KUALA LUMPUR: RHB Research has maintained its "Buy" recommendation on MyNews Holdings Bhd, setting a target price of 81 sen, a 26 per cent upside.
This follows MyNews' first half results for financial year 2024 (1HFY24 ended October), which met expectations.
Despite softer seasonal demand during the fasting month, the company's second quarter earnings for financial year 2024 (2QFY24) showed quarter-over-quarter improvement.
The consolidation of CU and MyNews management teams has consistently improved sales and GPM through stronger bargaining power and an enhanced product assortment, RHB Research.
"We believe valuation should re-rate with the progressive contributions from MyNews, alongside the turnaround of CU and food processing centre (FPC), driving the recovery of the profit base to pre-pandemic levels," said the firm in a note today.
RHB Research expects CU's losses to continue narrowing and reach break even by end-FY24, thanks to the consolidation of CU and MyNews management teams.
This yielded synergistic benefits resulting in stronger bargaining power and an improved product assortment.
"This should propel group profits to pre-pandemic levels once CU is no longer a drag on earnings," said RHB Research.
MyNews has demonstrated consistency and strong earnings delivery, and RHB Research believes the focus on expanding this brand will be the key driver for sustainable profitability moving forward.
The FPC's utilisation rate is expected to improve as sales volumes increase due to the expansion plan involving 100 new stores in fiscal year 2024, with 70 per cent owned by MyNews and 30 per cent by CU.