MyNews’ earnings performance to remain subdued in 3QFY20F

KUCHING: MyNews Holdings Bhd’s (MyNews) earnings performance has been projected to remain subdued in the third quarter of financial year 2020 (3QFY20F).

According to AmInvestment Bank Bhd (AmInvestment Bank), earnings performance for 3QFY20F remains uncertain as the recovery in demand is still in its early stages.

“Footfall is gradually improving with the easing of the Movement Control Order (MCO) which bodes well for the group,” the research firm said.

“Moving forward, we think Mynews’ earnings performance will remain subdued in 3QFY20. The group’s food processing centre (FPC) closed temporarily in May before production recommenced on June 14, 2020.

“We think that there will be further downward pressure on the group’s margins due to the absence of ready-to- eat (RTE) offerings, which fetch a higher margin.

“However, we think that following the easing of the MCO, footfall will gradually return and demand will slowly creep up.

“Hence, we think that the group’s earnings will recover in the second half of 2020 (2H20).”

Looking ahead, AmInvestment Bank expected Mynews’ profit after tax and minority interest (PATAMI) to contract by 41 per cent in FY20F due to the impact of the Covid-19 pandemic and MCO.

“We also think FPC’s gestational costs will remain a drag on the company’s operating profit margins for the next two years.”

The research firm estimated FY21F PATAMI to grow by 39 per cent y-o-y on the back of a recovery in sales, assuming that Covid-19 is fully contained by 1H of current year 2021 (1HCY21).