Buy: Berjaya Food

RHB Research has maintained a “Buy” recommendation for Berjaya Food Bhd with TP of RM2.55 as its 1QFY21 results came in line with expectations, on the back of commendable SSSG following the easing of movement restrictions since phase 2 of the National Recovery Plan (NRP).

The investment bank said that It believes that the best is yet to come, as the full effect of a sustained recovery has yet to translate through (considering the capacity restrictions in place), while its aggressive expansion drive should boost earnings in the medium term.

The investment Bank said that considering the capacity restrictions that are still in place for F&B players, we believe BFood has yet to reap the full benefits of a full-fledged and sustained economic reopening, with around 90% of stores currently operating.

It said that it expects contributions from dine-in sales to pick up even more substantially, as we move through latter phases of the NRP – which should bring about a further easing of capacity restrictions, thereby boosting sales.

“The rollout of booster shots and the more promising outlook of a bigger portion of the population being vaccinated should also allow foot traffic at the stores to gain further momentum – adding on to the heightened contributions from its alternative sales channels. We gather that 1QFY22 saw 55% of its sales being derived from customers dining in,” it said.

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