2020, compared with a net profit of RM7.95mil a year ago.
This was mainly attributed to the Covid-19 pandemic.
On the company’s closure of outlets, Dang said outlets were temporarily closed at locations which were significantly affected by the MCO but have been progressively re-opened.
“Currently, Mynews has about 5% of its outlets still closed since March 18 and they would be gradually re-opened as the situation improves, ” he added.
At present, it has 568 stores nationwide.
Dang also said that expansion plans were ongoing, with a strong focus on the domestic market.
“On outlet expansion, our initial plan before the MCO was to grow by at least 100 new outlets this year. This number has been reduced due to the pandemic and we expect to end the year with 50 to 60 new stores.
“We are a robust and innovative retail organisation and will not sit on our laurels in facing competition.
“We will continue to be a formidable local retail company that continues to improve our strategies and concepts as well as grow our market share, ” he said.
AmInvestment Bank, which is maintaining its “hold” stance on Mynews’ shares, in a report said following the easing of the MCO, footfall or traffic would gradually return and demand would slowly creep up. This would result in the group’s earnings recovering in the second half of the year, it said.
“We expect Mynews’ profit after tax and minority interest (Patami) to contract by 41% in financial year 2020 (FY20) due to the impact of the Covid-19 pandemic and the MCO. We estimate FY21’s Patami to grow by 39% year-on-year on the back of a recovery in sales, assuming that Covid-19 is fully contained by the first half of the calendar year 2021, ” the research house said.
Meanwhile, CGS-CIMB in a note said while Mynews has prepared recovery plans, including resuming store expansions and promotional efforts in anticipation of further easing of movement restrictions, it thinks that footfall recovery is likely to be gradual due to lingering Covid-19 concerns.
“As such, we temper our sales growth and margins assumptions, leading to 11.9%-26.8% cuts in our FY20-FY22F earnings per share. We downgrade our call from an ‘add’ to a ‘hold’, with a lower target price of 70 sen, in line with our earnings cut, ” it said.
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