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.

Share Performance

  • 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.

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