Second kitchen to drive Focus Point’s profitability

KUALA LUMPUR: Hong Leong Investment Bank (HLIB) Research expects the commencement of Focus Point Holdings Bhd’s second central

kitchen to accelerate its F&B division’s profitability.

HLIB said with increasing order volumes from existing clients and apparent interests from new clients, Focus Point’s current central kitchen had reached maximum capacity.

“By year- end, we estimate Focus Point’s second central kitchen to have a utilisation rate of 30 per cent based on increased orders from existing customers as well as new clients coming on board.

“We believe the second kitchen will be able to generate up to RM5 million per month from corporate sales at maximum capacity. The second central kitchen is estimated to be operational by the middle of February 2021,” it said.

HLIB also said Focus Point’s existing central kitchen facility had been granted Hazard Analysis Critical Control Point (HACCP) certification, paving way to supply to a large café chain with baked goods.

“We understand the venture will amount to RM50,000 revenue per month for the time being, given that Focus Point will solely supply macarons to a client.

“We expect this figure to increase going forward as we reckon Focus Point will start supplying new SKUs (stock-keeping units) in the future,” the firm said.

Meanwhile, HLIB said although the implementation of conditional movement control order (CMCO) restrictions alongside the Covid-19 case resurgence resulted in lower foot traffic in retail areas in October and November, Focus Point had guided that sales began to pick up in December due to the year-end festive season.

During the reimplementation of the MCO (MCO 2.0) in mid-January, Focus Point’s optical stores were only shut for a brief period because subsequently the government permitted optical stores to reopen.

“Despite being permitted to operate, Focus Point’s sales were lower by 20 per cent due to lacklustre foot traffic in retail areas.

“We like Focus Point’s relatively MCO-resilient business model as we view optical sales as an essential rather than a discretionary purchase,” it said.

HLIB downgraded Focus Point to “hold” at 76 sen as it reckoned the stock was now fairly valued.

However, the firm raised its target price (TP) to 78 sen, from 68 sen previously, underpinned by a stronger earnings outlook for the fourth quarter ended December 31, 2020.

“Note that since our last upgrade in August 2020, the stock has surged 181.5 per cent,” it added.

Source: NST