Home-grown MyNews Holdings Bhd, which already operates some 570 stores, is bringing a South Korean convenient store brand to the Malaysian market.
At its headquarters in Kota Damansara, the convenience store operator announced that its wholly-owned subsidiary MYCU Retail Sdn Bhd had signed a licensing agreement with BGF Retail Co Ltd, which runs the CU line of convenience stores in South Korea.
There are some 15,000 CU stores in the republic.
MyNews chief executive officer (CEO)-cum-founder Dang Tai Luk said the group will open 500 CU stores in five years’ time, with the first set of stores set to be open in Malaysia by early 2021.
When asked about the geographical location spread of the new stores, Dang said the group will look at launching the stores in bigger cities first.
“The Klang Valley is where we would start our CU journey,” he said, noting that onboarding the CU stores is part of the group’s expansion strategy.
In the first year, Dang said, the group will be looking at opening 30 to 50 CU stores first to monitor how they perform.
He noted that CU will be using MyNews’ food processing center (FPC) and, as a result of this, the center’s utilization rate will be increased to around 70%, partly aided by CU products at end-2021, from 35% currently.
The group expects the CU stores to break even in two to three years’ time, with MyNews spending RM30 million to RM40 million in capital expenditure (capex) on the stores.
In terms of earnings contribution, he noted that group will see higher revenue as a result of the new stores that are expected to achieve better gross margins when compared to the MyNews stores, whose margins tend to be 30% to 40% currently.
He noted that there is a gestational period for the CU stores and that initially the MyNews outlets will continue to be the group’s main earnings contributors, but opined that as the CU stores grow, they will contribute more to the bottom line.
Dang was not concerned about oversaturation in the convenience store market, noting that the market in Malaysia is still young and growing with the penetration rate still low.
The licensing agreement will last for 10 years, with an option to renew for another 10 years.
There are currently 570 MyNews stores at the moment. When queried about whether it will slow the launch of MyNews stores in favor of the CU stores, Dang noted that the group will monitor the situation and adjust its portfolios accordingly.
MyNews was last traded at 67 sen, with a market capitalization of RM457.04 million.
