MORNING CALL:6/11/23

TA Securities gaze has sharpened on Focus Point’s 2H prospects

Transcript

00:00 We start this week by putting the bifocals on TH Security's report on Focus Point,

00:05 where the research house walked away from a recent briefing, positive that things will

00:09 be better for the optical retailer in the second half.

00:12 It has a buy call and RM1.11 target price, implying a possible upside of almost 40%.

00:18 To recap, optical sales remain the critical contributor to Focus Point.

00:22 Six-month optical sales grew by 2% to RM99.1 million, driven by three new optical outlets.

00:28 Thereafter, Focus Point opened two more new optical outlets and is on track to open three

00:33 more in the fourth quarter.

00:35 Overall, TA expects optical sales to surge in the fourth quarter due to seasonality,

00:40 namely festive times and higher corporate sales.

00:43 The F&B division actually reported a loss before tax of RM1 million in the first half,

00:47 despite a higher revenue due to higher staff costs, as the group recruited more headcounts

00:51 in the first quarter.

00:52 Yet to date, the group has opened two more Komugi outlets, bringing the total number

00:56 of outlets to 13 in Malaysia.

00:59 TA understands that management will continue to look for new locations to open its new

01:03 high street concept Komugi outlet.

01:05 Positively, TA actually expects the F&B division to turn around in the second half, driven

01:10 by a price revision and lower staff costs.

01:13 TA is actually projecting the F&B division to grow by 10.2% in FY23, driven by higher

01:19 orders from existing customers and potential new clients coming on board.

01:23 Looking at Bloomberg, aside from TA's most recent report, the only other research house

01:27 that covers Focus Point is HLIB, and that was at the end of September.

01:31 That is also a buy.

01:33 Average target price is RM1.13, and that is 33.5 cents more than its last close.

01:38 [music]