Mynews Holdings - Near Term Positives Priced In. Downgrade to HOLD.

Date: 
2024-09-27
Firm: 
AmInvest
Stock: 
MYNEWS
Price Target: 
0.64
Price Call: 
HOLD
Last Price: 
0.625
Upside/Downside: 
+0.015 (2.40%)

  • We downgrade our recommendation on Mynews Holdings Berhad ("Mynews") to HOLD from Buy with lower fair value of RM0.64 (from RM0.78 previously) based on lower P/B ratio of 1.8x FY25F (from 2.3x), which is in line with its 4Y historical mean post the commencement of Food Processing Centre ("FPC"). Our neutral ESG rating of 3- star is unchanged.
  • We raised our net profit forecast for FY24F/FY25F/FY26F by 58.0%/68.4%/60.1% to reflect better-than-expected sales and margins. To note, our revised net profit forecast for FY25F/FY26F is still 21.6%/38.2% below the street. Despite the earnings beat for 9MFY24, we reckon the near- term earnings turnaround has been reflected in the share price while new initiatives such as introduction of standalone café, Maru Coffee and CU store's expansion into East Coast region will take time to contribute meaningfully to the bottom line.
  • Key takeaways from the results briefing:
    • Mynews revenue was higher by 11.7% YoY and 7.6% QoQ on the back of rising number of transaction volume despite ticket size remaining largely unchanged.
    • Gross margin during the quarter eased off slightly to 37.2% from 37.9% in 2QFY24 mainly due to slight uptick in the wastage rate.
    • FPC has turned profitable. Mynews' food processing centre utilization rate was at 80% in 3QFY24 based on 1 shift. Should volume pick up significantly, the company can add another shift to cater to that.
    • Introducing a new outlet format, Maru Coffee outlet. The first Maru Coffee outlet will be opened in Intercontinental Hotel on 30th September 2024, offering donburi, coffee, sandwiches, and wraps. The capex for this store is RM300k, which is lower than the average capex for Mynews of RM400k and CU store of RM500k. Thus far, 3 other locations have been identified for store opening over the next 4-5 months. As this is a new store format, it will take some time to contribute meaningfully to the bottom line. 0 200 400 600 800 1,000 1,200 1,400 1,600 1,800 0.0 0.2 0.4 0.6 0.8 1.0 1.2 1.4 1.6 Sep-19 Sep-20 Sep-21 Sep-22 Sep-23 MNHB MK FBMKLCI Index CONSUMER MYNEWS HOLDINGS (MNHB MK EQUITY, MYNE.KL) 27 Sep 2024 Near term positives priced in. Downgrade to HOLD. Company Report HOLD AmInvestment Bank Team Coverage 603-2036 2333 (Downgraded) Rationale for report: Company Update

Source: AmInvest Research - 27 Sep 2024

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