CONSIDERING the capacity restrictions that are still in place for food & beverage (F&B) players, Berjaya Food Bhd (BFood) – one of the two shining stars in the Berjaya Group stable alongside Berjaya Sports Toto Bhd – has surely yet to reap the full benefits of a full-fledged and sustained economic re-opening with around 90% of stores currently operating.
Making such observation, RHB Research expects contributions from dine-in sales to pick up even more substantially as Malaysia moves through advanced phases of the National Recovery Plan (NRP) which should boost sales.
“The roll-out of booster shots and the more promising outlook of a bigger portion of the population being vaccinated should also allow foot traffic at the stores to gain further momentum – adding on to the heightened contributions from its alternative sales channels,” opined analysts Soong Wei Siang and Raja Nur Aqilah Raja Ali in a results review.
“We gather that 1Q FY6/2022 saw 55% of its sales being derived from customers dining in.”
According to RHB Research, BFood reported 1Q FY6/2022 core earnings of RM11.6 mil (>100% quarter-on-quarter; +5.7% year-on-year). At 22% of our/consensus full-year estimates, the results are broadly in line with the research house’s expectations. A 1 sen dividend per share was declared for the quarter (payable on Dec 30).
All-in-all, RHB Research maintained its “buy” rating on BFood with a target price of RM2.55 which implies a 19 times FY2022F price-to-earnings ratio (P/E).
“We ascribe a 2% ESG (environmental, social and governance) premium to our target price as BFood’s ESG score of 3.1 is above the country median,” justified the research house.
“Downside risks to our outlook are slower-than-expected turnaround for Kenny Rogers Roasters (KRR) and a persistent resurgence in COVID-19 infection rates.”
Meanwhile, Maybank IB Research also maintained its “buy” rating on BFood with a higher target price of RM2.60 (from RM2.35 previously) on grounds that the company’s topline growth will continue to be driven by strong sales growth in Berjaya Starbucks while a gradual recovery in shopping mall footfall will also lift KRR Malaysia’s sales contribution.
“With the lifting in interstate travel restrictions in 2Q FY6/2022 and expected increase in consumer spending during the upcoming year-end festive period, BFood’s earnings outlook remains positive for FY6/2022,” projected analyst Jade Tam.
“Our FY2022/FY2023/FY2024 earnings estimates are raised by 14%/14%/16% upon adjusting for (i) higher new store opening assumptions to +38/+25/+25 (vs +30/+25/+25 previously); and (ii) higher EBIT margins of circa 1% per annum in light of increased sales in higher-margin Berjaya Starbucks products (eg seasonal Christmas/Chinese New Year- inspired drinks).”
At 10.10am, BFood was up 5 sen or 2.45% to RM2.09 with 36,200 shares traded, thus valuing the company at RM813 mil. – Nov 12, 2021
