RHB Research retains ‘buy’ rating on BFood

KUALA LUMPUR: Berjaya Food Bhd’s (BFood) valuation remains attractive on the back of its strong positioning as a cyclical play, improving fundamentals and consistently strong earnings delivery, said RHB Research in a note yesterday.

The research firm said BFood was trading at an undemanding 13 times financial year 2023 priceearnings ratio, below its five-year mean.

“The broader economic reopening should lead to foot traffic continuing the upward momentum across BFood’s brands, complemented by strong purchasing power and underpinned by income recovery and improving employment rates.

“Its aggressive seasonal promotions also work well in reviving consumption habits.”

The research firm said BFood’s growth in the medium term should be driven by its plans to open 30 to 35 Starbucks outlets annually.

“We believe that the brand’s already entrenched network suggests that the expansion will be into smaller towns, which could contribute to sustainable sales improvements moving forward.

“In essence, the improvement in BFood’s fundamentals, driven by sound business strategies, indicates that strong earnings delivery should be sustainable in the upcoming quarters, yet to be priced in by the market, in our view,” it added.

Meanwhile, RHB Research said BFood’s ninemonth core net profit of RM85.1 million made up 93 per cent and 100 per cent of its and consensus fullyear forecasts, respectively.

“We were previously a tad conservative in our expectation for its third quarter performance due to the Covid-19 Omicron wave and likelihood of waning revenge spending.”

RHB Research has maintained its “buy” call on BFood with a higher target price of RM4.80 from RM4.20 previously.