KUALA LUMPUR: MyNews Holdings Bhd is set to accelerate its outlet expansion efforts, with plans to launch 100 new stores in fiscal year 2024, according to RHB research.
This expansion initiative will consist of 70 per cent Mynews outlets and 30 per cent CU outlets.
The strategic focus on expanding the Mynews brand is expected to drive sustainable profitability, aiming to offset losses from other units given its consistent track record of strong and stable performance.
"We believe the expansion will be further aided by the new shareholder providing valuable insight and suggestions on the business," it said in a note today.
Meanwhile, RHB said CU is adopting a more prudent approach in marketing investments and optimising maintenance expenses to downsize losses while fine tuning its offerings to boost sales.
On the other hand, food processing centre (FPC)'s capacity utilisation and sales are anticipated to improve, driven by increased retail sales volume alongside the opening of new stores, said the research house.
Mynews' first-quarter fiscal year 2024 (1QFY24) results largely aligned with expectations, foreseeing further recovery on the horizon.
Following the release of the results, RHB opted to maintain its earnings forecasts and discounted cash flow (DCF)-derived target price of 68 sen, inclusive of a 2.0 per cent ESG premium, as the results were in accordance with its projections.
Mynews' 1QFY24 (Oct) results broadly met expectations in anticipation of further recovery ahead.
"We believe the worst is over, and expect improvement in CU's traction to continue paving the way for a turnaround for this business unit in FY24F.
"We upheld our buy recommendation and retained the target price of 68 sen, indicating a potential upside of 30 per cent," said the research house.
RHB research said the robust expansion of the Mynews brand is poised to further offset narrowing losses from other business units given its track record of resilient performance despite encountering various challenges.
However, the research house cautioned that key risks to its projections would be delays in CU's turnaround and weaker-than-expected consumer sentiment.