Focus Point posted a YoY 32.8% growth in 3QFY24 core net profit, underpinned by the turnaround in its F&B segment and stronger optical sales. Cumulative 9MFY24 core net profit of RM24.4m came in at 67% of our and consensus full-year estimates. However, we deem the results to be in-line with expectations, as we expect Focus Point to post stronger QoQ earnings due to festive spending. We remain optimistic about Focus Point's future earnings growth, driven by increasing demand for eyewear and the turnaround in its F&B segment. Our Outperform call and TP of RM1.00, based on 11x FY25F EPS is maintained. On a side note, Focus Point declared a second interim dividend of 1.75 sen, bringing the YTD dividend declared to 3.5 sen.

• 3QFY24 revenue increased by 8.7% YoY to RM70.2m, mainly due to stronger performance from the Optical segment (+10.5% YoY). This improvement was primarily driven by new store openings, bringing the total outlets in 3QFY24 to 196 stores (3QFY23: 189). On the other hand, the F&B segment's revenue fell marginally by 2.1% YoY, dragged down by weaker F&B corporate sales despite better F&B retail sales performance.
• 3QFY24 core PAT grew by 32.8% YoY to RM8.5m. In-line with the higher revenue, Focus Point's optical segment posted a 9.4% YoY PBT growth. The F&B segment turned positive, recording earnings from a Loss Before Tax of RM0.2m in 3QFY23, likely due to lower manpower costs. We gather that the second central kitchen is currently running at 40-50% utilization, while the first central kitchen operates at full capacity.
• Outlook. We foresee Focus Point to post stronger QoQ earnings in 4QFY24, driven primarily by festive spending and higher corporate sales in the Optical segment. Additionally, we expect consumer spending to be bolstered by the impending wage adjustments (civil servants' pay raise and higher minimum wage), coupled with the recovery in tourism, which should benefit the group. In the longer run, we believe that Focus Point's earnings growth will be driven by increasing awareness of eyewear and eyecare, supported by its ongoing store expansion strategy. Meanwhile, we expect the F&B segment to deliver meaningful earnings contributions as a result of higher central kitchen utilisation rates and lower manpower costs. All told, we forecast a 3-year core PAT CAGR of 15% for FY24-26F.

Source: PublicInvest Research - 22 Nov 2024