PETALING JAYA: MyNews Holdings Bhd’s near term outlook remains gloomy due to the lockdown measures that have caused insufficient foot traffic at its stores.
As the second-largest convenience store chain in the country after 7-Eleven, the company saw its net loss widened to RM10.32mil in the second quarter ended April 30, 2021 (Q2’FY21) compared with a net loss of RM2.33mil in the same quarter last year.
Revenue fell 15.8% to RM103.9mil against RM123.5mil a year ago. For the first six months ended April 30, MyNews posted a net loss of RM19.3mil from a net profit of RM2.02mil a year ago.
The company is expected to see a meaningful recovery in earnings sometime by the first quarter of next year despite downside risks, according to analysts.
CGS-CIMB Research said the reinstatement of the lockdown since June 1 was likely to cause a subsequent dip in footfall and revenue in the third quarter (Q3’FY21) as MyNews average sales per store has correlated closely with the severity of movement restrictions since the start of the Covid-19 pandemic.
Judging by the National Recovery Plan outlined by the government, the research house said a meaningful recovery in footfall is expected to come only by Q1’FY22, when all economic sectors are reopened and pre-pandemic norms are expected to return.
CGS-CIMB, which is reiterating its “hold” call on the stock with a lower target price of RM0.91, added:“ Notwithstanding near-term challenges, strong reception for its new South Korean convenience store CU outlets and myNEWS Supervalue stores could drive medium-to long-term growth.
“A faster-than-expected loosening of movement restrictions is a key re-rating catalyst. Key downside risks include weak reception for its CU outlets and slower-than-expected lifting of movement restrictions, ” it added.
Meanwhile, UOB Kay Hian said it is reducing its FY21 earnings to minus RM27mil from minus RM5mil on the back of lower revenue growth and margin assumptions but maintains its FY22-23 forecasts at this juncture, hoping for a sharp rebound in tandem with the government’s Covid-19 National Recovery Plan.
Key risks to a “sell” call includde CU store execution and swifter-than-expected recovery in consumer purchasing behaviour.