We understand that sales rebounded strongly in Dec 2021 from corporate client utilization and recovery in footfall traffic. The group is in the midst of ramping up their new optical concept store dubbed as Anggun Optometrist to cater for the untapped mid-high end Malay market. F&B revenue is expected to expand further from higher corporate sales and stable contribution from Komugi outlets. CK2 has received ISO22000 certification and we are positive on the new development as this would open more doors to secure business with established player. Reiterate BUY, with unchanged TP of RM1.03 based on 22x PE pegged to 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 conditions normalizes.

We Held a Conference Call With FocusP and Remain Upbeat About the Group’s Outlook.

Optical standing strong. We understand that sales rebounded strongly in Dec 2021 from corporate client utilization and recovery in footfall traffic. Note that 4Q is seasonally the strongest quarter for the group, historically making up of c.50% of full year earnings. FocusP is in the midst of ramping up their new optical concept stores dubbed as Anggun Optometrist to cater for the untapped mid-high end Malay market. We gather that 5 locations have been secured for new outlets with target to rollout 12- 15 stores for FY22. Management expects ticket size to be higher from this target market. The expansion in optical business will enable the group to bargain for higher rebates from its key suppliers which are mainly the established foreign brands. As for new venture in Excelview, the group has equipped its centre with advance machinery to perform special lasik operation.

Komugi. The group recently launched an expanded Komugi outlet in 1Utama and a new street shop concept Komugi store in USJ Taipan, which brings the number of total outlets to 11 stores.

F&B. FocusP main corporate client continues to contribute positively with RM1.5m- 1.6m sales per month for a total of 14 SKUs. This organic growth is expected to sustain from expansion of outlets and vending machines by the customer. DDD targets to open another 2 outlets for FY22 and we expect orders to be healthy. As for Customer S, sales are consistent with potential to upsize from expansion of supply to East Malaysia outlets.

Positive development from central kitchen (CK2). CK2 has received ISO22000 certification and the group is in the midst of pursuing the same certification for CK1. We are positive on the new development as this would open doors for FocusP to secure new business with an established convenience store chain in Singapore. CK2 is currently running at 50-60% utilisation rate and with the fast expanding corporate client base, management is planning to expand CK2 capacity by 10%-20% to cater for Baumkuchen products.

Outlook. Optical corporate sales continue to gain traction and we gather that the group recently secured two new corporate clients under its wing. As for F&B, we expect high probability of securing new F&B corporate clients given the popularity of its current product offerings and new ISO22000 certification.

Maintain BUY, TP of RM1.03. We maintain 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.

Source: Hong Leong Investment Bank Research - 12 Jan 2022