KUALA LUMPUR: Maybank IB Research has maintained its buy call on Berjaya Food Bhd with a higher target price (TP) of RM1.85 from RM1.80 previously, on the expectation of sequential earnings improvement in the third quarter for the financial year ended June 30, 2020 (3QFY20).
This will be backed by new product launches and better festive sales during the Chinese New Year.
Nevertheless, it expects normalisation in sales in 4Q as the Ramadhan period begins.
Berjaya Food’s results for 2QFY20, it said, were above expectations on lower-than-expected marketing and promotional expenses.
However, the research house cautioned that a general slowdown in activity is possible in the near term if the outbreak of the 2019 novel coronavirus (2019-nCoV) worsens in the coming months.
Meanwhile, RHB in its research note also reiterated its buy rating for Berjaya Food on the expectation of solid growth for Starbucks which anchors the earnings base.
It also expects Kenny Rogers Roasters to book improvement in performance moving forward.
The FY21 forecast (F) could deliver earnings growth of 28.2%, although the stock is trading at an undemanding 14 times price to earnings ratio FY21F, it said.
This was in view of a potential slowdown in retail spending, as a result of lower footfalls to shopping malls and lower tourist arrivals arising from ongoing concerns over the 2019-nCoV outbreak.
The research firm, however, revised the TP for the stock to RM1.62 from RM1.68 previously.
At 10.55 am, shares of BJFood eased one sen at RM1.26 with 280,700 shares traded. – Feb 7, 2020, Bernama
