FocusP 4Q21 results trumped our and consensus expectations on stronger than-expected sales and EBIT margin expansion. FY21 core PAT of RM14.3 (YoY: +32%) made up 135%/130% of our/ consensus full year forecasts. Overall, top line was bolstered by improvement in all segments with biggest increase in F&B (+39% YTD). We understand that optical sales rebounded strongly in Dec 2021 from corporate client utilization and recovery in footfall traffic. We expect high probability of securing new F&B corporate clients given the popularity of its current product offerings and new ISO22000 certification. We raise our FY22/23 forecast by 11.8%/12.4% to factor in higher sales. Reiterate BUY with higher TP of RM1.18 (from RM1.03) pegged to unchanged 22x PE of FY22 EPS.

Exceeded expectations. FocusP’s 4Q21 results trumped our and consensus expectations on stronger-than-expected sales and EBIT margin expansion. Quarterly revenue of RM63.7m (QoQ: 2.2x; YoY: +46%) and core PAT of RM9.5m (QoQ: 6.1x, YoY: +66%) brought FY21 sum to RM14.3m (YoY: +32%). This accounts for 135% and 130% of our and consensus full year forecasts, respectively. Core PAT was arrived after minor adjustments for reversal of PPE impairment loss, PPE written off and forex loss which amounted to RM223k.

Dividend. None declared. FY21: 2.0 sen per share (FY20: 2.0sen).

QoQ. Top line was bolstered by 2.2x to RM63.7m, attributable to improvement in all three segments of optical related products (>100%), franchise management (+50%) and F&B (+53%). The recovery was thanks to the relaxation of restrictions as the country progress to economic normalisation in 4Q21. Bottom line chalked in the best ever quarterly profit with a jumped by 6.1x to RM9.5m on the back of (i) EBIT margin improvement (+10.9ppt) due to higher suppliers purchase rebate; and (ii) lower effective tax rate (4Q21: 29.0% vs 3Q21: 42.9%).

YoY/YTD. Sales climbed by +46% YoY/+7% YTD attributable to the acceleration across segments with optical related products +43% YoY, franchise management +10% YoY and F&B segment +53% YoY. Subsequently, FY21 bottom line registered an increase of +32% vs SPLY to RM14.3m due to the above mentioned reasons.

Outlook. 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. Additionally, optical corporate sales continue to gain traction and we gather that this would contribute to constant streams of sales for the group. We are encouraged to witness that the F&B division continues to chart sales growth of 39% YTD. We expect high probability of securing new F&B corporate clients given the popularity of its current product offerings and new ISO22000 certification.

Forecast. We raise our FY22/23 forecast by 11.8%/12.4% to factor in higher sales.

Reaffirm BUY, with higher TP of RM1.18 (from RM1.03) pegged to unchanged 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 - 23 Feb 2022