PETALING JAYA: MyNews Holdings Bhd, which has been in the red since financial year ended Oct 31, 2020 (FY20), has bright prospects ahead, says Maybank Investment Bank (IB) Research, which expects the convenience store operator to return to the black in FY23.
In a report, Maybank IB Research said MyNews outlook for FY23 is turning positive, but further improvements in its CU mart and food processing centre (FPC) operations are needed for the group’s earnings to recover back to pre-pandemic levels.
For the first quarter ending Jan 31, 2023 (1Q23), Maybank IB Research expects MyNews’ overall sales to be better on a quarterly basis, mainly driven by strong sales during the school holidays in December 2022, fuelled by the festivities season.
“Sales momentum in November 2022 and early-January 2023 were lacklustre as consumers geared up for higher spending during the year-end and Chinese New Year festivities respectively,” Maybank IB Research noted.
On the matter of its labour issues, the research house noted MyNews requires an additional 10% to 15% of its total workforce, or 300 to 500 staff, for the group to operate at optimal levels.
The research house stated MyNews is taking a breather from aggressive store expansion.
According to Maybank IB Research, MyNews targets to open about 50 new stores in FY23 with 80% of new stores earmarked for CU mart and the remainder for Mynews and Mynews Supervalue stores.
“Its expansion of CU stores will slow down given that adequate economies of scale has been attained in order to aid its FPC utilisation rate, which is about 60%, and overall customer reach,” the research house stated.
Going forward, MyNews will focus on reducing in-store wastage rate and improving its product mix, Maybank IB Research said.
“Separately, its FPC is on-track to breakeven by end-FY23 at between 70% and 75% utilisation rate,” it added.
Maybank IB Research, which made no changes to its earnings estimates, believes consumers will adopt a more cautious stance on spending throughout FY23 as inflationary pressures take a heavier toll on overall household income.
“Although FY23 earnings are expected to return to the black, earnings recovery to pre-pandemic levels will be gradual,” it concluded.
For FY22, MyNews reported a net loss of RM18.2mil and revenue of RM631.3mil, while for FY19, the group posted a revenue and net profit of RM517.8mil and RM27.6mil, respectively.
Maybank IB Research, has maintained a “buy” call on MyNews with an unchanged target price of 80 sen per share, as it forecast MyNews to post a core net profit of RM6mil in FY23.