FocusP’s 9M21 core PAT of RM4.8m (YoY: -9.0%) made up 45%/42% of our/ consensus full year forecasts. We deem this to be broadly in line as 4Q is a seasonally stronger quarter for the group. Overall, optical related products were affected by soft footfall, while F&B division continued to thrive with revenue increase by 32% YTD. We gather that the restrictions relaxation in since Sept helped to drive better foot traffic in malls which subsequently recover sales in both of FocusP’s optical and F&B businesses. Maintain BUY with TP of RM1.03 pegged to unchanged 22x PE of FY22 EPS. We remain confident with FocusP’s scalable business model as we reckon that both optical and F&B segments are able to ramp up fully once operating condition normalizes.

In line. FocusP chalked in 3Q21 revenue of RM29.0m (QoQ: -17.8%; YoY: -41.4%) and core PAT of RM1.5m (QoQ: +>100%, YoY: -71.6%) which brought 9M21 sum to RM4.8m (YoY: -9.0%). This accounts for 45% and 42% of our and consensus full year forecasts, respectively. We deem this to be broadly in line as 4Q is a seasonally strongest quarter for the group. Historically, 9M19 and 9M20 accounted for 52% and 49% of the full year numbers. Core PAT was arrived after minor adjustments for loss on PPE disposal, reversal of PPE impairment loss, PPE written off and forex loss which amounted to RM56k.

Dividend. DPS of 1 sen (vs 3Q20: 1 sen) declared, going ex on 9 Dec; 9M21: 2.0 sen (9M20: 2.0sen).

QoQ. Top line weakened by -18% to RM29.0m, dragged by the declines in all three segments of optical related products (-17%), franchise management (-25%) and F&B (-21%). The lower sales were due to the prolonged Phase 1 lockdown restrictions in July/August. Despite that, core PAT charted a better figure of RM1.5m (+>100%) on the back of (i) EBIT margin improvement (+8.8ppt); and (ii) lower effective tax rate (3Q21: 42.9% vs 2Q21: 79.4%). EBIT margin expansion was supported by higher suppliers purchase rebate, lower operating cost, rental rebates provided by landlord and wage subsidies granted by the government.

YoY/YTD. Sales declined by -41% YoY/-8% YTD attributable to the weakness in optical related products -13% YTD, and franchise management -2% YTD that offset the encouraging improvement in F&B segment +32% YTD. Subsequently, 9M21 bottom line registered a decline of -9% YTD to RM4.8m due to the above mentioned reasons.

Outlook. We gather that the restrictions relaxation since early Sept helped to drive better foot traffic in malls which subsequently recovered sales in both of FocusP’s optical and F&B businesses. Additionally, the rental rebates granted from landlords from mall closures helped to boost up earnings for 3Q21 despite the weak sales QoQ. We are encouraged to witness that the F&B division continues to chart sales growth of 32% YTD. We expect 4Q to record a strong pick up in sales in line with the year-end festive season and utilisation of quota for its optical corporate clients.

Forecast. Unchanged.

Reaffirm BUY, TP of RM1.03. We maintain our BUY rating on FocusP, with unchanged TP of RM1.03 pegged to 22x PE of FY22 EPS. We remain confident on FocusP’s scalable business model as we reckon that both optical and F&B segments are able to ramp up fully once operating condition normalizes. Furthermore, we expect high probabilities of securing new F&B corporate clients given the popularity of its current product offerings.

Source: Hong Leong Investment Bank Research - 25 Nov 2021