KUALA LUMPUR: Hong Leong Investment Bank (HLIB) Research raised its financial year 2022 (FY22) and FY23 forecasts for Berjaya Food Holdings (BFood) by 25 per cent to account for higher sales volumes and improving margin.
For its fourth quarter (Q4) ended June 30, 2022, BFood chalked in net earnings of RM40.7 million, which pushed FY22's sum to RM122.7 million.
"This surpassed our and street expectations at 112 per cent and 109 per cent of full-year forecasts.
"The surprise on the upside was on the back of stronger-than-expected sales coupled with the lower effective tax rate," it said in a note.
The firm acknowledged that the strong sales momentum that surpassed the pre-pandemic level was driven by higher transaction counts, supported by BFood's relentless effort to expand its stores.
"We gather that Q4 recorded the highest store launch with 11 new outlets, of which 45 per cent constitute drive-through stores.
"The company has made efforts to ramp up its marketing and promotions for seasonal drinks and merchandise, which command higher margins," it said.
Apart from a robust festive quarter from Ramadhan and Hari Raya, Q4's performance was also boosted by the popular demand for Starbucks seasonal drinks, namely Acai Strawberry and Cocoa Macchiato, said HLIB Research.
It also applauded Kenny Rogers Roaster's (KRR) continuous improvement, almost doubling with same-store sales growth (SSSG) of 90 per cent year-on-year.
"We opine this was partially contributed by the wider selection and variety in KRR stores. Apart from the signature chicken dishes, KRR now serves fish fillet and meatballs options for consumers to choose from," it said.
HLIB Research maintained its 'Buy' call on the stock with a higher target price of RM5.48 from RM4.83 previously.
"We are positive on Starbucks, which continues to grow via new outlet openings and higher sales from active promotions and innovative products.
"We are impressed with BFood's growth opportunity, and the company is well-positioned to keep up the momentum," it added.
