KUALA LUMPUR (March 23): AmInvestment Bank expects the performance of MyNews Holdings Bhd to remain poor in the company’s second quarter ending June 30, 2020 (2QFY20), due to lower expected footfall arising from Covid-19.

In a note today, AmInvestment analyst Nafisah Azmi has cut MyNews's earnings forecasts for FY20, FY21 and FY22 by 30%, 31% and 27% respectively.

“This is to account for lower margins as we assume less store openings, higher food processing centre (FPC)-related costs and lower average spend due to Covid-19,” she said.

She noted that MyNews’ 1QFY20 net profit of RM4.4 million was below expectations, as the company saw higher FPC and outlet operating and logistics costs.

The analyst said the FPC was running at around 50% capacity, versus the break-even point of 75% of capacity, resulting in a loss of RM2.7 million for the manufacturing segment in 1QFY20.

The losses by the FPC had offset the higher revenue achieved by MyNews for the quarter, which was contributed by the addition of 96 outlets during the period and higher sales of its FPC products.

The average spend, however, dropped 5% during the quarter.

“We expect the group’s performance to continue to be poor in 2QFY20 due to Covid-19. We expect reduced footfall in the outlets and production volume to remain low,” said Nafisah.

“We expect the recovery in earnings to come from 4QFY20 onwards, assuming Covid-19 is contained within 1HFY20,” she added.

At 12.14pm, MyNews shares fell 3.5 sen or 5.6% to 59.5 sen, giving a market capitalisation of RM405.88 million.