Going full force. Dragged by a prolonged lockdown, FOCUSP’s 9MFY21 results was lacklustre, with core PATMI only accounting for 45% of our full year estimation despite securing 2 new corporate clients namely Customer S and DDD. In the wake of reopening activities and high vaccination rates, we expect FOCUSP’s 4Q earnings to stage a strong turnaround, supported by the recovering mobility data and consumer sentiment (#Figure 1&2). Although covid-19 risks may prevail in the short term, we nevertheless view that government will tend to take the an endemic approach and therefore avoid any further lockdown.

CK2 utilization to soar. To recap, FOCUSP had commenced its second central kitchen (CK2) since 1HFY21, with the capacity ramping up from 0% to 50~60% in just a few months (despite FMCO in 2HFY21). Going forward, we strongly believe CK2’s utilization rate will continue to gain momentum, underpinned by aggressive new outlets’ opening from its existing and potential new clients. Note that, with a 100% utilization rate, CK2 will contribute ~RM5m in revenue every month.

Main Market? It will not be surprising if FOCUSP proposes to migrate to the Main Market in FY22 as its latest 3 financial years aggregate after-tax profit had surpassed the RM20m threshold. Despite the company has yet to achieve a PAT of RM6m in their latest QR (one of the profit test requirement), we believe it will be just a matter of time to achieve it. Our optimism is underpinned by the anticipation of a recovery in its Optical business and higher contribution from its F&B segment.

Double Bottom. Technically, FOCUSP is pending for a double bottom neckline breakout. A successful breakout above RM0.695 levels will signal a trend reversal has happened, potentially spurring prices to RM0.75-0.80 levels. Cut lost at RM 0.64

Source: Hong Leong Investment Bank Research - 10 Jan 2022