Higher footfall good for MyNews

The third MCO, which started in June, has widened Mynews’ net losses for the third quarter ended July 31 to RM15mil from RM6mil net loss a year earlier.

PETALING JAYA: The worst could be over for convenience store operator MyNews Holdings Bhd as the movement control order (MCO) in many states have eased gradually.

The third MCO, which started in June, has widened Mynews’ net losses for the third quarter ended July 31 to RM15mil from RM6mil net loss a year earlier.

Analysts, however, are expecting a better footfall growth on the back of encouraging vaccination progress and decreasing number of Covid-19 cases moving forward.

“The worst is likely over as the movement restrictions should ease in the fourth quarter of this year, leading to a recovery in footfall and a resumption of MyNews expansion drive,” CGS-CIMB Research said in a report.

The research house added that the normalisation in footfall could also lead to a better product mix, ready-to-eat food compared with lower margin essential items.

“In our view, this could aid in gross margin recovery. We also expect the group to aggressively resume the opening of new CU-branded outlets to meet its target of about 30 stores by end-2021,” it said.

However, CGS-CIMB has cut its financial year (FY) 2021 earnings per share (EPS) forecast on MyNews to factor in the weak sales in the third quarter (Q3) FY21.

It has maintained a “hold” call on the stock with a lower target price of 90 sen per share in line with its earnings downgrade.

The target price is based on an unchanged 24 times price earnings ratio of the calendar year 2022 forecast, which is in line with the regional convenience store peers.

“We think the current valuations fairly reflect the near-term recovery prospects and risks.

“Notwithstanding near-term challenges, strong reception for its new CU outlets and MyNews supervalue stores could drive medium- to long-term growth,” CGS-CIMB said.

RHB Research has also reduced its FY21 forecast on MyNews, projecting a deeper loss of RM40mil for the year as it anticipated Q4FY21 forecast losses to narrow as consumer confidence picks up – following the relaxation in movement controls and the successful inoculation drive.

It added that MyNews had missed its expectation and the consensus estimate of full-year losses of RM16mil to RM19.5mil.

It said MyNew’s accumulated losses of the nine-month period ended July 31, 2021, was at RM34.2mil due to the softer business environment, as operations were disrupted by the lockdown that extended well into Q3FY21.“Although the results missed expectations, we continue to like MyNews for its positioning as a prime beneficiary of a return in foot traffic, upon the further relaxation of movement restrictions,” said RHB Research.