Store expansion to fuel MyNews growth

Changing expectations: A myNEWS.com outlet at Kota Damansara. The firm says the convenience retail sector will continue to evolve rapidly within an increasingly competitive environment.

CONVENIENCE retail chain MyNews Holdings Bhd, which operates the CU convenience stores in Malaysia, says it expects its financial performance to improve in the second half of the year as headwinds ease and operational initiatives start delivering results.

Group chief executive officer Dang Tai Wen says the company’s earnings and margins were “relatively stable” in the February-to-April quarter, mainly due to two factors – the Ramadan period, which typically sees lower footfall and softer sales, and a more cautious consumer spending environment.

“These are near-term and seasonal in nature. We expect performance to improve in the second half of the year as these headwinds ease and our operational initiatives deliver results,” Dang tells StarBiz 7.

For the first quarter ended Jan 31, MyNews made a net profit of RM4.1mil on revenue of RM238.4mil, compared with a net profit of RM3.9mil on sales of RM215.9mil for the same period a year earlier.

The company has plans to open about 80 new stores in its financial year ending Oct 31, 2026 (FY26) from 702 stores at the end of the fourth quarter of FY25 (4Q25).

Besides CU stores, the group also operates other brands of convenience stores such as myNEWS, myNEWS Supervalue, and Maru Café as well as WHSmith stores.

“The cost of expansion is being financed through current working capital and bank borrowings,” Dang says.

He admits that the impact of the Middle East conflict has gradually begun to affect the business environment, particularly through rising costs across goods and services.

“However, to a certain extent, the impact on us has remained relatively insulated and contained,” he says.

Notably, there has been slower-than-anticipated footfall as tourist arrivals reduce, and consumer spending soften because of the ongoing global conflict.

“However, the company is confident that this temporary top-line setback will be offset in the longer term by its ongoing store expansion strategy,” Dang adds.

Traditionally, the main profit contribution for MyNews has come from its retail categories.

“Today, our earnings profile has evolved into a more balanced contribution from retail, manufacturing and strategic partnerships.”

Dang says food remains an integral part of the company’s growth strategy.

Some of its food products that it sells at its stores include fresh onigiri, ready-to-eat meals, sandwiches and wraps, and hot snacks.

“We will continue to pursue greater expansion, innovation and partnership within this segment as a key driver for future growth.”

Dang says since JAG Capital Bhd emerged as a substantial shareholder of MyNews in December last year, the partnership has brought “significant positive momentum” to its business.

“JAG Capital has been an exceptional partner, providing valuable strategic insights and industry expertise, particularly within the fast-moving consumer goods and quick service restaurant segments.

“These two segments are integral to our success, bringing products and food together as a unified consumer offering,” Dang adds.

He says its involvement has strengthened the confidence of the group’s management team, enhanced its ability to identify growth opportunities, and further accelerated the company’s long-term expansion plans.

Industry outlook

Dang reckons from an industry perspective, the convenience retail sector will continue to evolve rapidly within an increasingly competitive environment.

“Consumer expectations are also changing quickly, particularly in areas such as accessibility, product innovation and food offerings.”

He says one of the key challenges facing the industry remains affordability.

“Consumers today are placing greater emphasis on value and affordability, often prioritising price over quality. As such, ­operators must continuously ­balance cost management, product innovation and customer experience to remain competitive and relevant in the market,” he says.

In a report to clients in March, RHB Research analyst Soong Wei Siang says he expects MyNews’ 2Q26 performance to remain ­relatively healthy at the core myNEWS level, supported by continued store openings.

CU and Maru may see softer performance due to fasting month seasonality, but should recover quickly thereafter, he says.

“Meanwhile, to capture tourist spending, four WHSmith outlets were opened at the Kuala Lumpur International Airport in 1Q26,” he says, adding that outlet expansion has been flattish in recent years.

“We expect these stores to continue providing incremental earnings support.

“We note that its Food Production Centre has been consistently profitable, with stable volume pick-up and improving utilisation. We expect this trend to continue, supported by an improving product mix and effective cost control.”

Citing the company’s management, Soong also says the group is focused on more strategic location selection.

Core myNEWS remains the main earnings backbone, particularly in captive locations such as hospitals, universities and highway stops, while CU continues to be positioned as the second growth driver, he notes.

Newer outlets are seeing encouraging performance, although overall growth is still dragged by older stores ­(particularly CU), which management is looking to rationalise or close to improve efficiency, Soong says, adding that in his view, this recalibration towards better locations is key, given MyNews’ location-driven business model.

RHB Research has a “buy” call on the stock with a target price of 70 sen.

At last look, the stock was at 47.5 sen apiece, valuing the entire company at RM365mil.

Key risks include higher-than-expected operating costs and weaker store productivity, RHB Research notes.