Review

• Focus Point Holdings Berhad’s (FOCUSP) 9M23 net profit of RM19.7mn came in at 60.0/56.7% of our and consensus’ full-year forecasts. We deem the results to be within expectations as we expect 4Q to be the strongest quarter.

• YoY, net profit declined by 22.6% to RM19.7mn despite higher revenue of 3.8% to RM187.2mn. We attribute the weaker performance to the optical segment (PBT dropped to RM26.4mn from RM29.8mn in 9M22) on the back of higher staff costs as well as rental from the opening of new outlets. As such, the optical PBT margin decreased 3.0pp to 17.5%. Note that 9M22 performance was supported by EPF special withdrawal scheme of RM10,000, along with reopening of the economy,

• Meanwhile, the food and beverage segment recorded an LBT of RM1.2mn (vs. PBT of RM2.4mn in 9M22) due to the higher staff costs in Central Kitchen operations.

• QoQ, 3Q23 revenue rose 2.4% to RM64.5mn due to higher contribution by the optical and F&B segments. However, the net profit declined 11.6% to RM6.4mn due to higher operating cost and tax rate.

Impact

• Maintain our earnings estimates.

Outlook

• We expect a much better performance in 4Q23 due to the festive period. The growth will also be supported by 3 new optical outlets (TRX, Subang and Klang) and improving F&B sales.

Valuation

• Reiterate our Buy recommendation on the stock with an unchanged TP of RM1.11/share based on 15.0x CY24 EPS.

Source: TA Research - 24 Nov 2023