The convenience retail chain group reported a net loss of RM3.21 million in Q1 FY23 compared to a net profit of RM1.3 million in Q4 FY22 due to the discontinuation of the government’s hiring incentive programme, the unavailability of fair value gains on investment properties, and higher administrative and financing costs.
MyNews’ Q1 FY23 revenue increased to RM184.09 million from the previous quarter’s RM180.6 million on the back of its new outlets, longer opening hours and an improvement in overall sales following the lifting of Covid-19 restrictions.
Its share price has fallen 19.05% since the beginning of 2023.
Kenanga Research said MyNews’ unexpected return into the red this quarter was contributed by its inability to sufficiently grow its top line to absorb higher cost as well as implying that its South Korean CU store chain required a longer gestation period.
Hence, the research house cut the group’s FY23 and next year’s forecast by 62% and 38% respectively, reducing its target price (TP) by 34% to RM0.50 from RM0.76, downgrading their call to “underperform” from “outperform”.
CGS-CIMB Research too had lowered MyNews’ earnings for FY23 and forecasted FY24 by 20.2% to 73.3% in assumption of lower operating margins due to the higher operating costs of CU stores and its food production centre.
CGS-CIMB’s TP of MyNews went downwards 20.4% to 66 sen from 83 sen previously, and maintained its “add” call on the basis that the group is the only publicly listed company that exclusively focuses on consumer value stores in Malaysia, and believes they will remain on track to achieve profitability in the second half of FY2023.
In its bourse filing with Bursa Malaysia, MyNews expected sales performance to improve from quarter to quarter driven by the store’s network growth, ongoing effort to increase in-store sales and strategic improvement in essential infrastructure that will enhance support to the retail front.
“The continuing improvement in sales at the retail front will continue to elevate the demand for ready-to-eat products and thus, increase the production volume of (our) food production centre,” its statement read adding that the continual recovery of air travel industry will continue to boost performance of its WHSmith stores located at international airports in the country.
The group has a total of 614 outlets consisting of 466 myNews stores, 131 CU stores, and 17 WHSmith outlets.
At the time of writing, 38,411 shares had exchanged hands with the counter resting at 51 sen for the mid-day break, trimming its losses by 6.5 sen or 11.3% with a market value of RM 347.9 million.