BERJAYA Food Bhd (BFood) – the undisputed star performer in the Berjaya group stable for now – has never stopped impressing as its management makes the dollar sign figures be seen and counted as opposed to merely making an easy-to-slip-away projection.
Its latest set of strong core net profit of RM31.9 mil for 3Q FY6/2022 which brings its 9M FY6/2022 net earnings to RM85.8 mil has been far above the expectations of both Maybank IB Research/CGS-CIMB Research and consensus, prompting both research houses to upgrade the company’s target price ‘by leaps and bounds’.
Maybank IB Research retained its “buy” rating on BFood with a 72.7% jump in its target price to RM5.70 (from RM3.30 previously) as it pegged the company to a higher FY6/2023 price-to-earnings ratio (PER) of 20 times (mean; 14 times FY6/2023 PER previously) to reflect its normalised business conditions post-pandemic.
CGS-CIMB Research reiterated its “add” call on BFood as a strong border re-opening play with a robust three-year EPS CAGR (earnings per share compound annual growth rate) of 30.5% while elevated its target price by 25% to RM5.50 (19 times CY2023F PER) from RM4.40 previously.
Maybank IB Research expects BFood’s sequential earnings to remain strong driven by higher sales volume from (i) Hari Raya Aidilfitri celebrations, (ii) re-opening of international borders; and (iii) extension of business hours past midnight.
“Adjusting for the latest run rates, we raise our FY2022/FY2023/FY2024 earnings estimates by 26%/21%/21%. Our DPS (dividend per share) estimates have also been raised to 5sen/6sen/6sen (from 4sen per annum previously),” noted analyst Jade Tham in a results review.
Meanwhile, CGS-CIMB Research is bullish on BFood (i) as a solid re-opening play; (ii) for the strong brand equity of Starbucks; (iii) its robust earnings growth profile with a three-year EPS CAGR (FY6/2021-FY6/2024F) of 30.5%; and (iv) for the sustainable turnaround of its Kenny Rogers Roasters Malaysia (KRR) operations.
“We gather that BFood aims to open 10-13 new Starbucks stores (circa five with a drive-through) in 4Q FY6/2022 after only two new stores in 3Q FY6/2022 due to delays in obtaining relevant authority approvals (year-to-date openings: 18),” revealed analysts Khoo Zhen Ye and Walter Aw.
“KRR could also open four new stores/kiosks in 4Q FY6/2022 after the relocation of two outlets to areas with higher footfall in 3Q FY6/2022. Moving forward, we expect 4Q FY6/2022 to see a strong sales growth trajectory on (i) capturing the Hari Raya festive sales; (ii) longer operating hours; and (iii) a higher store count.”
At 11.01am. BFood which is 67% controlled by Berjaya Corp Bhd founder and chairman Tan Sri Vincent Tan Chee Yioun was up 16 sen or 4.32% to RM3.86 with 572,700 shares traded, thus valuing the company at RM1.41 bil. – May 12, 2022
