PETALING JAYA: MyNews Holdings Bhd’s earnings outlook is expected to remain subdued in the near term as rising utility and operating costs put pressure on margins, despite continued revenue growth from store expansion and resilient consumer spending.
CGS International (CGSI) Research said the convenience store operator’s nine month financial year 2026 (FY26) core net profit of RM9.5mil came in below expectations, accounting for only 49% of its FY26 forecast and 61% of Bloomberg consensus estimates.
The research house said the earnings shortfall was mainly due to weaker-than-expected margins, with gross profit margin contracting 0.6 percentage point year-on-year (y-o-y) to 37.5%, while selling and distribution expenses rose 9% y-o-y and 6.1% quarter-on-quarter.
“Looking ahead, we expect earnings momentum to remain subdued in the near term,” CGSI Research said.
While revenue growth should continue to be supported by store expansion and resilient consumer spending, it expects margin recovery to remain constrained by higher operating expenses, particularly electricity costs and ongoing in-store sales promotions.
The research house noted that MyNews’ extensive store network, which has significant refrigeration, lighting and air-conditioning requirements, makes it susceptible to higher utility tariffs.
“Hence, we believe elevated utility costs will continue to weigh on profitability in the coming quarters,” it said.
Following the weaker-than-expected results, CGSI Research cut its FY26 to FY28 core net profit estimates by 11% to 38%, reflecting more conservative margin assumptions and a higher operating cost environment. It also downgraded the stock to a “hold” from “add” and lowered its target price to 45 sen from 66 sen.
CGSI Research, nevertheless, expects MyNews’ store expansion strategy to remain intact.
The research house sees ongoing store additions and a broader ready-to-eat product offering supporting basket sizes and revenue growth.
The research house estimates revenue will grow about 10% annually in FY26 and FY27, followed by 9% growth in FY28.
It expects the group to add 60 stores annually over FY26 to FY28, while return on equity is projected to recover to about 12% by FY28 as profitability and operational efficiency improve.
However, CGSI Research expects gross profit margin to remain around 37.5% to 38% despite a projected 9.7% three-year revenue compound annual growth rate.
