KUALA LUMPUR (March 25): MyNews Holdings Bhd remains confident that "the worst is over" after posting its second consecutive profitable quarter for the financial quarter ended Jan 31, 2024 (1QFY2024) on the back of higher sales.

In a bourse filing on Monday, the convenience store operator posted a net profit of RM1.27 million for 1QFY2024, compared to a net loss of RM3.21 million in the previous year’s corresponding quarter. Quarterly revenue increased year-on-year by 6% to RM195.52 million from RM184.09 million.

Looking ahead, the company said it aims to expand its five retail brands — myNEWS, CU, WHSmith, SUPERVALUE minimart and MARU Coffee — “at a faster rate.” MyNews currently operates 619 outlets, including 468 myNEWS outlets, 132 CU outlets, and 19 WHSmith outlets.

“Therefore, we expect the sales revenue to grow in parallel with the growing store network and ongoing efforts in increasing the in-store sales,” MyNews said. All in all, the company said it expects its performance to continue to improve.

Shares of MyNews have remained largely unchanged so far this year, after an 18% decline in 2023, as the company grappled with its second consecutive year of net losses. In contrast, consumer stocks have risen amid resilient private consumption and a robust job market.

The Nov-Jan period would be MyNews’ second consecutive profitable quarter after it returned to the black in 4QFY2023 with a net profit of RM947,000.

The company did not recommend any dividend for the quarter under review.

Ahead of the results announcement, CGS International said MyNews would return to the black in FY2024 and record a strong gain in profits in the next two years, on the back of higher store openings and utilisation rate of its food processing centres.

MyNews could grow its revenue by 14.5% in the 12 months ending Oct 31, 2024 (FY2024) as the company expands its footprint by 80 to 100 stores, CGS said in a note to investors. Higher store count in FY2024 is expected to raise utilisation of its food processing centre and lift gross margins to 37%, it noted.

Further, core net profit could surge 67% in FY2025 and 70.8% to pre-Covid highs of RM31 million by FY2026, according to CGS’ estimates.

The increase in cash handouts to lower-income households by the government, via initiatives such as the Rahmah cash aid, should support consumer spending, said CGS, adding that further recovery in tourism arrivals could increase footfall and support demand for convenience store goods.

The research firm has MyNews on “add”, equivalent to a “buy” call, with a target price of 89 sen, the highest among nine analysts covering the stock.

Bloomberg data showed that prior to the result announcement, a majority of five out of nine analysts rated MyNews as “sell”, while one issued a “hold” call and three recommended “buy”, with the 12-month consensus target price standing at 57 sen.

Shares in MyNews rose 1.5 sen or 2.97% to 52 sen at Monday’s market close, giving the group a market capitalisation of RM390.2 million.