FOCUSP: Strong Optical Performance Fuels Earnings Beat, Buy Rating Maintained
| Investment Bank | TA SECURITIES |
|---|---|
| TP (Target Price) | RM0.75 (+37.0%) |
| Last Traded | RM0.55 |
| Recommendation |
An investment bank report highlights a robust performance driven by the optical segment and an optimistic outlook for the second half of 2025. Despite challenges in the food and beverage (F&B) division, the group’s strategic initiatives and cost efficiencies have led to a maintained “Buy” recommendation and an unchanged target price.
Performance Review
The optical segment continues to be the primary revenue driver, contributing a record 83.3% of total revenue in 2Q25. Profit Before Tax (PBT) for this segment surged by 14.9% year-on-year (YoY) to RM11.5mn, significantly outpacing its 3.3% revenue growth to RM60.6mn. This strong performance was attributed to a substantial 71.7% increase in corporate sales, reaching RM5.0mn, bolstered by an expanding base of optical corporate customers, which grew from 731 to 780. Furthermore, improved cost efficiencies and enhanced supplier rebates led to a 2.1 percentage point expansion in the PBT margin to 20.8%.
Conversely, the F&B segment faced headwinds, registering a Loss Before Tax (LBT) of RM0.8mn in 2Q25, a reversal from the PBT of RM0.7mn in 2Q24. This decline was primarily due to a one-off write-off of property, plant, and equipment (PPE) following the closure of a Komugi outlet, higher operating costs associated with the opening of several new Komugi outlets, and a 13.2% YoY decline in corporate sales to RM4.5mn.
Future Outlook and Strategic Initiatives
Management anticipates a stronger optical performance in 2H25, supported by resilient margins from price adjustments, the inelastic demand for optical products, a growing corporate client base (now over 800), and favorable seasonal trends. The group aims to open up to 10 wholly-owned optical outlets in FY25, with five already launched in 1H25 and additional openings scheduled for 2H25 across various locations.
For the F&B segment, a turnaround is expected in 4Q25. This recovery is projected to be driven by an anticipated improvement in corporate sales in 3Q25, bolstered by the onboarding of approximately four new corporate clients, the introduction of new product offerings, and tighter cost controls. While retail expansion has slowed due to softer consumer sentiment and the impact of sales and service tax (SST), strategic marketing initiatives are in place to sustain momentum.
The group also actively champions vision care awareness through its sustainability efforts, which include continuous investment in Advanced Primary Eye Care (APEC) equipment and community roadshows. Partnerships, such as with Airdoc for AI-powered retinal imaging, further enhance value-added services for customers.
Investment Recommendation
The investment bank maintains its “Buy” recommendation with an unchanged target price of RM0.75, representing a 37.0% upside from the last traded price of RM0.55. This valuation is based on a PE multiple of 12.0x FY26 Earnings Per Share (EPS), with a decent dividend yield of 5.2% for FY25. The earnings forecasts for FY25-27 remain unchanged.
