AmInvestment lowers earnings estimates on Berjaya Food

TheStar Tue, Jun 02, 2020 09:45am - 3 years View Original


KUALA LUMPUR: AmInvestment Bank research slashed its earnings forecasts for Berjaya Food Bhd following an earnings disappointment over the first three quarters of its financial year.

AmInvestment lowered earnings forecasts by 7% for FY20F, 18% for FY21F and 17% for FY22F while maintaining its "hold" call on the counter with a reduced fair value of RM1.02 a share from RM1.23 previously.

For the the fourth and final quarter, the research house expects weak sales although the bottom line should improve quarter-on-quarter due to cost savings measures.

"We believe the group’s sales in 4QFY20 will be volatile. We expect depressed sales during the MCO in April but we anticipate improved sales in May and June as the government implemented the conditional MCO on 4 May 2020," it said.

However, more stores have opened with about 290 stores operational now, while the Hari Raya festive season should also improves sales for the group, it added.

For FY21 and FY22, AmInvestment expects sales growth to be driven largely by the opening of new stores as the group plans to open about 20 Starbucks stores in FY21.

"We believe the group will take this opportunity to close down underperforming stores in 4QFY20F," it added.

According to AmInvestment, only 150 Starbucks outlets, or about half, were open during the movement control order.

The outbreak however increased delivery services sales for Starbucks to about 30% of sales from 1% previously, and to 80% for Kenny Rogers Roasters from 10%.

The group's core net profit over three quarters was RM11.2mil, which was 68% and 49% of AmInvestment's and consensus full-year estimates.

Revenue during the period was RM533.2mil, which was about 1.7% higher year-on-year.

"We believe Starbucks’ sales improved due to new store openings in 9MFY20. Some 25 stores were added, making up 316 Starbucks stores in 3QFY20. SSSG was flattish for Starbucks in 9MFY20," said the research house.

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