TAPPING into vegan segment of the food & beverage industry (F&B) may soon be Berjaya Food Holdings Bhd’s (BFood) latest venture.
While still a small part of its business, Hong Leong Investment Bank (HLIB) Research reckoned that such venture has growth potential given the rise in popularity of plant-based eating habits.
Currently, “Sala” which is the company’s vegan Texas-Mexican inspired restaurant stands at three outlets. BFood expects to double the number of the outlets to six this year (two stores are currently on track to open in the next two months).
“At this juncture, the prospective new stores are targeted to open within the Klang Valley vicinity,” revealed analyst Syifaa’ Mahsuri Ismail in a company update
“We reckon that these will boost BFood’s diverse offerings with the growing health consciousness among the urbanites.”
With regard to its Starbucks operations, HLIB Research expects BFood to roll out 15-20 stores over the next six months with focus for drive-through concept stores (currently at 55 stores).
“The management shared that the take up for takeaway and drive-through have been robust during the second movement control order (MCO2.0),” noted the research house.
“The online delivery sales have spiked to the range of 20-30% of revenue contribution during the current conditional MCO.”
Currently Starbucks has 326 outlets (FY2020: 316 stores) with 10 outlets successfully launched in 1H FY2021 (BFood’s financial year-end falls on June 30).
As for Kenny Rogers Roasters (KRR) which currently stands at 70 stores, HLIB Research said BFood will continue to close unprofitable large format stores by opening small format outlets instead.
In light of increasing popularity for take-away, BFood has launched KRR cloud kitchen in Grab Kitchen and Panda Kitchen to cater to the demand.
“We understand that this concept serves KRR menu without the existence of physical store, requiring only minimal capex of a regular store’s start-up,” reckoned the research house.
“Additionally, KRR is also able to benefit from the ready access to the delivery partner merchant support tools, strong delivery network and wide customer base.”
Even amid the brighter outlook, HLIB Research has decided to downgrade its rating of BFood to “hold” (from “buy” previously) as “valuation now seems fair following recent share price performance.”
However, the research house adjusted upward, BFood’s target price to RM2.10 (from RM1.78 previously).
At 10.21am, BFood was unchanged at RM2.24 with 3,300 shares traded, thus valuing the company at RM857 mil. – April 16, 2021
