KUALA LUMPUR: RHB Research is confident Focus Point Holdings Bhd
's food and beverage (F&B) unit will turn a profit in FY24, despite a slow start in 1Q24 due to the Ramadhan period.
This comes as the group laid off excess workers at its central kitchen in 4Q23.
According to RHB, Focus Point's largest corporate customer, Family Mart, which contributes 80% of F&B revenue, will increase orders for stock-keeping units from 13 to 24 from July onwards.
It said this is expected to generate an additional RM1mil in sales per month, up from the current RM2mil.
The group's recently onboarded customers Zus Coffee and Cotti Coffee are still in the pilot phase but are expected to increase orders once the products are fully rolled out to their stores in Malaysia.
"This should boost the utilisation rate of its central kitchen to 80-90% by end-FY24 from the current 70% breakeven level," said RHB.
Additionally, it noted that Focus Point management plans to continue improving product quality and offer more toppings for its new HAP&PI frozen yogurt brand, while also targeting the opening of a second store in Johor in Sep 2024.
Meanwhile, RHB continues to like Focus Point's dominant position in the optical segment. It said 1Q24 optical sales growth was robust despite minimal store additions, and likely outperformed most retailers. Same store sales growth was 11% year-on-year.
"Unlike its rivals, Focus Point has been active in holding more roadshows and marketing activities to build brand visibility and gain market share.
"Additionally, corporate optical sales (7% of total optical sales) doubled (109% y-o-y), with intensified collaboration with third-party administrators (typically insurance firms with expertise in managing employee benefit claim processes) to onboard corporate customers," it said.
Focus Point said strong sales growth has been maintained into 2Q24 so far. Its expansion plans have progressed smoothly with 18 new outlets in 2024.
It added that the revised civil servant salary schemes and the restructuring of Employees Provident Fund accounts could further boost sales.
RHB maintained its earnings forecasts and "buy" call with a target price of RM1.12.
