Due to growing concerns over the ongoing boycott of Starbuck franchises, RHB Investment Bank (RHB IB) has advised clients to sell Berjaya Food (BJFOOD) stock, the company holding the Starbucks franchise in Malaysia.
The bank reportedly downgraded the rating of BJFOOD from “hold” to “sell” and slashed the target price from 73 sen to 46 sen, representing a significant decrease of 24% in stock prices.
RHB IB recently released a report recommending the sale of BJFOOD stocks, citing potential long-term repercussions if the Starbucks boycott continues. Analysts expressed concerns about the difficulty of recovering market share after a prolonged boycott, especially given the intense competition in the industry.
The report highlighted observations from visits to various Starbucks stores during peak hours, revealing mediocre customer traffic despite crowded malls.
Analysts estimated a 30% to 40% reduction in Starbucks foot traffic compared to pre-boycott levels, while competitors experienced more stable visitation rates.
Adding to the challenges, recent promotions by the coffee chain could impact its gross margins. In response to these factors, RHB adjusted its net profit forecast for fiscal years 2024-2026, lowering the figures by 21%, 17%, and 7%, respectively.
The report suggests that BJFOOD may face an uphill battle in regaining market confidence and share amid the evolving dynamics in the coffee retail landscape.
