This article first appeared in The Edge Malaysia Weekly on February 14, 2022 - February 20, 2022

FOCUS Point Holdings Bhd is a local household name in eyewear, having successfully stamped its mark with 180 stores in Malaysia and Brunei.

As the optical retail business moves into a mature growth phase, in which store expansion naturally becomes slower, president and CEO Datuk Liaw Choon Liang says now is the time for the group to focus on expanding its two other business segments — food and beverage (F&B) and eye specialist — which make a relatively smaller revenue contribution than the eyewear segment.

The F&B segment includes its home-grown Japanese concept bakery outlets under the Komugi brand, while it provides private ophthalmology and optometry treatment services via ExcelView Laser Eye Centre Sdn Bhd.

Liaw, 53, says the company plans to open three to four more Komugi outlets in the Klang Valley this year, adding to its 11 outlets.

“There is still room for us to grow. Our Komugi street shop in SS2, Petaling Jaya, which was opened a year ago, has been doing better than the mall shops, since street shops are a more convenient option for consumers during the pandemic,” he tells The Edge in a recent interview.

“So, there are still a lot of opportunities for us, as there are many residential areas to venture into. We will still look at mall shops as well, as long as they are in a prime location and the rent is reasonable.”

Focus Point is not relying solely on its Komugi retail outlet expansion to grow its F&B segment. In fact, its corporate client segment is an important part of its F&B business. Through its two central kitchens in Kota Damansara, PJ, Focus Point supplies baked goods to its corporate clients, which are popular names in the country and include a Japanese convenience store brand, an international coffee chain group and a Japanese supermarket.

Products for these corporate clients are made exclusively for their stores and Liaw says the margins are “not too bad” because its products are in the premium category.

“We are still talking to a few big players in the market. We are talking to supermarkets and also thinking of supplying to restaurants,” he adds.

The second central kitchen was set up a year ago and has a utilisation rate of 50%, indicating that it can continue to scale up as demand rises in tandem with the growing number of Komugi retail outlets and corporate clients.

While Liaw concedes that the F&B scene is competitive, he believes Komugi is in an advantageous position because of its halal and ISO certifications.

“Our standards are high. We are one of the few bakery retail chains that are halal-certified, and that is Komugi’s unique selling point,” he says.

Its baked goods, which are marketed in the premium range, have an average basket size of RM25.

Liaw believes the brand has hit its stride after the initial years of challenges and learning the trade. It has turned around and is making a good profit, he says.

Based on Focus Point’s 2020 annual report, the F&B segment registered its first profit before tax (PBT) of RM67,000 for the financial year ended Dec 31, 2020 (FY2020) after a loss of RM900,000 in FY2019. Revenue grew 14% to RM19.11 million in FY2020 from RM16.72 million the previous year.

As for the cumulative nine months ended Sept 30, 2021 (9MFY2021), the F&B segment saw a loss before tax of RM1.7 million compared with a PBT of RM30,000 a year earlier, owing to higher operating costs. Revenue came in at RM18.1 million during the period, up 32% year on year from RM13.7 million.

For perspective, the RM18.1 million in F&B revenue is only 17% of the group’s total revenue, which amounted to RM106.73 million in 9MFY2021. The bulk of the revenue is still derived from the optical business.

Liaw’s aim is for the F&B business to become as big as its optical business in terms of revenue. “The F&B segment is still small and we can grow it through our wholesale business,” he says.

“Many operators these days want a ‘hassle-free’ option of not having to set up a central kitchen, given the steep learning curve. That is where we can come in and provide our services.”

Liaw believes now is the time to expand its eye specialist centre because the growing ageing population and the company’s strong network of optical shops around the country will help spur the growth of the eye specialist segment.

Its only specialist outlet was set up 20 years ago and is located in Mid Valley Megamall in Kuala Lumpur. Liaw believes the company is ready to open its second location in Kota Baru, Kelantan, by the second half of this year.

Subsequently, the plan is to set up several regional centres across Malaysia. It is considering a potential centre in Kota Kinabalu, Sabah, and another in Johor.

“A plus point of being in the eye specialist business is that, with our optical retail, we can refer patients to our eye specialist centres. Our optometrists are usually the first point of reference for people with cataract problems before they visit an ophthalmologist. So, it is the right time for us to look at this now,” he says.

“Our eye specialist centre also provides Lasik surgery. It is much more advanced these days than it was 20 years ago. It is now more affordable and gaining greater acceptance among consumers.”

For 9MFY2021, the eye specialist centre recorded a PBT of RM1.5 million, up 49% y-o-y from RM1 million, while revenue was unchanged from the previous year at RM2.3 million.

Liaw says Focus Point’s main revenue and profit churner — the optical retail business — has bounced back strongly after experiencing a tough 2QFY2021 and 3QFY2021 because of the pandemic-induced lockdowns.

“We saw 4QFY2021 rebound strongly and we managed to recoup the sales that were a bit behind during those challenging quarters. About half our stores achieved record sales,” he says, attributing the performance to its corporate clients and a recovery in footfall at malls.

This year, the plan is to open 15 optical retail outlets — comprising a mix of its flagship Focus Point brand, the affordable Woosh range and a new brand called Anggun Optometrist aimed at the mid-range to high-end Malay market.

“Having been in the business for more than 20 years, we cannot stay stagnant. We need to continue expanding and come up with new segments to cater for various consumer needs,” says Liaw.

Although the optical retail business has reached the mature stage, he believes it will continue to grow because of the rising demand for vision correction among the local population.

The optical business recorded lower revenue of RM85.8 million for 9MFY2021, down 13% y-o-y from RM99.1 million, while PBT was up 26% y-o-y at RM8.5 million as operating costs fell.

As a group, Focus Point’s revenue stood at RM106.73 million, falling 8% y-o-y as a result of the lockdowns. Its net profit amounted to RM4.76 million, down 9% y-o-y, on account of high rental rebates, but was offset by the loss in its F&B segment, owing to higher operating costs.

The group will announce its 4QFY2021 earnings this month and it will be interesting to see whether a rebound in earnings will make up for the lower earnings in 2Q and 3Q.

As ACE Market-listed Focus Point prepares to move to the Main Market of Bursa Malaysia, Liaw appears confident about the group’s prospects. He says, “The government did a good job in the vaccination rollout. The important thing is that the Covid-19 virus is not getting more severe and I believe the government will not impose further lockdowns.

“I believe 2022 will be a good year for all our business segments. We have no plans to look at other businesses but will stay focused on our three segments.”

Focus Point’s share price had slipped 8% from 76.4 sen on Feb 9, 2020, to close at 70 sen last Wednesday, giving the group a valuation of RM234.3 million. The stock has a price-earnings ratio of 23 times and a dividend yield of 2.82%.

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