Adding on some of my throughts to whats been shared on $MYNEWS / 5275 (MYNEWS HOLDINGS BERHAD)

1. Management guided that FY22 would be 80% of FY19 revenues, which i think is very conservative
- Just taking Q1'FY22 (Nov'21-Jan'22) revenue and annualising it gets you to higher than FY19 revenue figures (pre-pandemic baseline). Plus, its safe to say we are now in much more "normal" environment than we were even a few months ago.
- The footprint of the MyNews stores, which are focused in malls / commercial areas, is very positivy for recovery of the business. Malls are full again and most employers have asked their staff to return to office (at least on a hybrid basis)
- Increasing business mix of CU stores, which typically has higher basket size, will be driver for revenue growth. Plus it is a more unique and interesting assortment to differentiate itself versus competitors.
- I'd ballpark that the business could do RM600m in revenue in FY22 - ~13% higher that FY19 (pre-pandemic baseline).

2. Profitabilty is another question entirely tho given that
- Business is rapidly expanding CU stores
- It will take some time for the new stores' profitability to stabalise as they optimise assortment and minimise wastage
- FCP is not at breakeven point yet, but expected to be soon

Management is guiding return to profitability in FY23, but I'd wager the business could return to profitability by Q4'FY22 if recovery trajectory remains.

3. In my opinion, how the business decided to fund the expansion of CU will be interesting to keep an eye on.

4. The business has been investing ~RM12m - RM18m per quarter on new store openning (plus also maybe enhancements to the FCP, I'm just going off the numbers in the Cash Flow Statement - but safe to assume the vast majority of the investing activity is in new stores).

5. This business actually generates plenty of cash flow, which could fund the growth of CU stores.

MyNews' operating cash flow:
* Q1 - FY20 (pre-pandemic baseline):
-- Net cash generated from operations: RM18.5m

* Q1 - FY22 (latest quarter):
-- Net cash generated from operations: ~RM11.1m

6. I think this current quarter (Feb-Apr) could brings the business back to pre-pandemic levels at least for operating cash flows, which I'm quite optimistic it'll get very close given the strong Q1 (Nov-Jan).

7. I think its a safe bet that the business COULD fund the majority of the CU stores growth from its own cash flows. Plus maybe some debt, depending on how hard management wants to push the store expansion.

##Conclusions##
* $MYNEWS / 5275 (MYNEWS HOLDINGS BERHAD) is trading around RM0.64 - which is not far off its price at the worst of the pandemic, but the vastly improving fundementals around its operating environment and the business itself positions it very nicely to recover.
* I think shareholder concerns around equity fundraising / dilution to drive CU store expansion might be overblown given the business generates strong operating cashflows, plus there is room to take on more debt instead given the gearing is still at ~0.3x.
* The currently very low shareprice also makes it less favourable for the business to raise funds via equity.

Disclaimer: I hold MyNews shares and am definitely positive on the outlook over a long-term time horizon.

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