RHB Investment Bank (RHB) maintained Focus Point Holding Bhd.’s (FOCUSP) BUY rating with a target price of RM1.12, representing a 39% upside and approximately 5% yield. The company’s robust topline growth in 1Q24 (+15.4% YoY) was expected to sustain into 2Q24F, driven by effective marketing strategies and a rising myopic population. The current valuation was deemed compelling given FOCUSP’s market leadership and strong brand equity in the optical business.
Despite Retail Group Malaysia revising its 2024 retail sales growth expectations downward to 3.6% from 4% due to a subdued 2Q outlook, RHB anticipated FOCUSP’s optical segment to outperform the broader retail industry. Management observed a strong SSSG trend in 2Q24F (1Q24 SSSG: +11% YoY), attributed to aggressive brand-building initiatives. These included collaborative marketing campaigns, targeted brand awareness roadshows, and exhibitions, effectively raising brand visibility and attracting new customers. The 360 Advanced Primary Eye Care campaign was also noted for enhancing customer engagement and driving larger spending ticket sizes.
The company’s expansion plans remained intact, intending to open 18 additional stores (8 owned, 10 franchised) in 2024, focusing on untapped areas outside shopping malls. Optical corporate sales, which doubled (+109% YoY) in 1Q24 due to new corporate customers, were expected to provide a consistent revenue base with significant upside potential as more companies upgraded staff benefits.
In the F&B segment, RHB foresaw continued growth driven by the expansion of its largest corporate customer, FamilyMart, and additional orders from new clients like ZUS Coffee and Cotti Coffee. This was expected to boost central kitchen utilisation above the 70% breakeven level. FOCUSP also planned to add two new Komugi outlets in FY24 and a second HAP&PI frozen yoghurt store in Johor, following the success of the first store in Kuala Lumpur.
RHB made no changes to its earnings forecasts and maintained the DCF-derived target price of RM1.12 (inclusive of a 2% ESG discount), implying a 13.9x FY24F P/E or +1SD from the mean. This valuation was in line with other consumer retail stocks under RHB’s coverage.
Investors were encouraged to consider FOCUSP for its market leadership, strong brand equity, and promising growth prospects in both its optical and F&B segments.
