• Still BUY and MYR1.20 TP, 49% upside and 6% FY25F yield. We anticipate Focus Point achieving a record-high 4Q24 net profit, underpinned by robust growth in the optical segment and increasing contributions from the F&B division. The stock remains undervalued, trading at an 8.8x FY25F P/E discount to peers, which are trading in the teens (Figure 1). Additionally, the group has consistently outperformed the broader retail industry by delivering strong revenue growth, profitability, and margins (Figure 2), even amid a challenging market environment.
• We expect Focus Point to achieve a record-high 4Q24 net profit, driven by strong sales growth from the rising myopic population (particularly children), robust corporate sales, and effective marketing initiatives. Management also noted strong footfall at tourist-centric outlets and anticipates this trend to continue. The group remains optimistic for FY25, with its focus on premium-seeking customers, which should insulate it from soft consumer sentiment.
• FY25 expansion plans. Focus Point plans to open 10-12 owned stores in FY25, primarily in mall-based locations. Despite the competitive market, management guided that it can secure prime locations and prevent competitors from entering thanks to its strong relationships with mall operators. While there is no fixed target for franchised stores, Focus Point is actively exploring franchise opportunities to capture market share in high-street locations, leveraging on its strong brand equity.
• Growing market share via effective marketing initiatives. Focus Point held eight roadshows and screened 20k people in FY24, with >50% being new to the brand and successfully converting some into customers. In addition, the group has targeted schools to screen children for vision issues, aiming to tap into the growing myopic youth market. For FY25, Focus Point plans to hold 10 roadshows to further build brand awareness and expand market share.
• Second growth avenue. The group plans to continue opening Komugi outlets in second-tier malls where competition is less intense, depending on available opportunities. For corporate F&B sales, Family Mart is performing well, with an expanding range of stock keeping units or SKUs being supplied. ZUS Coffee remains uncertain, with only one outlet currently being supplied. Meanwhile, HAP&PI's performance has not met expectations - Focus Point will reassess its quality and pricing strategy, while also aiming to supply corporate customers.
• Forecast and ratings. We make no changes to our earnings forecasts and DCF-derived MYR1.20 TP (inclusive of a 2% ESG discount), which implies 13.1x FY25F P/E or +1SD from the mean. This is in line with the valuations ascribed to other consumer retail stocks under our coverage. Key downside risks: Major delays in expansion plans and a loss of key corporate customers in the F&B segment.

Source: RHB Research - 20 Jan 2025