Berjaya Food’s prospects to be led by store base growth
KUALA LUMPUR: Berjaya Food Bhd’s (Berjaya Food) near-term prospects will likely be led by store base growth, especially by its two biggest brands Starbucks and Kenny Rogers Roasters (KRR).
The research arm of Kenanga Invesmtent Bank Bhd (Kenanga Research) anticipated near-term prospects to be led by store base growth, with 25 new Starbucks stores and three new KRR stores per year.
“For Starbucks, samestore-sales growth (SSSG) could improve to three per cent in financial year 20192020 ( FY19-FY20), from two per cent in FY18, from its effective penetration into newer locations.
“KRR’s SSSG could ease to one per cent ( from six per cent), but this is attributed by the consolidation of its restaurant business.
“Meanwhile Jollibean Foods, Singapore could persist to record thinning losses as it restructures its staff count and store base,” Kenanga Research said.
On a side note, Kenanga Research highlighted that the Starbucks brand previously faced cost pressures impacted by high commodity prices and strengthening foreign currencies.
“We expect these factors to ease following their respective recovery in the near term.”
According to Kenanga Research, coffee beans make up the largest of the group’s raw material commodity, attributed to the high sales portion from Starbucks.
Quoting Bloomberg, the research arm highlighted that recent Arabica and Robusta price trends demonstrated a CYTD decline of circa 10 per cent.
“We gathered that the group sources its beans from Starbucks Corp, US for quality control, but are also priced at slightly above market rates.
“Hence, there could be a lag in improvement of input costs, which means that the benefit could only be seen in the medium term.”
Overall, Kenanga Research anticipated FY19-FY20 to register revenue of RM688.8 million (up eight per cent)RM762.3 million (up 11 per cent) with profit after tax and minority interest (PATAMI) of RM32.3 million (up 95 per cent)-RM39.3 million (up 22 per cent).
It said that this will be led by growth in the group’s storefront and store sales, leaner operating cost environment and cheaper input prices.
Kenanga Research For Starbucks, same-store-sales growth (SSSG) could improve to three per cent in financial year 2019-2020 (FY19FY20), from two per cent in FY18, from its effective penetration into newer locations.