Focus Point Holdings Bhd is optimistic about its growth for 2022, with expansion plans for its optical and eyewear retail division and a target of securing more customers for its bakery and pastry business.

       “This year, we aim for a 15% to 20% growth in revenue, and perhaps we can achieve a little over RM200mil. We are on the right track, and hopefully, there are no more lockdowns,” president and CEO Datuk Liaw Choon Liang tells StarBizWeek.

       “We are confident we can meet the numbers. Hopefully, revenue will be on par or even higher than 2019 (a record RM191mil for the group),” he adds, noting that the retail sector is making a comeback as Malaysia has achieved a high Covid-19 vaccination rate and international travel restrictions are gradually being eased.

       Regarding Komugi, which is the group’s homegrown Japanese premium bakery and pastry brand, Liaw points out that three years ago, it had expanded beyond the bakery retail business to include supply of pastry products to corporate customers.

       “Today, the revenue from our business-to-business (B2B) bakery supply or wholesale business is bigger than our bakery retail business.

       “Our first and largest corporate customer is a fast-growing Japanese convenience store franchise chain.

       “Last year, we started supplying to an American coffeehouse chain and a Japanese discount chain store. Recently, we also inked a supply deal with a Japanese supermarket chain,” he says.

       A new growth area will be the launch of frozen pastry products in the third quarter that the group plans to supply to supermarkets.

       “Our frozen techniques are quite mature. This is different compared to the chilled pastry products that we supply, as their shelf life is short – three or four days,” Liaw explains.

       The group has 11 Komugi bakery retail outlets in the Klang Valley, including two street outlets – each located in SS2, Petaling Jaya and USJ Taipan, Subang Jaya.

       In the medium-term pipeline is another three to four new Komugi outlets, with the majority targeted at street outlets in well-established suburbs in the Klang Valley.

       “We prefer to have more street outlets as they offer lower rentals (compared with shopping malls) and there is no need to pay GTO (gross turnover) rental,” says Liaw, adding that there are no plans to expand the bakery and pastry business outside the Klang Valley in the next five years.

       He explains that there are still many opportunities to be explored in the residential areas in the Klang Valley, and expanding the business to other states would require a huge outlay in setting up a new central kitchen.

       The group has two central kitchens in Kota Damansara, with the first at near full utilisation and the second at 60% utilisation.

       Liaw recalls that to diversify its business, the group ventured into the food and beverage (F&B) sector in 2012.

       “Unlike optical and eyewear retail, this involves manufacturing processes and we work together with Japanese consultants.

       “Along the way, there were mistakes – we opened in wrong locations and had wrong concepts. There is a learning curve but we never gave up,” he says.

       Liaw is confident that in 2022, the group’s F&B business would return to the black.

       In the financial year ended Dec 31, 2021 (FY21), the F&B segment achieved a 39% year-on-year jump in revenue to RM26.5mil (or 15.6% of FY21 revenue).

       However, it recorded a pre-tax loss of RM1.1mil (versus a pre-tax profit of RM70,000 a year earlier) due to higher operating cost and the impact of the prolonged pandemic and some suspension of operations.

       “Last year, our bottom line was impacted by the set-up cost for the second central kitchen and the Covid-19 pandemic. This year, we are confident it will be profitable,” says Liaw.

       He is also looking at foreign expansion for Komugi via master franchise with business partners, such as the current ventures in the Philippines (17 outlets) and Brunei (four outlets).

       “Before the pandemic, we had approaches from the Middle East and Indonesia. These were put on hold but definitely we will look into such opportunities again.

       “If we meet good business partners with a master franchise relationship, we are more than happy to talk,” says Liaw.

       Regarding high commodity and logistics costs as well as supply chain issues, he notes that the F&B segment is affected like many other industries.

       “Komugi targets the mid to high-end categories and sources premium ingredients from countries like Japan, Thailand and New Zealand. We had to readjust our selling prices earlier this year.

       “At the same time, we have reduced unnecessary operating expenses and are focusing on inventory management for cost control,” he explains.

       Another challenge for the F&B segment’s expansion plan is the shortage of foreign workers.

