PETALING JAYA: MyNews Holdings Bhd is expected to deliver a stronger second half of financial year ending Oct 31, 2026 (2H26), supported by normalising customer traffic, continued outlet expansion and improving operational efficiency at its food processing centre, despite persistent inflationary pressures and a challenging retail environment.
The convenience store operator is also seen benefitting from gradual improvements in consumer spending sentiment if geopolitical tensions in West Asia continue to ease, although any recovery is expected to be moderate amid ongoing cost pressures.
CIMB Research, however, turned more cautious on the group’s prospects following weaker-than-expected second-quarter (2Q26) results and downgraded the stock to “hold” from “buy”, while lowering its target price to 51 sen from 75 sen previously.
“We maintain our view that MyNews will likely post a stronger 2H26, driven by normalised footfall post Ramadan, particularly across the high-traffic ready-to-eat and beverage segments, continued store rollouts, and further deployment of automation at its food processing centre (FPC), which should improve economies of scale,” the brokerage said.
“While easing US-Iran tensions could support gradual recovery in consumer sentiment and spending patterns, we expect the rebound to be measured given lingering inflationary pressures,” it added.
It added that higher input costs and the expanded service tax scope covering leasing services are likely to continue weighing on margins and operating leverage in the near term.
Nevertheless, it believed that cost optimisation measures and better utilisation rates at the FPC should help cushion some of the pressure heading into 3Q26.
The research house noted that MyNews’ 2Q26 core net profit fell 89.8% year-on-year (y-o-y) and 92.9% quarter-on-quarter to RM0.3mil, hurt by weaker sales and a sharp rise in operating expenses.
Revenue was affected by seasonal weakness as the earlier timing of Ramadan in 2026 fell within the quarter and disrupted sales momentum.
Consumer spending was also dampened by softer sentiment following the outbreak of conflict in West Asia, affecting discretionary purchases within the convenience retail segment.
The earnings weakness came despite the group increasing its store network to 704 outlets, up 10.2% from a year earlier, alongside improved in-store sales performance.
Earnings before interest, taxes, depreciation and amortisation margin declined to 12%, reflecting lower gross margins from a less profitable sales mix and promotional activities, higher administrative and distribution expenses associated with network expansion, and weaker operating leverage.
For 1H26, revenue rose 11% y-o-y, supported by outlet expansion and stronger in-store sales.
However, core net profit fell 34.3% to RM4.6mil due to margin compression arising from higher operating expenses and increased depreciation charges.
CIMB Research noted that MyNews’ 1H26 core net profit amounted to only 19.8% of its forecast and 20.5% of Bloomberg’s forecast, hence missing expectations.
Following the earnings disappointment, the brokerage reduced its FY26 to FY28 earnings per share forecasts by between 22% and 25%.
Accordingly, its target price for MyNews’s stock was revised down, based on a lower 18.2 times 2027 price-to-earnings (PE) multiple, compared with 21 times previously.
“We lowered our target PE multiple to account for softer consumer sentiment and intensifying competition within Malaysia’s convenience store industry,” CIMB Research explained, adding that it saw limited upside to the company’s current share price.
“While valuation appears attractive at 19.4 times 2026 PE, representing a 16.7% discount to the consumer discretionary sector’s calendar year 2026 weighted-average PE of 23.3 tines, we take a more cautious stance given Mynews’ large exposure to the convenience retail segment, weaker consumer sentiment, and rising inflationary pressures,” it highlighted.
