KUALA LUMPUR: Berjaya Food Holdings Bhd's recovery momentum is expected to accelerate with the reopening of the country's borders on April 1.
Hong Leong Investment Bank (HLIB) research noted that the F&B group had already experienced robust sales improvement as at 2QFY22, but opines that the border reopening "would serve as a further catalyst to drive better sales".
Following a meeting with Berjaya Food's management, the research firm said same store sales growth (SSSG) for Starbucks Malaysia, Kenny Rogers Roasters (KRR) and Starbucks Brunei were all up 51%, 61% and 12% year-on-year (y-o-y) respectively as at 2QFY22.
In addition, the group has taken efforts to ramp up its marketing and promotions for seasonal drinks and merchandises, which command higher margins.
"Note that promotional drinks contribute more than 10% of sales in 2QFY22.
"Additionally, the increase in merchandises (cups, tumblers, tote bags, water bottles) in Starbuck stores also helped to attract foot traffic," said HLIB.
Meanwhile, Berjaya Food has also introduced a new division of retail hospitality to be the point of contact for customers to obtain more information on Starbucks offerings.
According to HLIB, this will further improve group's margin expansion, on the back of a 2.2ppt y-o-y Ebitda expansion in 2QFY22 resulting from a higher transaction count.
On new offerings, HLIB noted that Berjaya Food has expanded its menu selection in KRR stores with fish fillet and meatball options for consumers.
The group has also incorporated a new subsidiary called Berjaya Kelava which is principally involved in manufacturing, trading and producing vegan ice cream called Kelava.
HLIB maintained its "buy" call and target price of RM3.80 on Berjaya Food.
"We are positive on Starbucks which continues to grow via new outlet openings and higher sales from active promotions and continual innovative products.
"Furthermore, a leaner concept KRR store would enable the group to maintain its profitability," it said.