MyNews Holdings Bhd is facing continued pressure on its profit margins despite steady revenue growth driven by store expansion and resilient consumer demand, according to a recent analysis by CGS International Research. The convenience store operator reported a core net profit of RM9.5 million for the first nine months of its 2026 financial year, falling short of expectations. This figure represented 49% of CGSI’s full-year forecast and 61% of Bloomberg consensus estimates.

The shortfall was attributed primarily to a decline in gross profit margin, which contracted by 0.6 percentage points year-on-year to 37.5%, alongside rising operating costs. Selling and distribution expenses increased by 9% compared to the same period last year and 6.1% quarter-on-quarter, further squeezing profitability.

CGSI Research highlighted that MyNews’ large store network, which incurs significant electricity costs due to refrigeration, lighting, and air-conditioning requirements, is particularly vulnerable to the impact of rising utility tariffs. These elevated costs, combined with ongoing promotional activities, are expected to continue limiting margin recovery in the near term.

Reflecting these challenges, CGSI revised down its core net profit estimates for MyNews from 2026 through 2028 by between 11% and 38%, citing a more cautious outlook on margins and higher operating expenses. As a result, the research house downgraded the stock rating from "add" to "hold" and reduced its target price from 66 sen to 45 sen.

Despite these setbacks, CGSI remains optimistic about MyNews’ growth prospects, noting that the company’s store expansion strategy is likely to remain on track. The firm projects that MyNews will continue adding approximately 60 stores annually over the next three years. It also anticipates that a wider range of ready-to-eat products could help support basket sizes and drive revenue growth, which it estimates will rise by about 10% per year in 2026 and 2027 and by 9% in 2028.

While return on equity is expected to recover to around 12% by 2028 amid improved profitability and operational efficiencies, gross profit margins are forecast to remain relatively stable between 37.5% and 38% over the same period, despite an anticipated compound annual revenue growth rate of nearly 9.7%. The outlook suggests that MyNews will continue to face margin pressures even as its revenue base expands.