KUALA LUMPUR (June 28): At least three research houses have lowered their target prices (TPs) for MyNews Holdings Bhd following the announcement of its largest quarterly loss since it was listed in 2016.
CGS-CIMB Research has lowered its TP for the stock to 91 sen from RM1, followed by RHB Investment Bank Research (RHB Research) to RM1.20 from RM1.25 and Kenanga Research to 95 sen from RM1.
MyNews’ stock was down three sen or 3.39% this morning to 85.5 sen.
To recap, MyNews' net loss widened further to RM10.32 million for the second quarter ended April 30, 2021 (2QFY21), compared with a net loss of RM2.33 million during the same quarter a year ago.
Quarterly revenue was 15.8% lower at RM103.94 million, compared with RM123.49 million for the previous corresponding quarter.
Analysts of the three research houses all noted that the poor results came in below their earnings forecasts, caused by weaker-than-expected footfall as a result of the intensive lockdown prevailing throughout the period under review, including the movement control order (MCO) from January to March 2021 (MCO 2.0).
The analysts added that the weaker revenue was also a result of outlet closures as its total store base slid to 518 as at end-2QFY21 from 539 as at end-2QFY20.
CGS-CIMB analyst Syazwan Aiman Sobri noted that the instatement of the total lockdown from June 1 will likely cause a subsequent dip in footfall and revenue for 3QFY21 as MyNews’ average sales per store correlated closely with the severity of movement restrictions since the start of the pandemic.
"Judging by the National Recovery Plan outlined by the government, we think that a meaningful recovery in footfall is expected to come only by 1QFY22, when all economic sectors are reopened and pre-pandemic norms are expected to return," he said in a note today.
According to Syazwan Aiman, CGS-CIMB retained its "hold" call on the stock, with a lower TP of 91 sen from RM1 previously, as its earnings forecasts were downgraded, factoring in a slower pace of recovery in footfall.
Meanwhile, RHB Research expects MyNews to register losses of RM15.5 million for FY21 as the restrictions currently in place nationwide — and the resulting limited operating hours of all its outlets — will continue to cause shopper footfall for MyNews to remain subdued.
The research house maintained its "buy" call on MyNews, with a lower TP of RM1.20 from RM1.25 previously.
Nevertheless, its analyst Soong Wei Siang said MyNews' earnings growth prospects still remain exciting, with the launch of South Korean convenience store chain CU brought in by the company.
"We think the target of opening at least 30 CU stores this year remains on track. With the offerings at CU being sourced from MyNews’ FPC (food processing centre), the potential improvement in its utilisation rate should continue to help reduce its losses.
"More importantly, MyNews stands to be a prime beneficiary of the gradual return in footfall upon vaccination reaching critical mass, which should see its outlets (including those at office buildings and transportation hubs) registering higher sales when mobility normalises upon the broader reopening of economic activities, making it a relevant proxy for recovery play," he said in a note today.
Kenanga Research shared the same view, noting that it is “positive on the foundations placed” for MyNews “to ride the economic recovery post-pandemic”.
"Revenue is expected to be supported by the opening of its Korean brand CVS (CU) in April, of which MyNews is targeting to open between 30 and 50 outlets in CY21 (calendar year 2021).
"The addition of CU into the group’s portfolio would: i) aid in achieving higher utilisation of the FPC (currently at about 35%, with break-even at 70%); ii) allow the group to be the first Korean CVS chain player in Malaysia by tapping into persistently rising popularity of the K-culture (South Korean culture); and iii) potentially boosting the group’s overall margin due to the higher fresh food content of the CU stores," Kenanga Research analyst Ahmad Ramzani Ramli wrote in a note today.
The research house downgraded MyNews to "market perform", from "outperform" previously, as it revised down its TP to 95 sen from RM1.