Thursday 28 Mar 2024
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KUALA LUMPUR (June 29): RHB Research has maintained its "buy" rating on Mynews Holdings Bhd at 69 sen and said it believes the company's earnings should normalise in the third quarter ending July 31, 2020 (3QFY20) after the relaxation of Movement Control Order (MCO) and resumption of business activities.

In a note today, RHB Research noted that the press and retail convenience chain's 2QFY20 earnings missed expectations due to MCO-led business disruption. Hence, the research house advised investors to look at the company in a longer-term perspective.

"We believe investors should look beyond near-term earnings weakness as the beauty of Mynews lies in its business scalability and entrepreneurial management team," it said.

Also, the research house added Mynews' earnings growth should continue to be underpinned by outlet expansion, which the research house expects will resume progressively after business uncertainties are eliminated following the broad containment of the pandemic.

"Outlet expansion plans may have been affected too as we notice YTD (year-to-date) net store openings of 26 outlets versus management's target of 100."

Last Friday, the convenience store operator reported a net loss of RM2.3 million for 2QFY20 versus a net profit of RM7.95 million in the previous corresponding quarter. This is the first quarterly loss the company has made since its listing in 2016. 

Its quarterly revenue fell 7.14% to RM123.49 million from RM132.98 million in the previous corresponding quarter.

Post results, RHB Research has slashed its earnings projections by as much as 55% for the financial year ending Oct 31, 2020 (FY20), as well as 32% and 31% for FY21 and FY22, respectively.

The research house now anticipates the company to generate annual earnings of RM8 million for FY20, RM25 million for FY21 and RM32 million for FY22.

Correspondingly with the earnings revisions, RHB Research has also revised downward the target price to 90 sen, from RM1.25 previously.

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