Focus Point - worth for investment?

 

I am myopic since 10 years old. Now am I am 45.

When I was 25 years old, my younger sister brought me to Focus Point in the Curve to buy a pair of branded glasses. I forgot the brand of the glasses already. But, I remember that the price of my glasses was around RM 800++. Pretty expensive for me. Since then, my first impression to Focus Point is --> high-class & expensive (not my taste). 

I never thought to buy the shares of Focus Point (FOCUSP) all this while, until I found out from HLIB's analyst report about this company. After doing some analysis on FOCUSP's financial report, I found that its revenue and net profit historical data are as below:

It is listed in the ACE market of KLSE in 2010. Since then, its net profit is down-trending from 2010 to 2018, although the revenue is growing. Interestingly, after 2018, both revenue and net profit have experienced a noticeable growth. Indeed, I am curious on why this could happen as optical industry is highly competitive. So, I dig into its Annual Report 2018 and found the following statements from the Chairman:

Thus, to bring focus back to our business, our fellow board members together with the management team and we have pushed through five main strategies so that we can have a more sustainable business:

 1. Upgrading our malls in areas where population growth is still prominent; 

2. Careful selection of our growth areas and launching our own e-commerce site; 

3.  Smarter procurement to match the changing lifestyle needs of our consumers; 

4.  Investing in human capital to support both our wholly owned and franchise business’; and  

5.  Aligning, and initiating cost management processes for managing and expanding the food and  beverage business.

If I understand correctly, the Management has been very selective in picking up locations for establishing new branches. Also, they would invest in upgrading the shops (in selected hot locations) to make them more appealing to potential customers. Cost management (smart procurement) is another way out, and the Management would find ways to expand the franchise and F&B business. 

Now, let us zoom into the CAGR of its business segments from 2018-2024. There are 3 business segments of FOCUSP, i.e. optical (main), F&B (Komugi) and franchise (mainly optical, I think).

One thing that has grasped my attention is its optical business. Although its revenue growth  is only 7%, its PBT growth is recorded at 24%!! This may indicate the cost management strategy implemented by the Management team is working well. The similar trend has been observed for its franchise segment. This is pretty amazing. Its F&B revenue experienced a double digit growth as well; however, this segment's profitability is hardly predictable. Sigh... bakery industry is high competitive.

I have also studied the number of optical retail outlets of Focus Point. Up to 2025, there are about 200 outlets in Malaysia. There are many types of optical retail outlets of Focus Point, targeting different market segments. Table below shows the number of outlets of the main types:

Can you see the pattern? Since 2018, the number of Concept Store has experienced a double digit growth, a whopping 23%!! As compared to other types of retail outlets, they are hardly growing in number. Management could believe that Concept Store could attract more sales as compared to other types of retail outlets, hence, they have been trying to grow the number of concept stores. I went into the Focus Point Concept Store in IPC yesterday (21 March 2026). Basically, all kinds of Focus Point optical products are housed in the Concept Store, ranging from the affordable (Whoosh) to luxurious (branded, e.g. BOSS, OAKLEY, etc.) one. I believe most customers would find it easier to find their desired glasses in the Concept Store. My daughter told me that the glasses there are trendier than other ordinary eyewear shops in United Point Kepong, as she finally found her preferred frame in the Focus Point Concept Store in IPC. She has her new Whoosh glasses readied in 30 minutes (Original Price: RM 288 Frame + Lens (UV & thin) + RM 100 (Blue-ray) = RM 388). As I am a MiCare member, I am entitled for another 10% discount (so I paid RM 349).

I have asked my daughter what's her experience when doing eye-power checking in the dark room. I did not manage to enter the room as I am filling out the optical form. She mentioned that the staff has performed a more thorough checking on her eyes as compared to the eyewear shop in United Point Kepong. The staff also check the focal points on her left and right eyes using a separate machine, before assembling the glasses. My wife did a free eye-check also on her eye pressure. I remembered that the CEO of FOCUSP once said he is offering differentiation in terms of service offered.

