This article first appeared in The Edge Malaysia Weekly on July 3, 2023 - July 9, 2023

MYNEWS Holdings Bhd could see the emergence of a new shareholder — businessman and Umno politician Datuk Seri Johari Ghani — in the company, say sources.

According to a source, Johari, who reclaimed the Titiwangsa parliamentary seat in the 15th general election last year, had been eyeing a block in MyNews for a while now “but the pricing was not right”.

Johari’s interest in taking up a block in MyNews coincided with the latter’s announcement of a proposed fundraising exercise through the issuance of new shares.

The company had also recently seen some analysts, including Kenanga Research, RHB Research, CLSA Ltd and KAF Equities downgrade its counter.

According to a poll by Bloomberg, three research houses had a “sell” call on MyNews, four a “hold” and two a “buy”.

On June 27, MyNews announced that it plans to raise RM29.33 million via a private placement involving the issuance of 68.2 million new shares, which is about 10% of its total issued shares.

The company said the proposed placement has been identified to third-party investors at an issue price to be determined later.

When contacted, MyNews founder and group CEO Dang Tai Luk declined to comment on the profile of the new investors.

Interestingly, Dang has slowly raised his equity interest in MyNews by more than two million shares at around 46 sen apiece to 401.6 million, or a 58.87% stake, since early May.

The proceeds from the proposed share sale, amounting to RM29.33 million, is based on an illustrated price of 43 sen per share. MyNews closed at 42 sen per share last Friday, giving it a market capitalisation of RM286.5 million.

The company plans to use the proceeds from the cash call to open up to 48 convenience stores in Malaysia within the next 12 months.

“The group is in the midst of identifying suitable geographical locations to set up its new outlets and is unable to ascertain the location of each new outlet at this juncture,” it said in a filing with Bursa Malaysia.

An industry observer believes Johari’s interest in MyNews could be due to his experience in the consumer sector.

“He is invested in a local company that is involved in bottled drinks, for which MyNews could be used as a distribution channel,” a source says.

An accountant by training, Johari shot to fame from his time at the helm of KFC Holdings (M) Bhd and QSR Brands Bhd back in the 1990s. At the time, he owned a 5% stake in KFC and had another 5.5% in QSR — both of which stakes he sold in 2005 after a boardroom tussle.

Soon after, he bought into CI Holdings Bhd.

In 2011, CI Holdings disposed of Permanis Sdn Bhd, a soft drink bottling plant, to Japanese beverage giant Asahi Group Holdings Ltd for a whopping RM820 million. The transaction was touted as a record back then. More impressively, CI Holdings had only paid RM72 million for Permanis in 2005.

Fast forward to today, and Johari is the single largest shareholder of KUB Malaysia Bhd, holding a 32.96% stake in the company, which he had bought for RM121.08 million or 68 sen per share in 2019.

His interests in CI Holdings (32.96%) and KUB are held under JAG Capital Holdings Sdn Bhd.

Looking at his shareholding in both CI Holdings and KUB, it would be fair to say that Johari prefers to have a controlling stake of at least 30% in the companies he invests in. However, it is unclear if it is the case with MyNews.

Shares in MyNews have been under pressure since the beginning of the year, declining more than 33% on the back of disappointing quarterly financial results.

An analyst reckons that the group’s aggressive expansion of both the MyNews brand and CU stores — South Korea’s leading and largest convenience store chain, has been a drag on the group’s financial performance.

The company operates myNEWS convenience stores, Korean CU, Supervalue minimart and WHSmith travel retail. Currently, it operates 615 outlets in total, made up of 463 myNEWS, 133 CU and 19 WHSmith outlets.

For the first quarter ended March 31, 2023 (1QFY2023), MyNews posted a net loss of RM6.28 million, lower than the RM10.22 million registered a year earlier.

Kenanga Research has cut its earnings forecast for MyNews in FY2023 and FY2024 by 53% and 46%, respectively, to reflect higher operating expenditure and depreciation charges, and a longer gestation period for its CU stores.

“MyNews disappointed again with a first half FY2023 net loss of RM9.5 million versus our full-year net profit forecast of RM6.5 million, largely due to its inability to grow its top line enough to absorb higher costs and higher-than-expected depreciation charges,” it says in a June 20 report.

Nonetheless, the research house has a bullish view of the long-term growth of MyNews on the back of the under-penetrated convenience store market in Malaysia, with some 111 convenience stores per million population currently compared with Thailand’s 291 Japan’s 445 and Australia’s 268. 

Save by subscribing to us for your print and/or digital copy.

P/S: The Edge is also available on Apple's App Store and Android's Google Play.