MYNEWS Holdings Berhad: Navigating Growth Amidst Seasonal Shifts – A Deep Dive into Q2 FY2025 Results

Greetings, fellow investors! Today, we’re taking a closer look at the latest financial performance of MYNEWS Holdings Berhad, a familiar name in Malaysia’s convenience retail landscape, encompassing brands like myNEWS, CU, WHSmith, SUPERVALUE minimart, and MARU Coffee, alongside their innovative Japanese Food Hub (JFH).

The company has just released its unaudited interim financial report for the second quarter ended 30 April 2025 (Q2 FY2025). What caught my eye immediately was the significant leap in profitability for the quarter and year-to-date, signaling a strong operational recovery and strategic expansion. However, a closer look also reveals the impact of seasonal factors, which is crucial for understanding the full picture.

Core Data Highlights: A Tale of Growth and Resilience

Let’s break down the key figures from MYNEWS’s Q2 FY2025 report, comparing it against the same period last year (Q2 FY2024) and the immediate preceding quarter (Q1 FY2025) to understand the underlying trends.

Quarter-on-Quarter (Q2 FY2025 vs Q2 FY2024) Performance: Strong Momentum

MYNEWS demonstrated robust growth compared to the corresponding quarter last year, driven by strategic expansion and improved sales dynamics.

As you can see, revenue grew by 5.1%, reaching RM202.57 million. What’s even more impressive is the gross profit, which surged by 9.6% to RM80.05 million, leading to an improved gross profit margin of 39.5% from 37.9%. This positive trend flowed down to the bottom line, with Profit Before Tax skyrocketing by 42.6% to RM4.72 million and Net Profit for the period more than doubling, up 100.9% to RM2.10 million. Basic Earnings Per Share also saw a healthy increase from 0.23 sen to 0.30 sen.

This impressive performance was primarily fueled by the addition of 38 new outlets, bringing the total to 639, coupled with improved in-store sales and a better sales mix. However, it’s worth noting that selling and distribution expenses increased by 12.7% (partially due to minimum wage increases and store expansion) and other expenses rose by 4.2% (mainly from higher depreciation on right-of-use assets and property, plant, and equipment).

Year-to-Date (6 Months Ended 30 April 2025 vs 2024) Performance: Sustained Growth

Looking at the cumulative six-month period, the growth story continues:

For the first half of the financial year, revenue grew by 7.8% to RM418.43 million, and gross profit increased by 10.6% to RM160.48 million. The most striking figures are PBT, which surged by 76.5% to RM11.47 million, and Net Profit, which saw an incredible 192.1% increase to RM6.51 million. This translates to a strong Basic Earnings Per Share of 0.82 sen, nearly double that of the previous year.

Quarter-on-Quarter (Q2 FY2025 vs Q1 FY2025) Analysis: Seasonal Headwinds

While the year-on-year figures are impressive, it’s also important to compare the current quarter with the immediately preceding one to understand short-term dynamics.

Compared to Q1 FY2025, Q2 FY2025 saw a slight dip in revenue by 6.2% and a 30.1% decrease in Profit Before Tax. This was primarily attributed to the fasting month of Ramadan and fewer trading days in February. Despite these seasonal challenges, the company managed to maintain a strong gross profit margin, improving it from 37.3% in Q1 to 39.5% in Q2, indicating effective cost management and sales mix optimization.

Financial Health Check: Balance Sheet and Cash Flow

Beyond the income statement, the balance sheet and cash flow statements offer crucial insights into the company’s financial health.

The balance sheet shows a slight decrease in total assets, but this is accompanied by a more significant reduction in total liabilities, leading to a healthy increase in total equity and net assets per share. This suggests a strengthening financial position.

From a cash flow perspective, MYNEWS generated RM21.78 million from operating activities for the six months ended 30 April 2025. While this is lower than the RM41.28 million generated in the same period last year (primarily due to changes in working capital), it remains positive. The company utilized cash for investing activities (RM13.81 million, mainly for property, plant, and equipment for new and revamped outlets) and financing activities (RM29.14 million, including dividend payments and net repayments of borrowings). Total borrowings increased slightly from RM82.30 million (October 2024) to RM89.22 million (April 2025).

Prospects and Challenges: What Lies Ahead?

MYNEWS is clearly on an expansionary path. The management is confident of surpassing its goal of 700 total outlets this financial year, a significant increase from the current 676 stores (495 myNEWS, 154 CU, 20 WHSmith, 7 Maru Coffee). This expansion is expected to intensify the utilization of its Japanese Food Hub (JFH), which produces ready-to-eat meals and bakery products.

Key growth drivers highlighted by the company include:

• Strategic Locations: Placing stores in high-traffic and public transit areas to maximize footfall.
• Lifestyle-Driven Retail Experiences: Catering to the growing demand for quick, on-the-go meal options, especially among urban consumers.
• Cross-Branding: Leveraging a single loyalty app and CRM across myNEWS, CU, SUPERVALUE, and Maru Coffee to enhance customer value and retention.
• Quality, Fresh, and Halal-Certified Food: An uncompromising commitment to food safety and quality, backed by a fully halal-certified JFH.
• Growing Consumer Preference: Malaysian consumers continue to show a rising preference for convenience stores.

However, the report also acknowledges challenges. The impact of seasonal factors like Ramadan and shorter months can affect revenue, as seen in the Q2 vs Q1 comparison. Furthermore, increasing operating costs, particularly due to minimum wage hikes and depreciation from ongoing store expansion, will require diligent cost management. The company’s strategy to counter these challenges lies in its aggressive expansion, improving gross profit margins, and a relentless focus on delivering quality products and services.

Dividend Announcement

In a positive move for shareholders, the Board of Directors has announced a single-tier interim dividend of 0.5 sen per share for the year ending 31 October 2025, amounting to RM3,751,770. The payment and entitlement dates will be announced later.

Overall, MYNEWS seems to be executing its growth strategy well, leveraging its brand portfolio and food production capabilities. Do you think MYNEWS can maintain this growth momentum and navigate the increasing operational costs effectively in the coming quarters? Share your thoughts in the comments below!