PETALING JAYA: Berjaya Food Bhd (BFood) saw its share price tank more than 20% today after its financial results for the third quarter ended March 31, 2023 (Q3 FY2023) missed expectations on higher input and operating costs.
The food and beverage chain operator’s net profit slumped 49.5% to RM15.9 million from RM31.6 million in the corresponding quarter last year.
The counter was one of the biggest losers and most active, with 54.4 million shares changing hands by the mid-day break. At 12.30pm, its share price fell 21.2% or 18 sen to 65 sen, giving it a market capitalisation of RM1.26 billion.
CGS-CIMB Research downgraded BFood to “reduce” from “hold” with a lower target price of 70 sen. The group’s Q3 results missed its expectations by 69%.
It said earnings underperformance was attributed to higher-than-expected input costs (i.e. coffee, milk, syrup, chicken, etc) and operating expenses (i.e. higher rental, labour, repair, maintenance and renovation works on cost inflation) compressing margins.
Hong Leong Investment Bank (HLIB), in a note today, lowered its target price to RM1.10 (from RM1.31) after BFood’s Q3 results missed its expectations by 54% and consensus by 63%.
Starbucks a bright spot
Nonetheless, there was some optimism about the group’s Starbucks brand which would garner the attention of returning tourists.
RHB Investment Bank analyst Soong Wei Siang, however, is not expecting any significant improvement in the next quarter.
“Consumer spending could soften further, considering the elevated inflationary pressure and rising interest rates environment,” he said
As a result, RHB cut FY2023-2025 full year earnings by 19%-32%, taking into account the higher cost base and cautious consumer spending.
“On the flip side, (Berjaya Food’s) robust expansion of its Starbucks network should continue to underpin growth,” said Soong.
BFood has plans to open 40-45 new Starbucks stores in FY2024, expanding its footprint further (from the 35-40 store target in FY2023).
The group currently has 379 Starbucks stores and 69 Kenny Rogers Restaurant outlets.
