myNews Holdings Bhd (KLSE:MYNEWS) is a fast growing convenience stores operator listed in Malaysia. As of 12 August 2019, myNEWS is valued at RM 995.9 million in market capitalisation. In this article, I’ll bring an account on its developments since listing in 2016, latest financial results and valuation figures. Thus, here are 10 things to know about myNEWS before you invest:
Growth Strategy 1: Outlet Expansion
myNEWS operates a large network of retail convenience stores through its brand name ‘myNEWS.com’ and as well as WH Smith outlets located at international airports across Malaysia under a joint venture with WH Smith. As of 21 June 2019, myNEWS’s portfolio of outlets had increased to 483, up from 165 outlets as of 31 October 2013.
Source: myNEWS’s Annual Reports and IPO Document
Growth Strategy 2: Sub-Distribution Centre in Johor
In December 2016, myNEWS acquired a semi-detached factory located at Eco-Business Park 1, Tebrau, Johor for RM 3.92 million. It is used as a warehouse to support logistics functions for its retail stores in Johor. As such, myNEWS is able to free up spaces in its existing facility in Rawang to support its retail stores in Central and North of Peninsula Malaysia.
Growth Strategy 3: Corporate Office & Warehouse in Kota Damansara
In August 2017, myNEWS acquired an industrial land together with a 3- storey office block and a 1-storey warehouse for RM 50.0 million. It has moved into its new premises and have started the construction of food processing centre (FPC) on its industrial land. The FPC comprises of two production plants that would manufacture bakery products for its joint venture companies namely, myNEWS Ryoyupan Sdn Bhd and myNEWS Kineya Sdn Bhd.
Overall, myNEWS has achieved a CAGR of 20.2% and 17.8% in revenues and shareholders’ earnings for the past five years. Revenues had grown from RM 157.1 million in 2013 to RM 393.4 million in 2018. It is directly contributed by the above growth initiatives mentioned above. Hence, it has recorded growth in its earnings, up from RM 11.7 million in 2013 to RM 26.5 million in 2018. Since its listing, myNEWS has a three-year ROE average of 10.66% per annum. It means, it made, on average, RM 10.66 in annual earnings from every RM 100.00 it has in shareholders’ equity.
Source: myNEWS’s Annual Reports and IPO Document
Cash Flow Management
Since its listing in 2016, myNEWS has generated RM 33.7 million in cash flows from its operations and raised RM 160.1 million in net equities. In that period, it had spent on:
– RM 128.7 million in net capital expenditures (CAPEX).
– RM 40.3 million in net acquisition of other investments.
– Total of RM 17.7 million in dividends to its shareholders.
Overall, it has raised its cash reserves from RM 6.4 million in 2015 to as high as RM 23.6 million in 2018. Evidently, myNEWS has placed more of its efforts on expansionary activities, which had resulted in higher sales and profits from 2016 to 2018.
Over the past 12 months, myNEWS has made RM 463.7 million in sales and RM 29.5 million in shareholders’ earnings, which equates to a total of 4.33 sen in earnings per share (EPS). Hence, it has been able to keep up with its growth trajectory recorded over the last 5 years.
|Period||Group Revenue||Shareholders’ Earnings||EPS (Sen)|
Source: myNEWS’s Quarterly Reports
- Balance Sheet Strength
As of 30 April 2019, myNEWS has reported to have RM 44.2 million and RM 297.8 million in non-current liabilities and total equity. The company’s gearing ratio is 14.8%. In addition, the company has current assets of RM 157.0 million and current liabilities of RM 60.0 million. Its current ratio is 2.62.
- Valuation Figure 1: P/E Ratio
As of 12 August 2019, myNEWS is trading at RM 1.46 a share. Based on its 12-month latest EPS of 4.33 sen, its current P/E Ratio is 33.72, below its 3-year average of 35.07.
- Valuation Figure 2: PEG Ratio
From above, myNEWS has recorded 17.8% in earnings growth rate on a per annum basis from 2013 to 2018. Hence, its PEG Ratio is 1.89. Based on the PEG Ratio formula, it has indicated that its stock price has grown
at a pace much faster as compared to its earnings growth in the period.
- Valuation Figure 3: P/B Ratio
As of 30 April 2019, myNEWS reported 44.0 sen in net assets a share. It has a current P/B Ratio of 3.32, below its three-year average of 3.73.
- Valuation Figure 4: Dividend Yields
myNews has paid out 1.00 sen in dividends per share (DPS) in 2018 and will be paying out (15 August 2019) 1.00 sen in DPS for 2019. As such, it is offering a dividend yield of 0.68% per annum, below its local FD rates of 3.0% offered currently.
Overall, myNEWS has delivered continuous increase in revenues, earnings, and dividend payments to its shareholders since its listing in 2016. Its stock price has increased from 2016 to early 2018 as shown below. However, the rise had stopped and has led into a period of flat movement in stock price till today, as I write. The stock price is trading at P/E Ratios way above 30.0 and is offering almost negligible dividend yields presently.
What’s your thoughts on myNews Holdings Bhd?
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