MyNews’ CU expected to narrow losses moving forward

KUALA LUMPUR: MyNews Holdings Bhd’s CU convenience store chain can be expected to continue its turnaround following the consolidation of the CU and Mynews management teams, which has helped to elevate sales and gross profit margin, says RHB Research.

The research firm said the merger between the management teams of both chains have boosted their bargaining power and enhanced their product asssortment.

“This should propel group profits to pre-pandemic levels once CU is no longer a drag on earnings,” said RHB in its results review.

It added that the Mynews chain has demonstrated consistency and strong earnings delivery, and believes the focus on expanding this brand will be the key driver for sustainable profitability moving forward.

The food production centre’s (FPC) utilisation rate is also expected to improve from the current breakeven level due to stronger sales volume from the expansion with 100 new stores in FY24.

This comes following the recent release of MyNews’ results for the first half of its financial year, which saw core profit dropping RM9.1mil year-on-year to RM4.4mil.

RHB said it adjusted for the property, plant and equipment (PPE) written off and the loss on disposal of PPE amounting to RM1.4mil in arriving at the core profit.

While the result was only 34% of RHB’s full-year estimate, and 47% of consensus, it was considered within expectations, said the research firm, as it expects a more significant turnaround in the second half of the year.

During the six-month period, MyNews’ revenue rose 8.4% to RM388.3mil, on contributions from six new stores and improvements in overall in-store sales due to the improved product assortment.

The group’s gross profit margin expanded 3.3 percentage points to 37.4% on better wastage control and increased bargaining power with suppliers following the consolidation of the management teams of Mynews and CU.

Meanwhile, the FPC saw a narrowing of losses to RM1.6mil from RM5mil.

RHB maintained its “buy” rating on MyNews with an unchanged target price of 81 sen a share.