Focus Point Holdings has received a BUY recommendation from RHB Investment Bank Bhd (RHB Research), with a target price of RM1.20, implying a 52% upside and a 6% FY25 yield. The call reflects the company's strong for the first nine months of 2024 (9M24) performance, driven by robust growth in its optical segment and a turnaround in its food and beverage (F&B) division. RHB Research noted that Focus Point's below-mean valuation makes it an attractive entry point into a leading diversified market player.

For 9M24, the company's core earnings rose by 22.5% year-on-year to RM24 million, meeting 65%-66% of full-year forecasts. Revenue grew 11.7% to RM209.1 million, supported by a 13.4% increase in the optical segment and a 5.4% improvement in F&B. Store expansion played a key role, with four new owned outlets and two additional franchises, bringing the total to 198 stores. Same-store sales growth surpassed 10%, spurred by effective marketing strategies and rising myopia among Malaysians. Meanwhile, the F&B segment benefitted from higher corporate customer orders.

Despite a slight 0.6% dip in its third quarter (3Q24) revenue to RM70.6 million due to weaker festive demand, EBIT margins for 9M24 improved to 16.9%, reflecting operational efficiencies and cost control. A second interim dividend of 1.75 sen was declared, bringing the year-to-date total to 3.5 sen, in line with expectations.

Focus Point is expected to post stronger 4Q24 results, buoyed by year-end festivities and school holidays. Its optical segment is anticipated to continue its growth trajectory, backed by expanding store networks, marketing initiatives and rising demand for optical products. In the F&B segment, the company is increasing stock-keeping units offered to Family Mart and exploring new opportunities with ZUS Coffee, while refining the strategy for its HAP&PI frozen yogurt brand.