Store expansion, earnings recovery keep Mynews on analysts' radar

New Straits Times

5 days ago

KUALA LUMPUR: Analysts remain upbeat on the long-term prospects of Mynews Holdings Bhd, anchored by the consistent performance of its core Mynews brand and a gradual recovery expected in its CU Mart business.
Despite softer-than-expected first-half earnings, research houses such as RHB Research and CIMB Securities are maintaining their 'Buy' recommendations, reflecting optimism about the company's ongoing turnaround and retail expansion plans.
In the first half of FY2025 (1H FY2025), Mynews added 54 new outlets, representing an 8.7 per cent year-on-year growth, bringing its total store count to 676. This includes 495 Mynews stores (+24), 154 CU Mart outlets (+23), 20 WHSmith stores (unchanged), and 7 Maru Coffee outlets (+7).
For the full year, the group plans to open 80 to 100 new outlets, with the majority under the Mynews banner.
Analysts believe the flagship brand will continue to be a key earnings stabiliser, offsetting CU's short-term drag on performance.
Mynews reported a core net profit of RM7 million for the six months ended April 30, 2025, up 61.3 per cent year-on-year. However, results fell short of expectations, meeting only 28 per cent of RHB's and 31 per cent of consensus full-year forecasts. The earnings miss was largely attributed to the slower-than-expected recovery in CU, its Korean-inspired convenience store chain.
Revenue for 1H FY2025 rose 7.8 per cent year-on-year to RM418.4 million, driven by the opening of 38 stores and improved in-store sales performance, underpinned by a refreshed product mix and more efficient inventory management. Gross profit margin (GPM) improved by 1 percentage point to 38.4 per cent, reflecting enhanced wastage control, a better product assortment, and increased contributions from CU, which offers higher margins.
Quarter-on-quarter, Q2 FY2025 revenue slipped 6.2 per cent to RM202.6 million, due to seasonal factors such as the Ramadan fasting period and February's shorter operating month. Core earnings fell 25.4 per cent to RM3 million, as revenue moderated and the group's food processing centre (FPC) posted a marginal RM0.4 million loss versus a RM1.1 million profit in the previous quarter. Nonetheless, GPM rose 2.3 percentage points, aided by reduced promotional activity.
RHB Research remains optimistic about Mynews' recovery trajectory, underpinned by strong same-store sales growth (SSSG), expected in the low- to mid-single-digit range, and continued expansion of the Mynews store network. Increased sales volume is also expected to strengthen supplier bargaining power, support further GPM improvements, and enhance utilisation at the FPC.
RHB projects CU to reach breakeven in 2025, supported by improved product curation focused on high-performing SKUs and tighter control over wastage.
Reflecting a more conservative recovery timeline for CU, the research house has revised its FY2025 to FY2027 earnings forecasts downward by 23 per cent, 19 per cent, and 18 per cent, respectively, and reduced its target price to 80 sen (from 86 sen), still offering 51 per cent upside from current levels.
The new TP includes a 2 per cent ESG premium and implies a 22.3x FY2026 forward P/E, aligning with the group's pre-pandemic valuation average.
Meanwhile, CIMB Securities also expects a stronger quarter-on-quarter performance in 3Q FY2025, as consumer demand rebounds following the Ramadan period.
CIMB similarly trimmed its EPS forecasts by 23 to 25 per cent for FY2025–2027 and lowered its target price to 73 sen.
Despite the downward revisions, it maintains a 'Buy' rating, pointing to Mynews' sustained return to profitability in FY2024 and its continued earnings recovery momentum.
Both research houses caution that risks to their outlook include further delays in CU's breakeven timeline, subdued consumer sentiment, and potential increases in operating costs.
However, given the group's ongoing expansion, improving fundamentals, and recovering profitability, analysts believe Mynews remains well-positioned for long-term growth.