FocusP’s 9M22 core PAT of RM26.0m (YoY: 5.4x) made up 74%/77% of our/ consensus full year forecasts. QoQ registered a declined as 2Q22 was boosted by Hari Raya coupled with reopening of international borders. YoY/YTD recovered strongly with sales rebounding across the board. Moving forward, management stays focus in expanding both the double pillars of growth namely optical and F&B segments. In optical, the group continue s to add corporate clients to its list and focus on expanding its new Optometrist Anggun. On F&B, we understand the new potential corporate clients are expected to come on stream towards the year end. Overall, we remain upbeat on FocusP’s bright prospect and opine that 4Q22 will deliver a stellar end to FY22. Maintain BUY with TP of RM1.51 pegged to unchanged 14x PE of mid-FY23 EPS.

In line. FocusP registered 3Q22 revenue of RM61.0m (QoQ: -9.6%; YoY: +110.4%) and core PAT of RM9.3m (QoQ: -12.4%, YoY: 6x) which brought 9M22 sum to RM26.0m (YoY: 5.4x). This came in-line accounting for 74% and 77% of our and consensus full year forecasts, respectively. 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 RM548k.

Dividend. DPS of 1.5 sen (vs 3Q21: 1 sen) declared, going ex on 13 Dec; 9M22: 3.0 sen (9M21: 2.0sen).

QoQ. Top line weakened by -9.6% to RM61.0m, dragged by the declines in optical related products (-13.2%) and franchise management (-10.9%) offsetting the improvement in F&B (+7.6%). We opine the lower sales were due to the absence of holiday festive period as 2Q22 was boosted by Hari Raya coupled with reopening of international borders that lifted sales in the Southern region. Core PAT declined - 12.4% to RM9.3m on the back of (i) decline in revenue; and (ii) EBIT margin contraction (-0.9ppt) from slightly higher depreciation charges.

YoY/YTD. Sales leaped by +110.4% YoY/+69.0% YTD attributable to the recovery across the board in optical related products +69.0% YTD, franchise management +31.7% YTD and F&B segment +54.9% YTD. Note that this was also from a low base effect as 9M21 operations were disrupted from various lockdowns. Subsequently, 9M22 bottom line registered an impressive jump of 5.4x YTD to RM26.0m due to (i) increase in revenue; (ii) EBITDA margin expansion (+4.0ppt); and (iii) lower effective tax rate (9M22: 25.2% vs 9M21: 37.5%).

Outlook. The group announced on 11 Nov that they have received approval to migrate to the Main Market and we understand that this will officially take effect in Jan 2023. Moving forward, management stays focus in expanding both the double pillars of growth namely optical and F&B segments. In optical, the group continues to add corporate clients to its list to sustain demand and focus on expanding its new Optometrist Anggun (currently stands at 7 outlets). On F&B, we understand the new potential corporate clients are expected to come on-stream towards the year end. As for Komugi, management is looking to expand another additional 2 street-shop outlets by 4Q22. Overall, we remain upbeat on FocusP bright prospect and opine that 4Q22 will deliver a stellar end to FY22.

Forecast. Unchanged.

Maintain BUY, TP of RM1.51 based on 14x PE of mid-FY23 EPS. We remain confident on FocusP’s scalable business model as we reckon that both optical and F&B segments are poised to ramp up fully with resumption of economic activities.

Source: Hong Leong Investment Bank Research - 23 Nov 2022