KUALA LUMPUR (Sept 25): Shares of MyNews Holdings Bhd (KL:MYNEWS) rose to their highest in two months on Wednesday, after the retail convenience store chain operator reported better-than-expected quarterly results.
Mynews rose as much as 4.5 sen or nearly 8% to 64.5 sen, its highest since July 29. The stock was trading at 64 sen at 9.30am, giving the company a market capitalisation of RM480 million. Trading volume totalled 212,600 shares so far.
Analysts scrambled to raise their earnings estimates, and now see further upside ahead for the stock, as the company's recovery appears sustainable following the fourth straight quarter of net profit.
“We believe MyNews' turnaround is now on firmer ground, backed by stronger traction for its improved range of new products”, as reflected in the strong same-store sales growth, said CIMB Securities.
The house also upgraded its recommendation for the stock to ‘buy’ from ‘hold’, and raised its target price (TP) to 80 sen from 63 sen previously, after raising its forecasts.
Shares of MyNews have risen some 23% so far this year as the company rebounded from 14 quarters of losses. Core net profit of RM8 million for the nine-month period ended July 31, 2024 (9MFY2024), meanwhile, has accounted for 80% of the consensus full-year forecast.
There are now four ‘buy’ calls on the stock following CIMB Securities’ upgrade, and one ‘sell’ rating post-earnings. The average 12-month TP is 82 sen, based on the average of five research houses’ recommendations.
In terms of valuations, a sharp recovery in MyNews’ net profit would take its forward earnings multiple to a “deeply discounted” 12 times compared with its peers’ 17 to 23 times, said CGS International.
“We believe that as the market is convinced of the sustainability of this earnings recovery, MyNews' valuations will be rerated,” the house said, noting that the company's food processing centre broke even in the third quarter ended July 31, 2024 (3QFY2024) for the first time since its inception in 2019.
The consensus now expects MyNews to rake in a net profit of RM10 million for FY2024.