Focus Point Holdings Bhd

Buy. Target price:

MALAYSIA’s eyewear market is expected to record an accelerating 5-year CAGR (2024-28F) of 6.6%, on the back of increased screen time leading to vision issues and a growing population with presbyopia due to an aging population. We believe this opportunity will be well captured by FPHB considering its market leading position with an extensive store network of 189 outlets as of Q3’23 and various store formats to cater to consumers of different income groups. We highlight this business has consistently shown steady growth and superior profitability (FY22 net margin of 15% vs peer average of 10%).

Moving forward, the group is planning to open 20 outlets (inclusive of 10 franchised stores) in FY24F, which will support our forecasted 12% and 11% growth in segmental revenue and PBT.

Venturing into the F&B business in 2012, management has accumulated valuable experience and expertise in managing both the F&B retail and central kitchen operations. As such, we look forward to more stable earnings. Plans for this segment include the expansion of the Komugi bakery outlets (3-4 outlets targeted for FY24F) and to secure more corporate customers to fill up the capacity of its central kitchen (current utilisation rate: 70%). On top of that, it is also looking to launch a frozen yogurt brand in view of the growing demand and lucrative profitability.

We forecast FPHB to grow at a 5-year CAGR of 30% to RM40.2 million in FY25F – driven by the steady demand for optical and F&B products, outlet expansions, healthy SSSG, and market share gains.

Initiating coverage with a BUY and DCF-derived RM1.02 TP, 48% upside and c.6% yield.