How about its Free Cash Flow (FCF)? One should note that a healthy company should pay dividends from FCF, not from bank borrowings. All this while, Focus Point is able to generate +FCF since 2014, which is commendable. More interestingly, its FCF generation capability is significantly stronger after FY2018. In FY2025, the total dividends given is RM0.0356/share * 616M shares = RM22M (only 30% of its FCF in FY2025 of ~ RM 74M). No wonder Focus Point has recently revised its dividend policy to become 50%.

Valuation

I have studied the PER of Focus Point during the years when its net profit is growing. Based on the median PER values of years 2020, 2021, 2022, 2024 and 2025, the median PER is ~11.2. So, the fair value would be around PER x Estimated EPS (=RM 0.0569) = RM 0.63.

During the time of writing (22 March 2026), the share price is RM 0.485. So, the Margin of Safety (MOS) is around (RM 0.63 - RM 0.485) / RM 0.485 ~ 30%. It is very attractive for me personally.

Strength of FOCUSP:

1. Largest eyewear retail chain, enjoying economies of scale.
2. Many shops are available (nearly 200 as in FY2024). Easier accessibility.
3. Differentiation in eye-checking services.
4. Aging population, rising myopic cases amongst children.
5. Working with Third Party Administrator (TPA) like MiCare & other corporate partners to boost up sales.
6. Offers advanced and comprehensive eye-screening procedures which are hardly found in other ordinary eyewear shops.

Risk:

1. Stiff competition by other players. Recently, A-look was acquired by EssilorLuxottica, the largest  eyewear company in the world. If A-look is expanded further, it could pose a risk to the growth of FOCUSP.
2. Dragged by F&B business which is very competitive.

Q4 2025 YSPSAH: A good quarter?

 

I am very lazy nowadays. Just have time to summarize the findings of YSPSAH recent quarter result. YSPSAH just reported its Q4 2025 earning as below:

As expected, due to the strengthening of MYR against USD, it booked another forex loss of RM 4M this quarter (vs. gain of RM 3 M Q4 2024). This reported figure is the combination of realized and unrealized forex loss. To know the exact numbers of each category, we have to refer to the upcoming annual report. No choice. However, according to my research (from FY2016 - FY2024), regardless of the fluctuation of USD against MYR, its realized forex gain/loss is only around RM 1M - 2M. I believe its natural hedging is properly implemented so far. Even during FY2024 (where USD weakens against MYR broadly), YSPSAH is still able to book in a realized forex gain of RM 1.6M (& unrealized loss of RM 9.2M).

For this Q42025, despite the forex loss, the net profit attributed to shareholders (accounting profit) stands at RM 7M, which is higher than the accounting profit reported in Q4 2024 (RM 6 M). On the whole year basis, however, the accounting profit for FY2025 is RM 25M, slightly lower than RM 27M made in FY2024. However, core profit (after adjusting forex loss, assuming the reported RM14M is unrealized forex loss) for FY 2025 is RM 39M (vs RM 35M in FY2024), which is commendable.

The operating cash flow (OCF) generated in FY 2025 is very strong, which is significantly higher than the accounting profit. Free cash flow in FY2025 comes at RM 54M-RM4M = RM 50M, which translate to FCF/share of RM0.35. It has ample cash to pay dividend from the internally generated cash flow obviously.

Concerning on its future expansion plan, I learn from the Management in AGM 2024 that they would build an advanced production line to boost up the capacity. They claimed that there is a problem in their old manufacturing line, leading to their inability to secure some local orders. As shown in the revenue breakdown below, local (and overall) sales experienced a slight drop indeed. This might indicate that the manufacturing plant could not take more capacity any longer, hence need further expansion.

From the cash flow statement (under Property, Plant and Equipment), I guess the number reported does not reflect the arrival of the new machinery yet. Still, the budget falls under capital commitment (Note A12 below). 

For valuation, core EPS comes at RM39M/142M shares = RM 0.27/share. Considering the closing price on 19/3/2026 (RM2.08), PER ~ 7.7. Personally, I found that it is very attractive. Plus, its dividend yield is > 5% with potential of further profit growth after the commissioning of the new production line.

Of course, Mr. Market would definitely abandon this counter as the USD is weakening nowadays (vs MYR). For a value investor like me, this would enable me to slowly accumulate the shares. Of course, this comes at certain opportunity cost. However, I am the kind of person that do not like to chase hot counter at high valuation. This kind of "boring" counter, instead, is my cup of tea.

