KUALA LUMPUR (Dec 20): MyNews Holdings Bhd (KL:MYNEWS)’s turnaround in its latest financial year is expected to be sustained, said analysts, who maintained their ‘buy’ calls on the stock in view it is trading below its historical and peer valuation.
In a note on Friday, RHB said MyNews currently trades at an attractive 18.6 times FY2025 forecast price-earnings ratio (PER), below its pre-pandemic mean of 22.9 times supported by sustainable earnings recovery.
MyNews’ financial year ended Oct 31, 2024 (FY2024) results came in at 128% of consensus and 99% of RHB and CIMB Securities' estimates, their research notes showed.
“We expect the turnaround to sustain,” RHB said, citing “consistent” performance of MyNews stores and WH Smith outlets, reduced losses at CU, and a turnaround of its food processing centre.
The first quarter of 2025 is anticipated to benefit from seasonal factors such as the year-end festivities and school holidays, with supplier rebates expected to enhance near-term profitability.
Additionally, RHB anticipates that continued gross profit margin expansion will be driven by the consolidation of MyNews and CU management teams, outlet growth, better bargaining power with suppliers, and effective control of wastage.
RHB also expects MyNews’ plan to open 60 new MyNews stores and 40 CU outlets next year to increase volume and improve the utilisation of its food processing centre.
Similarly, CIMB said MyNews “will continue its turnaround heading into FY2025” with forecasted growth of 85.9% in earnings next year already incorporated prior to the latest results.
“In addition to a 7.5% year-on-year growth in FY2025F revenue thanks to higher SSSG (same-store sales growth) and new store openings, we expect MyNews’ core net profit to grow by a larger quantum owing to its (i) strategic initiatives to further optimise CU business performance; (ii) higher operating leverage, especially to benefit its FPC (food processing centre) operations; and (iii) disciplined cost management,” CIMB said.
Both RHB and CIMB maintained their target prices for the stock at 81 sen and 80 sen respectively. They also kept their FY2025 and FY2026 earnings forecasts for MyNews unchanged after the convenience store operator's latest quarter results.
According to Bloomberg, five research houses have “buy” calls on the stock and two have “hold” ratings, with target prices of between 52 sen and RM1.18 for an average of 81 sen.
Moreover, an expected rise in tourist arrivals is expected to boost foot traffic at WH Smith outlets in airports, further supporting MyNews' growth trajectory, RHB said.
RHB has maintained its "buy" call on MyNews, with a target price of 81 sen.
Separately, CIMB expects core net profit to see a larger increase due to strategic initiatives to optimise CU operations, greater operating leverage benefiting food processing centre operations, and disciplined cost management.
“We keep our 'buy' rating on MyNews with an unchanged target price of 80 sen (21 times 2026 PER, at a 20% discount to 7-Eleven’s five-year forward mean PER of 26 times to account for its smaller store footprint,” CIMB said in a note.
CIMB also cited MyNews’ plans to launch standalone Maru Coffee outlets, which signals its entry into the coffeehouse business segment to capitalise on the growing coffee market.
For FY2024, MyNews returned to profitability with a net profit of RM9.38 million, a significant turnaround from a net loss of RM10.7 million recorded in FY2023.
Full-year revenue grew 10.1% to RM804.2 million, supported by the expansion of its store network. Earnings per share for FY2024 stood at 1.25 sen, a reversal from a loss per share of 1.52 sen in the prior year.
Shares of MyNews slipped 1.5 sen to 67.5 sen at the time of writing, giving it a market capitalisation of RM502.82 million.