KUALA LUMPUR, Dec 20 ― RHB Investment Bank Bhd has maintained a “buy” recommendation on myNEWS Holdings Bhd due to the company's scalable growth potential and strategy to go upstream, with a new discounted cash flow (DCF) target price (TP) value of RM1.45 from RM1.70 previously.
In a research note, the research firm expected a more intensive management focus on lifting the sales volume and utilisation rate of the manufacturing plant.
This includes fine-tuning product offerings to meet consumer demand and more aggressive marketing and introductory initiatives to improve consumer acceptance of fresh food products.
“Meanwhile, the underlying convenience store business is likely to remain robust in churning growth, driven by outlet expansion and same-store sales growth (SSSG).
“We reckon the strategy to go upstream is vital in complementing the store expansion to underpin sustainable growth over the long run,” it said.
Downside risks to its call include higher-than-expected increase in operating costs, competition, weak consumer sentiment and longer-than-expected gestational period of the central kitchen.
Meanwhile, Maybank IB Research, which also maintains a “buy” recommendation, has reduced myNEWS' TP to RM1.35 from RM1.62.
This is due to the expectation of a slower ramp in demand of its manufactured ready-to-eat/bakery products, which reduced its financial year 2020-2021 estimates net profit by 11 per cent-16 per cent.
At 11.38am, myNEWS’ share price fell six sen to RM1.10 with 344,500 shares traded. ― Bernama
