Focus Point Holdings Bhd (FPBH) reported a 3QFY24 net profit of RM8.1m (+26.8% yoy), bringing 9MFY24 core earnings to RM24m (+21.9% yoy), meeting 68% of both our and consensus full-year forecasts. We view these results as in line with our expectations, as we expect the group to deliver seasonally strong earnings in 4QFY24, driven by festive spending and stronger corporate sales in the optical segment. As such, we maintain our valuation forecasts and BUY call on FPHB with an unchanged TP of RM1.15 based on 13x FY25F EPS

Results Highlights

Solid 3QFY24 results, expect seasonal boost ahead. Focus Point posted an 8.7% yoy revenue growth this quarter, resulting in a solid net profit of RM8.1m (+26.8% yoy) and lifted 9MFY24 core earnings to RM24m (+21.9% yoy), meeting 68% of both our and consensus full-year forecasts. We view these results as in line with our expectations, as we expect the group to deliver a seasonally strong earning in 4QFY24, driven by festive spending and higher corporate sales in the optical segment. Additionally, Focus Point declared a second interim dividend of 1.75 sen (ex-date of Dec 5), bringing the YTD DPS declared to 3.5 sen.

Steady performance in optical sales. As of 9MFY24, FPHB’s revenue increased by 11.7% from RM187.2m to RM209.1m, primarily driven by the steady growth in the optical (13.4% yoy) and F&B segments (5.4% yoy). The standout performance in the optical segment was largely driven by ongoing outlet expansion, with four new stores added, increasing the total to 196 outlets compared to 192 in FY23. This growth was also supported by the expanding myopic populations, along with stronger corporate sales and the continued effectiveness of marketing and promotional strategies.

Stable growth in F&B operations. The F&B segment is gaining traction with higher corporate sales, supported by increased production of innovative products for key clients like Family Mart, which continues to expand its convenience stores network. The growth has enabled Komugi to maintain a healthy utilisation rate (100% for CK1, ~50% for CK2) and keep the F&B segment stayed in the green. Additionally, the group is still in a trial partnership with ZUS Coffee by supplying selected products to one outlet, with feedback expected by early 2025.

Earning forecast and valuation. We maintain our earnings forecasts and TP of RM1.15, based on 13x FY25F EPS, aligning with the average valuation of similar consumer retail stocks. We remain optimistic about FPHB's leading position in the eyewear business and its potential earnings expansion from the turnaround in the F&B business.

Source: Mercury Research - 25 Nov 2024