KUALA LUMPUR: RHB Research expects convenience retail operator MyNews Holdings Bhd to see a more substantial earnings improvement across all business units in fourth quarter of financial year 2024 4QFY2024), after 3QFY2024 saw its fourth consecutive quarter of profits.
MyNews reported a net profit of RM2.62 million for the third quarter of the financial year 2024 (3QFY24), a turnaround from a net loss of RM2.16 million in the same quarter last year.
The company's revenue increased by 11.7 per cent, reaching RM207.5 million, compared to RM185.79 million previously.
Its 9MFY24 core profit of RM8 million met 63 per cent of RHB Research's estimates and 80 per cent of consensus forecast for the year.
RHB Research said it expects CU's losses to continue narrowing and reach breakeven by the end-FY24, supported by continuous cost optimisation efforts and the consolidation of the CU and Mynews management teams, which have strengthened bargaining power.
It said an improved sales volume from an enhanced product assortment and expansion (we forecast 80 new stores in FY25) should sustain the turnaround of the food processing centre (FPC) moving forward.
"Management has identified opportunities on the East Coast and plans to expand its brand presence there, taking advantage of lower operating costs and untapped demand. Additionally, the first Maru Coffee outlet is scheduled to be opened in 4QFY24 to meet the increasing demand for its coffee and fresh food offerings," RHB Research said.
It also expects the ramp-up in tourist arrival numbers to boost foot traffic to convenience store outlets, ie WH Smith locations in airports.
In a filing with Bursa Malaysia, MyNews attributed its improved performance in 3QFY2024 to an increase in the number of outlets, growing from 593 to 606, as well as higher in-store sales driven by an improved product mix and enhanced operations.
Its gross profit rose by RM11.47 million or 17.4 per cent, from RM65.81 million to RM77.27 million, with its profit margin improving by 1.8 per cent, from 35.4 per cent to 37.2 per cent.
MyNews noted that its brand, CU penetrated the East Coast of Peninsular Malaysia with the opening of 4 outlets in Pahang, 1 outlet in Terengganu and 4 outlets in Kelantan.
"Simultaneously, the opening of new stores in other parts of the country is ongoing, while the existing stores are improved and revamped whenever necessary."To date the store count is 631 outlets, made up of 476 myNEWS (inclusive of 34 SUPERVALUE), 135 CU and 20 WHSmith," it said.
The company said the production volume at its FPC will grow in line with the increasing sales at its retail outlets."With the continuing participation and support of the Korean and Japanese business partners in food products development and production, the FPC continues to be innovative in producing attractive products of highest quality to meet the demand of the consumers," it added.