Mynews Holdings Bhd continues to demonstrate strong performance, with the company's 9MFY24 results marking its fourth consecutive profitable quarter. The steady recovery and growth trajectory remain on course, driven by a combination of sales growth and ongoing cost optimisation efforts. Analysts from RHB Stock Broking House have reiterated their BUY call, maintaining a target price of RM0.81, suggesting a 34% potential upside. At its current valuation of 15.1 times FY25F P/E, Mynews presents an attractive opportunity for investors, particularly as it benefits from consistent earnings improvements, a narrowing loss at CU outlets, and the successful turnaround of its food processing centre (FPC).

In the first nine months of FY24, Mynews posted a core profit of RM8 million, a significant recovery from the RM10.6 million loss recorded during the same period in FY23. This result met 63% of RHB's forecast and 80% of consensus estimates. Revenue for 9MFY24 increased by 9.5% year-on-year to RM595.8 million, supported by an expanded outlet network, growing from 593 to 606 stores, and stronger in-store sales driven by an improved product mix. Furthermore, gross profit margins (GPM) improved by 2.8 percentage points to 37.3%, reflecting better wastage control and increased bargaining power with suppliers after the consolidation of the Mynews and CU management teams.

In the third quarter of FY24, Mynews achieved record-high revenue of RM207.5 million, a 7.6% quarter-on-quarter increase, bolstered by stronger sales post-Ramadan. This, combined with the ongoing recovery at the FPC, led to a 40.9% jump in core net profit to RM3.7 million for the same quarter. The continued turnaround of the FPC and the narrowing losses at CU outlets, which are expected to break even by the end of FY24, underpin the company's long-term prospects.

Looking ahead, Mynews is set to open 80 new stores in FY25, with a focus on expanding in Malaysia's East Coast, where operating costs are lower and demand remains untapped. Additionally, the first Maru Coffee outlet is expected to open in the fourth quarter of FY24, catering to rising demand for coffee and fresh food. The ramp-up in tourist arrivals should also increase foot traffic to Mynews' convenience stores, particularly its WH Smith locations in airports. With these developments, the company remains on track for continued growth.

Source: RHB
Title: Onwards And Upwards; Keep BUY