Mynews Holdings Berhad: A Hidden Gem with 35% Upside Potential

Mynews Holdings Berhad (MYNEWS), Malaysia's convenience store operator, has emerged as a compelling investment opportunity after its Q2 2025 earnings revealed accelerating growth, improving profitability, and analyst-backed optimism. With its stock price undervalued by an estimated 22% relative to revised targets, investors could capitalize on a potential 35.8% upside as the company executes its expansion plans and turns around its underperforming segments.

Strong Q2 Results Signal Resilience and Momentum

Mynews reported a 31.6% year-on-year jump in net profit to MYR 2.3 million for Q2 2025, driven by strategic store expansions and operational stability. Revenue rose 5.1% YoY to MYR 202.57 million, with gross profit margins improving to 39.5%, up 1.6 percentage points from the previous year. The company added 54 new outlets in the first half of FY2025, bringing its total store count to 676, including a focus on its profitable Mynews banner.

Analysts Reaffirm Bullish Outlook with Trimmed but Meaningful Targets

Despite trimming forecasts to reflect near-term challenges, analysts remain bullish on Mynews' long-term potential:
- RHB Research maintained a "BUY" rating with a reduced target price of MYR 0.80, implying a 51% upside from its June 2025 price of MYR 0.53. The firm cited improved margins, a planned expansion to 700+ outlets by October 2025, and expectations that its struggling CU Mart division will break even by year-end.
- CIMB Securities also kept a "BUY" rating, lowering its target to MYR 0.73 but highlighting a three-year net profit CAGR of 35.9% and the likelihood of stronger Q3 performance post-Ramadan.

Why the Stock is Undervalued

Mynews trades at a 22% discount to its average target price of MYR 0.765, offering a compelling entry point. Key drivers of its undervaluation include:
1. Underappreciated Growth Catalysts: The market has yet to fully price in the impact of its store expansion (80–100 new outlets planned for FY2025) and margin improvements from cost controls.
2. CU Mart Turnaround Potential: Analysts anticipate the division's breakeven by year-end, reducing a key drag on profits.
3. Dividend Support: A proposed 0.50-sen interim dividend signals confidence in cash flow, bolstering investor sentiment.

Risks to Consider

While the upside is compelling, investors should weigh the following risks:
- Market Cap Constraints: Mynews' small market cap of MYR 397 million may lead to volatility, especially if broader market sentiment sours.
- Management Experience: The company's recent leadership changes and reliance on younger directors could raise concerns about execution.
- Cost Pressures: Rising minimum wages and energy costs threaten margins, though Mynews' focus on cost discipline and FPC utilization may mitigate these risks.

The Case for Buying Now

The combination of accelerating revenue growth, margin expansion, and analyst consensus suggests Mynews is undervalued and primed for a rebound. With a 35.8% potential upside to RHB's MYR 0.80 target and a solid track record of executing store expansions, the stock offers asymmetric reward-to-risk.

Investors should prioritize a gradual accumulation strategy, entering positions at current levels and adding on dips. A stop-loss below MYR 0.45 would protect against downside risks tied to macroeconomic headwinds.

Conclusion

Mynews Holdings Berhad is a growth story with legs. Its Q2 results and analyst upgrades underscore a company transitioning from recovery to expansion mode. With a stock price undervalued by 22% and a path to a 35.8% upside, now is the time to consider a position in this under-the-radar convenience store operator.

Rating: Buy
Target Price: MYR 0.80
Risk Rating: Moderate (due to small cap and execution risks)