4QFY23 results for Berjaya Food (BFD) overshot Maybank Investment Bank (Maybank IB)’s expectations on lower-than-expected operating costs.
“However, we do not expect BFD to report meaningful margin expansion in the near-term due to high input cost and USD/RM currency,” said Maybank IB in a recent report, stating a Target Price of RM0.65 and the Hold rating.
BFD’s 4QFY23 core net profit of RM20m brought FY23 core net profit to RM107m. The beat was attributed to lower-than-expected operating expenses. The group also declared a fourth interim dividend per share of 0.5sen.
4QFY23 revenue grew 2% QoQ mainly due to added contribution from new BStarbucks stores whilst earnings before interest and tax grew a wider 12% QoQ from improved labour optimisation and other store operating efficiencies.
“Despite lower coffee average selling prices QoQ, we understand that raw material cost savings were partially offset by unfavourable currency exchange,” said Maybank IB.
On a YoY basis, weaker topline and bottomline growth in 4QFY23 were due to a higher base comparison from 4QFY22’s pent-up demand and margin compression from spikes in raw material costs respectively.
Maybank IB believes that BFD’s FY24E earnings will continue to be hindered by operating cost challenges from elevated forex and raw material costs.
As at end-4QFY23, BFD has 393 BStarbucks stores and 70 KRR Msia stores. It targets to open 40 to 45 new stores in total in FY24.
