Company Background. Focus Point is principally engaged in the operation of professional eye care centres, trading of eyewear & eye care products, management of franchised professional eye care centres, as well as managing franchised food & beverage outlets. The group operates under 3 core business segments: (i) optical, (ii) franchise management, and (iii) food and beverage (F&B). Focus Point is the largest optical retail chain in Malaysia, with its key brands being Focus Point, Whoosh Eyewear and Optometris Anggun. Additionally, the group also runs bakery outlets in the F&B segment under the brand name Komugi.

Prospects. (i) Leverage its market-leading position in the optical segment by opening new outlets in strategic locations and expanding nationwide with aggressive marketing & promotions. Currently, the group operates more than 180 optical outlets across the country, (ii) In 2023, the group launched the SightSavers Franchise Programme, enabling entrepreneurs to start optical businesses in Tier 2 and Tier 3 cities with minimal investment. Within a year, 4 new outlets opened, enhancing the group's financial performance, and (iii) As for the F&B segment, the group plans to expand Komugi bakery outlets in residential areas, innovate/introduce more products for retail & corporate customers, and launch a new frozen yogurt segment named HAP&PI.

Financial Performance. In 1QFY24, Focus Point reported higher revenue of RM68.3mil (+14% YoY) with a PAT of RM7.4mil (+23% YoY). This was mainly attributed to higher sales from newly-opened optical outlets, strong corporate sales growth in the F&B segment and lower overall operating/overhead costs.

Valuation. Focus Point is trading at an attractive FY25F P/E of 9.8x, which is lower than its 5-year forward average of 13.4x and Bursa Consumer Index’s 15.3x currently. As a comparison, Japan-based Jins Holdings, a retailing company engaged in the planning, manufacturing, sales, and import/export of eyewear & fashion accessories, trades at a much higher FY25F P/E of 24.7x.

Technical Analysis. Focus Point may trend higher after it surged to a new 52-week high and closed above the RM0.80 resistance a few weeks ago. With the 20-day EMA remaining above the 50-day EMA since a bullish crossover in early May, we believe the uptrend may persist in the near term. A bullish bias may emerge above the RM0.80 level with stop-loss set at RM0.74, below the 50-day EMA. Towards the upside, near-term resistance level is seen at RM0.95, followed by RM1.00.

Source: AmInvest Research - 10 Jul 2024