The risk is rising energy cost (Iran war) and competition from bigger rival like DPHARMA in local market. It seems to me that DPHARMA is always the preferred supplier of government hospital. The Management told me that their competitiveness is their good service. Well, I am not sure how good service would translate to more sales lah... I am not familiar in pharma industry. Need more time to find out.

The truth of long term investing 长期投资 & the "mean reversion"

I believe most of us have heard about this: 

"To succeed in share investment, one MUST practice long-term investing, or 长期投资".

Sometimes, I wonder why those experienced investors always say the above. It seems to me that they like long-term investing SO..........MUCH. 

But, is it really the case?

I have a personal experience. I bought the shares of CCK in late 2023 at around RM 0.8x, the price shoots up to RM 1.4++ around mid of 2024, a hefty 80% gain in just a few months. I sell all my CCK shares as it is trading beyond the intrinsic value.

The above is one of my success stories, achieving 80% realized profit within 6 months.

However......

There are many instances in my investment journey whereby the bought companies have not reached their intrinsic values within the anticipated period of time. This is due to many factors: 

(a) Money does not flow into the sector of the bought company. For example, most monies flow into AI-related sectors in 2025, making those companies in other sectors under-performing although they are growing and financially sound.

(b) Near-term headwind on the industry. For example, export-based companies experience unrealized forex loss due to USD weakening against MYR, or facing business disruption in the Middle East during the Iran-Israel war in 2026, etc.

All these factors could be unprecedented, and out of our control in most cases. As investors, we have no choice but live with all these uncertainties.

In many cases, I bought the shares of those under-valued, fundamentally strong and growing companies at the time when their share price is up-trending (with the help of technical analysis), hoping their share price would revert to their mean (i.e. the so-called mean reversion process, which the legendary investor Ben Graham said that it would just happen magically). During this process, some headwinds would just appear and drag the entire mean reversion process. What would be a value investor do in this scenario? Well, if the headwind is not long-term, I believe most investors would choose to hold. There you go.... they have no choice but to go for long-term investment in this company.

For me, the strategy of  LONG-TERM investing is developed from the fact that in short-term, an under-valued, good company is very likely to face headwinds from time to time. If you are lucky (like my investment journey in CCK above), then you could make handsome profit in just a few months. But, in a real investment journey, sadly to say, we could not replicate this "luck" for every company that we bought. 

This is my message: We DO NOT like long-term investing. 

In fact, we are "forced" to do LONG-TERM investing to accommodate all the uncertainties during the mean reversion process, which could take years. After all, who do not wish their companies to get to their intrinsic values within a short period of time?

AJI-Q3 ending 31 Dec 2025 quarter result

 

AJI just released its Q3-2025 result as below:

By purely looking at the above result, the quarter net profit is not so good if compared to last year. What are the main reasons behind? Well, let us look into Note 11 below:

As expected, there is an unrealized forex loss of RM1.9M vs gain of RM 3.6M last year. It is due to the strengthening of MYR to other major currencies. If adding back the unrealized forex loss to the current quarter net profit, the core profit of the current quarter would be: RM 13234k+ RM 1938k = RM 15.2M (vs core profit of RM19348k - RM3624k = RM15.7M). So, the core business profit is almost flat.

Meanwhile, Management has guided that there is a marketing expense in Q3. Unfortunately, the exact amount is not disclosed. Similar question has been asked to the Management during AGM; however, no exact numbers coming from them... Not sure why it is so secretive.

Overall, the current Q3 result is not bad. If no marketing expenses, I guess the overall core profit would be higher than last year.

At the time of writing, Iran war is happening in the Middle east. I believe the freight cost to Jeddah (Saudi) would be higher, affecting the profit of AJI in near term. As a result, Market has realized this and sell the shares beforehand. I choose to hold, as the current share price is still below my calculated intrinsic value. 

Frankly speaking, I feel bit sad as all my paper profit evaporated due to the heavy selling. Who wouldn't, right? But, this would definitely happen to any serious investors in their long investment journey, I believe.

Hopefully the Iran-US-Israel conflict would be resolved soon.