KUALA LUMPUR, Feb 7 ― Maybank IB Research has maintained its “buy” call on Berjaya Food Bhd (BJFood) with a higher target price (TP) of RM1.85 from RM1.80 previously, on the expectation of sequential earnings improvement in the third quarter (Q3) financial year (FY) ended June 30, 2020.
This will be backed by new product launches and better festive sales during the Chinese New Year.
Nevertheless, it expects normalisation in sales in Q4 as the Ramadhan period begins.
BJFood results in the Q2FY2020 it said, were above expectations on lower-than-expected marketing and promotional expenses.
However, the research house cautioned that a general slowdown in activity is possible in the near-term if the outbreak of the 2019 novel coronavirus (2019-nCoV) worsens in the coming months.
Meanwhile, the RHB in its research note also reiterated its 'buy’ rating for BJFood on the expectation of solid growth for Starbucks which anchors the earnings base.
It also expects Kenny Rogers Roasters (KRR) to book improvement in performance moving forward.
The FY 2021 forecast (F) could deliver earnings growth of 28.2 per cent, although the stock is trading at an undemanding 14 times price to earnings (P/E) ratio FY 2021F, it said.
This was in view a potential slowdown in retail spending, as a result of lower footfalls to shopping malls and lower tourist arrivals arising from ongoing concerns over the 2019-nCoV outbreak.
The research firm, however, revised the TP for the stock to RM1.62 from RM1.68 previously.
At 10.55am, shares of BJFood eased one sen at RM1.26 with 280,700 shares traded. ― Bernama