Investment Highlights

• We maintain HOLD on Mynews Holdings (Mynews) with an unchanged fair value of RM0.49/share, which is based on a FY24F P/BV of 1.6x. The P/BV of 1.6x is 0.5SD below the 5- year mean of 1.7x. Our fair value of RM0.49/share also reflects an unchanged neutral ESG rating of 3-stars.

• Mynews FY23’s net loss of RM10mil was smaller than our expectations and consensus of RM13mil. The variance came largely from stronger-than-expected sales driven by an increase in the number of outlets.

• We maintain our FY24F-FY25F numbers and introduce FY26F earnings estimate.

• FY23 revenue rose by 16% to RM730mil on the back of a higher number of outlets and an increase in average selling prices. These coupled with a gross margin improvement of 1%-point from better sales mix, resulted in net losses declining by 41% to RM10mil in FY23.

• QoQ, 4QFY23 revenue was muted. However, Mynews was able to return to the black with a net profit of RM0.9mil (vs. 3QFY23 net loss of RM2.2mil) mainly due to improvements in operational efficiencies and lower costs, particularly at its FPC.

• Despite the turnaround in 4QFY23, we remain cautious on Mynews. We think that the group’s outlook is challenging in the near-term due to: (i) a longer-than-expected gestation period for its CU stores as competition with the other convenience stores is stiff, (ii) higher operational and depreciation costs from the new outlets and (iii) a slowdown in consumer spending caused by inflationary pressures.

• Mynews currently trades at a FY24F P/BV of 1.7x, which is in line with the 5-year average.

Source: AmInvest Research - 22 Dec 2023