KUALA LUMPUR: Focus Point Holdings Bhd (FPH) will likely see strong optical sales year-end as the company's optical performance increased by 4.3 per cent quarter-on-quarter (QoQ), Hong Leong Investment Bank Bhd (HLIB Research) said.
The bank-backed research firm also noted that FPH's positive sales momentum will continue with its brand equity and store expansion.
Further, FPH's year-on-year (YoY) sales recorded softness from high base effects from the reopening and flush of cash with an Employees Provident Fund (EPF) special withdrawal.
HLIB Research said this is reflected in YoY retail segment and franchise sales declining by 10.5 per cent and 27.4 per cent, respectively.
However, the research firm noted that with the active onboarding of new customers, corporate sales charted strong growth of 56.0 per cent YoY.
"The expansion in the optical business will enable the group to bargain for higher rebates from its key suppliers, mainly established foreign brands.
"FPH targets to expand an additional 10 outlets in FY23, with the target revised down from 12 following the mall opening delay.
"Year-to-date (YTD), the company has successfully launched four new outlets, with the remaining five to open in the fourth quarter (Q4) of 2023," HLIB Research said in a note.
In addition, HLIB Research also noted that FPH is actively launching new initiatives such as 360° Advanced Primary Eye Care
(APEC) campaign to raise awareness of the importance of eye health.
Additionally, some of the ongoing promotions include a contact lens promotion and a discounted Whoosh frame and lens package.
On the food and beverage (F&B) segment, HLIB Research noted that the segment continues to grow, with sales expanding by 4.7 per cent YoY thanks to positive retail and corporate sales contributions.
The Komugi retail outlet benefitted from the bustling footfall traffic and stronger marketing activities. At the same time, corporate sales were aided by ongoing initiatives to secure new F&B corporate clients and increase the utilisation rate for the central kitchen (CK1) and CK2.
"We understand F&B recorded a turnaround after excluding the losses from the franchise in the Philippines.
"As for the flagship Komugi store in Shah Alam, we gather the sales performed well and up to expectations," HLIB Research noted.
On the outlook, HLIB Research expects pockets of opportunities with the reopening of China's borders that could spur the tourist momentum, especially in the branded sunglasses segment.
"For F&B, we expect the segment to recover with the coming orders from the new expansion of the corporate clients list, which includes big retailer A, airline customer AA, café chain Z, and petrol station café outlets.
"Apart from supplying white-labelled products, the diversification includes supplying Komugi's frozen products at selected stores," HLIB Research noted.
The research firm reiterated 'Buy' for FPH with an unchanged target price of RM1.15.
"We remain confident in FPH's scalable business model as we reckon that both optical and F&B segments are poised to continue their growth trajectories with the group's brand equity and popularity of Komugi products," the research firm noted.
