KUALA LUMPUR: The trading stock of MyNews Holdings Bhd slumped five sen or 8.7% at the opening bell following the release of its latest quarterly result yesterday.
As at 9.40am, the convenience retail chain operator's stock had slid further to 50 sen a share, representing a 13% decline from the reference price of 57.5 sen a share, on the back of 1.98 million shares exchanging hands.
Kenanga Research said MyNews' 1QFY23 results disappointed as it unexpectedly slipped back into the red.
The group posted a net loss of RM3.2mil, in contrast to Kenanga's full-year net profit forecast of RM23.8mil and the consensus full-year net profit expectation of RM14.4mil.
According to Kenanga, the group was unable to sufficiently grow its top line to absorb higher costs, particularly labour and electricity. The negative performance also pointed to a higher gestation period for its CU stores
Kenanga said it slashed its FY23-24 earnings projection by 62% and 38% and cut its target price by 34% to 50 sen a share. The new price forecast led to a downgrade to "underperform" from "outperform".
"MyNews’s top line will continue to expand driven by new CU outlets and longer operating hours, and a further rise in utilisation at its FPC to 80%-90% based on our estimate from 60% currently, backed by rising fresh food sales and solved labour issue.
"A stronger top line, coupled with a better product mix should help to absorb start-up cost (including promotion cost) for new CU stores," it said in a results note.
Kenanga added that it likes MyNews for the still underpenetrated convenience market in Malaysia, its return to a growth growth with the turnaround of its FPC and new stores in FY23 and its differentiation from competitors through Korean products.
"However, we are concerned over the volatility in its quarterly earnings and a seemingly longer gestation period for its CU stores."