WITH the prospect of a delisting looming on April 20 following Bursa Malaysia’s recent rejection for a timeline extension to submit its regularisation plan, Practice Note 17 (PN17) in-flight caterer Brahim’s Holdings Bhd saw its share price slumped to an all-time low of 1.5 sen at the close of today’s mid-day trading.
The ultimatum given by the market regulator for Brahim’s to submit an appeal against delisting before April 14 (Thursday) lest shares of the airline caterer will be suspended from trading effective April 15 seems to be a tall order to say the least.
Recall that although Brahim’s was linked with Malaysia’s fifth prime minister Datuk Seri Abdullah Ahmad Badawi by virtue of brotherly bond with the company’s founder Datuk Seri Ibrahim Ahmad Badawi, its share price was rather subdued for most the former’s administration from 2003 till 2009.
A former lecturer and a founding member of the University Putra Malaysia’s Faculty of Food Science and Biotechnology, Ibrahim has been executive chairman of Brahim’s since May 2008. He was also the founder of Dewina Food Industries Sdn Bhd which has been manufacturing Brahim’s products since 1986.
In its initial years of operation, Dewina Food was better known as a supplier of military rations to regional armies and the United Nations (UN) Peacekeeping Forces due primarily to the unique features of its retort pouch products.
Slapped with PN17 status
Brahim’s was classified as PN17 status listed issuer on Feb 28, 2019 after its shareholder equity fell below the 25% threshold. Its shareholders fund stood at negative RM5.812 mil for the year ended 2018 as from a positive RM98.81 mil for 2017. This decline was attributable to impairment on goodwill of RM88.6 mil.
According to a media release dated March 5, 2019 which encapsulated how Brahim’s was gearing up to exit its PN17 status, the company’s profitable airline catering business actually nosedived following two Malaysia Airlines (MAS) tragedies in 2014.
This was when sovereign wealth fund Khazanah Nasional Bhd developed the MAS Recovery Plan in 2015 to rebuild the country’s national carrier which among others also reviewed all supply contracts.
As a result of this massive cost-cutting Recovery Plan, Brahim’s signed a New Catering Agreement on Sept 16, 2015 with up to 40% price cut in monthly bills.
Brahim’s had to accept very thin margins for meals served and flights handled. In that contract, the company was forced to write off RM74 mil in receivables from MAS, and reduce the remaining contract term from 14 years to 5+5 years without any compensation which affected its shareholders fund.
As a result, Brahim’s incurred its maiden loss of RM35 mil in 2014 after having posted a profit after tax of RM57 mil a year earlier while its share price plunged to below 50 sen from a high of RM2.40 of the previous year.
COVID-19 outbreak
A turnaround and eventually exiting the PN17 status became immensely impossible for the company as the world was hit by the COVID-19 pandemic in 2020 which brought the airline industry to a standstill.
Although Brahim’s SATS Food Services Sdn Bhd (BSFS) remains the principal inflight catering service provider at the Kuala Lumpur International Airport (KLIA), KLIA2 and the Penang International Airport, only a few of its 35 international airlines clients were active throughout 2020.
This resulted in BSFS catering to an average of only 70 aircraft daily and preparing an average of only 5,000 inflight meals per day from its halal inflight kitchens at KLIA and the Penang International Airport – far off its actual capacity of handling up to 60,000 meals daily.
The closest Brahim’s share price came to stage a turnaround in recent times was on Oct 12 last year when it jumped as much as 14 sen or 32.2% to 57.5 sen, its highest since end-September 2017.
However, the counter succumbed to profit taking by settling at 51.5 sen, still up 8 sen or 18.4% with 50.31 million shares traded.
For tits financial year ended Dec 31, 2021 (FYE2021), Brahim’s managed to narrow its net loss to RM12.49 mil from RM103.10 mil in FYE2020. However, the company’s revenue fell 59.29% to RM33.54 mil from RM82.39 mil in FYE2020.
At 3.08pm, Brahim’s was down 2 sen or 57.14% to 1.5 sen with 60.04 million shares traded, thus valuing the company at RM5 mil. – April 11, 2022
