KUALA LUMPUR: Retail and convenience store operator MyNews Holdings Bhd has launched Maru Café at the Intercontinental Hotel Kuala Lumpur, marking a new growth opportunity for the company, according to RHB Investment Bank Bhd (RHB Research).
Maru Café enables MyNews to tap into the rising demand for coffee and fresh food.
"We saw a large crowd of hotel guests and office workers (at the opening). The café features a cosy, relaxed atmosphere, complemented by efficient service, quick order preparation, and a wide variety of fresh food offerings, with coffee made using a more hands-on process compared to Mynews outlets," it said in a note.
The firm maintained a 'Buy' recommendation on MyNews, with a target price of 81 sen, indicating a potential 34 per cent upside from its current price.
Year-to-date, MyNews' share price has risen 23.1 per cent to 64.5 sen.
MyNews management has identified five locations for further Maru Café expansion within the next four to five months, some of which will be located adjacent to MyNews outlets to boost brand visibility.
RHB Research highlighted that with low capital expenditure (capex) and a cautious rollout to gauge market response, it does not foresee significant gestation losses from the venture.
"We understand Maru Café positions itself with competitive pricing in strategic locations, leveraging on the growing popularity of its coffee and fresh food offerings," it said.
Additionally, with Maru Café's food supplied by MyNews' food processing centre (FPC) and the planned opening of 100 new MyNews and CU stores, the FPC's utilisation rate is expected to increase.
RHB Research also anticipates that CU outlets will break even in the fiscal year 2024 and contribute to profits in the following financial year.
MyNews reported a RM1.7 million net profit in the second quarter ended April 30, 2024 thanks to improvements in in-store sales and margin. It posted a net loss of RM6.3 million for the same quarter in 2023.
The better performance was on 10.7 per cent higher revenue of RM192.8 million.
Gross profit increased by RM13.28 million or 22.2 per cent, from RM59.79 million to RM73.07 million, while the margin improved to 37.9 per cent from 34.3 per cent.
MyNews currently operates a total of 622 outlets, made up of 471 myNEWS (including 34SUPERVALUE), 131 CU and 20 WHSmith outlets.