PETALING JAYA: Focus Point Holdings Bhd’s core optical segment remains the primary engine of growth, but the narrative is shifting from pure retail expansion to high-value medical eyecare services.
Mercury Securities Sdn Bhd said that with 206 outlets now established across every state in Malaysia, Focus Point is leveraging its scale to roll out Advanced Primary Eye Care.
The research firm said that by integrating artificial intelligence-powered technologies such as AirDoc to detect eye disease early, the group is gaining ground that distinguishes it from traditional optical retailers.
“This transition into specialised healthcare services is expected to drive higher customer retention and support margins despite a competitive retail landscape,“ Mercury Securities said in a note.
Meanwhile, Focus Point’s food and beverage (F&B) segment (Komugi) remains the wildcard in the group’s portfolio. While FY25 revenue remained stable at RM44.2 million, profitability was weighed down by rising operating expenses and one-off write-downs, resulting in a RM3.1 million loss.
However, Mercury Securities noted that Focus Point’s rationalisation strategy is under way, with a focus on optimising its 14 self-owned retail outlets in Malaysia and supporting robust franchise growth in the Philippines (currently 25 outlets).
“Investors should monitor this segment for a potential turnaround play, as cost-control measures may take effect in the coming quarters,“ Mercury Securities said.
Moving on, Mercury Securities said a key highlight of the current financial year is the group’s strengthened balance sheet and more aggressive dividend policy.
Maintaining a net cash position as of December 2025 provides Focus Point with a significant opportunity to fund its expansion into East Malaysia without diluting equity.
“This financial strength has allowed the board to institutionalise a 50% dividend payout ratio with quarterly distributions.
“The record-high dividend payout (3.5 sen for FY25) provides a solid yield floor and signals management’s confidence in sustained cash flow generation,“ Mercury Securities said.
Post-update, Mercury Securities has trimmed FY26 core earnings by 3%, as the firm revised its revenue model to account for the closure of one Komugi and one Hap&Pi Kiosk in FY25.
“Furthermore, we have also elevated the number of Focus Point outlets to reflect management’s target of 10 new outlets per year between FY26-FY28.
“Correspondingly, we derived a new target price of RM0.66 from RM0.68 previously, applying a target PE multiple of 10x to its FY26 EPS of 6.6 sen.
“Given the undemanding valuation alongside a compelling dividend yield of 6-8%, we maintain our Buy recommendation for Focus Point,“ the research firm said.
Mercury Securities continues to like Focus Point due to its market leader position with 15% to 20% market share, tailwinds from regulatory changes, including the Medical Device Authority banning the online sale of optical devices and contact lenses by non-licensed sellers.
This regulatory shift is expected to benefit Focus Point, given its strong licensed presence and leading market position.
Further, Focus Point’s diversified revenue coming from emerging F&B contribution and resilient private consumption supported by higher disposable income are also seen as positive, with favourable market conditions, targeted assistance programs and vibrant tourism activities.
“Risks to our recommendation include intense competition, supply chain disruption, and dependency on registered optometrist/opticians and upside risk of inflationary pressure,“ Mercury Securities said.