       Liaw says unlike the group’s optical and eyewear retail division which has a 100% local workforce, the F&B segment needs foreign workers.

       “The challenges for the F&B segment are rising costs and labour shortage. We need to expand more carefully and look at whether we have sufficient manpower,” he says.

       Meanwhile, plans for the optical and eyewear retail division in 2022 include launching new brand Optometris Anggun, which will target mid to high-end Malay customers, as well as opening 12 to 15 new branches (including five locations for Optometris Anggun).

       The optical and eyewear retail division accounted for 81.6% of FY21 revenue of RM170.4mil.

       “We are still expanding. Before the pandemic, we used to open eight to 10 new outlets annually,” says Liaw, adding that despite increasing competition, the optical and eyewear retail business is resilient.

       “The pandemic has resulted in increased usage of digital devices and we are also an ageing nation,” he says.

       Liaw notes that the optical and eyewear retail business has grown from humble beginnings 33 years ago to having 185 branches in Malaysia as well as a presence in Brunei.

       “We always continue to innovate. During the pandemic, we grew our online sales channels. Besides credit card installment plans, we are also working with buy now, pay later (BNPL) services,” he says.

       Liaw also points out that an insurance plan for optical and eyewear products was launched recently.

       “Nowadays, eyewear such as multi-focal glasses can be quite expensive. We work together with a well-known insurance company.

       “Customers only need to pay small premiums of about 3%. The response has been good since we kicked off the programme at around 40 outlets, to start with.”

       The group is also looking at opening a new eye specialist centre this year, perhaps in Kelantan and another east coast state.

       Liaw notes that the group has not been paying attention to this business segment since starting its Excelview Laser Eye Centre in Mid Valley Megamall in 2000, which provides Lasik and cataract surgery.

       “Last year, we refurbished the centre, expanded the floor space and brought in new high-tech equipment from Germany. Many customers are looking for Lasik solutions nowadays.

       “Hopefully, we can also set up new eye specialist centres in Penang or Johor in the near future,” he says.

       Regarding the ACE Market-listed group’s ambition to move to the Main Market, Liaw says Focus Point targets to make its submission to the Securities Commission in April or May this year.

       For its fourth quarter ended Dec 31, 2021, Focus Point posted a 72% year-on-year jump in net profit to RM9.3mil, while revenue increased 46% to RM63.7mil.

       In a filing with Bursa Malaysia, the group says this was mainly due to the relaxation of movement restrictions as the country achieved high vaccination rates and made further progress towards economic normalisation in the fourth quarter.

       For financial year 2021 (FY21), net profit rose 32% year-on-year to RM14mil, while revenue was 7% higher at RM170.4mil, mainly due to higher suppliers purchase rebates by the optical and related product business, which was offset by losses incurred by the F&B segment due to higher operating cost.

       Focus Point’s earnings per share in FY21 was 4.26 sen (versus 3.22 sen in FY20).

       On its prospects this year, the group says its recovery plan will prioritise control of inventory needs to improve cashflow management, continually introducing attractive sale promotions, negotiating with shopping malls for rental rebate, innovation of new services, and streamlining operations in its F&B operations, control cost and also improving its market segments.

       Meanwhile, in a recent report, Hong Leong Investment Bank Research (HLIB Research) says Focus Point’s sales had rebounded strongly in December 2021 from corporate client utilisation and recovery in footfall traffic.

       The research unit notes that the fourth quarter is seasonally the strongest quarter for the group, historically making up 50% of full year earnings.

       “Optical corporate sales continue to gain traction and we gather that this would contribute to constant streams of sales for the group.

       “We expect high probability of it securing new F&B corporate clients, given the popularity of its current product offerings and new ISO22000 certification,” says HLIB Research, which reaffirmed its “buy” call on Focus Point’s stock with a higher target price of RM1.18 (from RM1.03), pegged to unchanged 22 times price-to-earnings of FY22 estimated earnings per share.

       “We remain confident on Focus Point’s scalable business model as we reckon that both the optical and F&B segments are able to ramp-up fully once operating condition normalises,” says the research unit.