RHB Research has maintained its buy call on Berjaya Food Bhd, premised on the robust growth of Starbucks and potential turnaround of Kenny Rogers Roasters (KRR) following its business rationalisation and restructuring.
In a note, the research house said the company is in a good position to capture the anticipated recovery of consumer spending in 2021, thanks to its wide network of stores and strong brand equity.
“This is reflected in the financial year 2021 forecast net profit growth of 37%,” RHB Research said.
Berjaya Food had to close down 55% and 40% of its Starbucks (313) and KRR (82) outlets, in adherence to the government’s Movement Control Order (MCO), it said, adding that the company is negotiating with landlords or shopping mall owners for rental rebates or waivers.
The remaining outlets have continued to operate but are restricted to only takeaway and delivery.
“We anticipate the demand to recover after the pandemic but as of now, the immediate-term outlook will be challenging, as the Covid-19 pandemic and MCO should dampen consumer spending and sentiment in the next couple of months, on slower economic and disposable income growth.
“Assuming that the pandemic is contained by end-2Q20, we foresee a gradual recovery in economic and consumption growth, from third quarter 2020,” said RHB Research.
Looking further ahead, demand and sales volume growth could resume in 2021 from a low base, as the macroeconomic environment improves with positive effects stemming from the government’s stimulus packages and impacts from interest rate cuts.
RHB Research has set a target price of RM1.38 for Berjaya Food. — April 10, 2020, Bernama
