10 December 2014 – The Star
KUALA LUMPUR: CIMB Equities Research said Berjaya Food’s earnings in the first half ended Oct 31, 2014 (H1FY15) fell short of its expectations and that of consensus mainly due to slower-than-expected performance by Starbucks in 2Q.
It said on Wednesday the earnings were at 31% of its full-year forecast and 25% of consensus expectations.
The revenue growth in the first half was driven by stronger same store sales growth and full consolidation of Starbucks, but net profit growth was subdued due to higher depreciation and interest expenses.
“We cut our FY15-17 earnings to factor in Starbucks’s slower performance; this lowers our target price, from RM4.33 to RM3.68, which is based on 23.7 times CY16 P/E (30% premium over the peer average).
“However, we maintain Add as our new forecasts still imply a three-year earnings CAGR of 41%. Potential catalyst is strong contribution from FMCG Starbucks,” it said.
CIMB Research said BFood’s first interim dividend of 2.5 sen was in line with its forecast.
It pointed out BFood’s 1H results were impacted by interest expense and depreciation, with revenue up 63.6% but core net profit increased at a slower pace of 13.7% on-year.
The stronger revenue was due to (i) stronger same store sales growth at Starbucks, (ii) full consolidation of the remaining 50% of Starbucks franchise since 19 Sep, (iii) new contribution from Starbucks Brunei which started operations in Feb 2014, and (iv) new stores (11 Kenny Rogers (KRR) outlets and eight Starbucks year-to-date).
“We understand that Kenny Rogers (KRR) Malaysia and Indonesia (49% of revenue) witnessed same store sales contraction due to slower consumer spending. Jolliebean’s business (accounted for 17% of revenue) was also weak (flat same store sales growth) due to some changes in the management team.
“Despite the widened losses from Indonesia (more new store openings) and small losses in Cambodia, EBITDA increased by 93% on-year. Core net profit rose at a slower rate due to (i) higher depreciation costs, and (ii) higher interest expenses (rose over 200% on-year) incurred for the acquisition of Starbucks,” it said.