Kuala Lumpur, 14 December 2017,
CIMB Equities Research expects Berjaya Food’s earnings to continue to be buoyed by its crown jewel, Starbucks, as the coffee chain is expected to record firm earnings growth.
It said on Thursday it expected the positive earnings momentum to come from ongoing new store openings of between 25 to 30 new stores per annum.
As for Kenny Rogers Restaurants (KRR) Malaysia, management expects it to return to net profit by end-FY18F after the implementation of its turnaround initiatives.
CIMB Research said the disposal of KRR Indonesia would result in one-off loss in.
“Even though the cash consideration BFood received from the disposal of KRR Indonesia is minimal, we think that this exercise marks a new beginning for BFood as it eradicates the major strain on the group’s earnings over the last five years,” it said.
It expected the disposal of KRR Indonesia would lift the share price overhang and trigger re-rating as it turns into a pure Starbucks player. KRR Indonesia reported pre-tax loss of RM7.5mil in FY17.
“We keep our earnings forecasts, Add call and end-2018F target price of RM1.96, based on an unchanged 22 times CY19F price-to-earnings (P/E) — in line with three-year historical mean.
“The disposal of KRR Indonesia would catalyse BFood’s share price, in our view.
“Other potential re-rating catalysts include the disposal of the loss-making Jollibean franchise and faster turnaround for KRR Malaysia.
“We also expect the group to post stronger results as it pares down debt (leading to lower interest payments) and given lower effective tax rates,” it said.
Read more at https://www.thestar.com.my/business/business-news/2017/12/14/starbucks-to-underpin-berjaya-food-earnings-says-cimb-research/#zkPCUkJeY0klB65M.99
