PETALING JAYA: MyNews Holdings Bhd’s long-term expansion plans remain intact despite higher borrowing to fund a new distribution centre, prompting CIMB Research to maintain a “hold” call with an unchanged target price of 51 sen.
The research house said MyNews’ proposed RM24.7mil acquisition of a 13.5-acre industrial site in Rawang, Selangor, would significantly expand its distribution capacity, supporting the convenience store operator’s target of opening 60 new stores annually through to the fiscal year ending October 2028 (FY28).
The new facility will replace the company’s existing 2.6-acre distribution centre, which is nearing full utilisation.
“We view this as a meaningful enhancement of MyNews’ supply chain infrastructure, strengthening both distribution capacity and cold-chain capabilities to support its longer-term growth strategy,” CIMB Research said.
The acquisition will be funded through 15% internal funds and 85% bank borrowings, which CIMB Research estimates will raise net gearing to about 0.44 times from 0.36 times previously. However, it believes the increase remains manageable.
Although the additional borrowings and RM20mil in capital expenditure could reduce FY27 to FY28 earnings per share by approximately 4% to 13.3%, CIMB Research has kept its earnings forecasts for MyNews unchanged pending completion of the transaction.
The research house added that the stock’s current valuation already reflects a gradual recovery in sales, while taking into account continuing margin pressure from inflation and higher operating costs.
“At 15.7 times the forecast price-earnings ratio for the calendar year of 2027, the stock is trading in line with its five-year historical average, reflecting our expectation of gradual sales recovery and persistent margin headwinds.”
