FocusP chalked in highest 4Q22 results with revenue of RM68.4m (+12% QoQ; +8% YoY) and core PAT of RM10.4m (+12% QoQ; +10% YoY) which brought FY22 sum to RM36.3m (2.5x YoY). Overall, top line was bolstered by improvement in all segments with biggest increase in its core optical & related products (+46% YTD). 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 and steadfast in expanding its new Optometri st Anggun. On F&B, we are upbeat and confident with the growth prospect especially coming from the new client. Reiterate BUY with higher TP of RM1.61 based on 14x PE of FY23.

Within ours but beat consensus. FocusP’s quarterly revenue of RM68.4m (+12% QoQ; +8% YoY) and core PAT of RM10.4m (+12% QoQ; +10% YoY) brought FY22 sum to RM36.3m (2.5x YoY). This matched ours but beat consensus estimate at 104% and 108% of full year forecasts, respectively. Core PAT was arrived after minor adjustments for loss on disposal of PPE, reversal of PPE impairment loss, PPE written off and forex loss which amounted to RM490k.

Dividend. None declared. FY22: 3.0 sen per share (FY21: 2.0 sen).

QoQ. Top line grew steadily at 12% to RM68.4m, which marked another fresh record of highest ever quarterly revenue. This was attributable to improvement in optical related products (+20%) and franchise management (+2%) despite the slight drag in F&B (-15%). Similarly, bottom line chalked in the best ever quarterly profit with a jumped of +12% to RM10.4m in line with increase in revenue.

YoY/YTD. Sales climbed by +8% YoY/+46% YTD attributable to the acceleration across segments with optical related products +46% YTD, F&B segment +39% YTD and franchise management +26% YTD. The impressive growth was also supported by the low base effect from the Covid-19 lockdown in FY21. F&B flourished with higher revenue from corporate sales and retail outlets. Encouragingly, F&B recorded a healthy PBT of RM2.3m (vs FY21 loss of -RM1.1m). Core PAT on the other hand, rose further by 2.5x to RM36.3m attributable to (i) EBIT margin improvement by 6ppt; and (ii) lower effective tax rate of 25.1% vs 32.1% in FY21.

Outlook. We are pleased with another accomplishment by the group with doubling up of earnings. 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 and we gather that this would contribute to constant streams of sales for the group. Management is steadfast on expanding its new Optometrist Anggun (currently stands at 7 outlets). On F&B, we are upbeat and confident with the growth prospect especially coming from the new client. The new corporate F&B client will raise its CK2 utilisation to 80%, from current level of 50%. As for Komugi, management is looking to expand another 2-3 outlets in FY23. On a separate note, FocusP announced plans to undertake a bonus issue with an issuance of up to 132m new shares on the basis of 2 bonus share for every 5 existing shares (2-for-5), on an entitlement date to be fixed later.

Forecast. We raise our FY23/24 forecast by 5%/3% to account for growth in revenue. Reiterate BUY, with higher TP of RM1.61 (from RM1.51) as we roll over our valuation year to FY23 (from mid-FY23) based on unchanged 14x PE multiple. We remain confident on FocusP’s scalable business model as we reckon that both optical and F&B segments are poised to continue its growth trajectory with the group’s brand equity and popularity of Komugi products.

Source: Hong Leong Investment Bank Research - 22 Feb 2023