Berjaya Food Quarterly Net Profit Drops, Shares Fall
Berjaya Food experiences a sharp decline in quarterly net profit, leading to a drop in shares. Analysts downgrade forecasts but remain positive about the company's Starbucks expansion.
Troy D. Hanson
August 16, 2023
Shares of Malaysian food and beverage chain operator, Berjaya Food, experienced a decline in value early Tuesday following a sharp drop in their quarterly net profit. The company attributed the decrease to pressure on margins.
The shares of Berjaya Food fell by as much as 5.9% initially and were recently recorded to be 3.7% lower at 0.65 ringgit. These losses have amounted to a year-to-date decline of 38%.
Quarterly Financial Results
Berjaya Food announced on Monday that their net profit for the fiscal fourth quarter dropped to 17.28 million ringgit ($3.7 million), a significant decrease from the MYR40.66 million recorded in the previous year.
The decline was primarily attributed to lower sales and margin compression caused by inflationary pressure and the unfavorable foreign exchange rate against the dollar.
Furthermore, quarterly revenue dropped by 6.7% compared to the previous year, amounting to MYR271.75 million.
Analyst Downgrades and Adjusted Forecasts
Following these results, Maybank Investment Bank downgraded Berjaya's rating from "buy" to "hold" and adjusted the target price from MYR0.72 to MYR0.65.
Maybank analyst Jade Tam also reduced earnings forecasts for Berjaya Food for the fiscal years 2024 and 2025 by 8% and 10% respectively. Forecasts for earnings before interest and tax margins were also lowered.
Additionally, Hong Leong Investment Bank decreased the target price for Berjaya Food from MYR1.10 to MYR0.97 due to higher operating expenses and cautious consumer sentiment.
Positive Outlook on Starbucks Expansion
Despite the challenges faced by Berjaya Food, Hong Leong analyst Syifaa' Mahsuri Ismail expressed optimism about the company's expansion of its Starbucks chain and maintained a "buy" rating on the stock.