PETALING JAYA: Berjaya Food Bhd’s (BFood) Starbucks coffeehouse chain is expected to remain as the company’s earnings driver amid the national lockdown.
Operation-wise, the lockdown has had minimal impact on the food and beverage company, as all its stores, being categorised as essential services, are allowed throughout the movement control order 3.0 (MCO 3.0) and enhanced MCO (EMCO) period.
The company’s unit, Berjaya Starbucks Coffee Company Sdn Bhd (BStarbucks), has continued to see strong sales volume, with about 50% sales coming from physical stores, while delivery and drive-thru sales contribute 25% each.
This was noted by Maybank Investment Bank (MaybankIB) Research following a recent meeting with BFood’s management.
Despite the resilience of BStarbucks’ business, the brokerage noted that BFood’s Kenny Rogers Roasters (KRR) Malaysia operations could fall into losses in the fourth quarter of its financial year ended June 30, 2021 (Q4’FY21) given that footfall at shopping malls have been significantly impacted by heightened restrictions led by Covid-19 outbreaks.
MaybankIB expected BFood’s upcoming announcement of Q4’FY21 results to see a softening in earnings in light of tighter movement restrictions from MCO 3.0 and EMCO in selected areas. The group’s top line growth, however, is expected to resume in tandem with gradual easing of lockdown measures going forward.
It noted resilient consumer demand from BStarbucks should partially buffer the adverse impact from KRR operations.
Overall, MaybankIB cut its FY21-FY23 earnings estimates for BFood by 2%-4%.
The brokerage reiterated “buy” on BFood, with a lower target price of RM2.35, compared with RM2.40 previously.