PETALING JAYA: Berjaya Food Bhd’s earnings for the full financial year ended June 30 is likely to exceed estimates as contributions from alternative sales channels remain elevated throughout the year.

       The company is expected to announce its fourth quarter (Q4) results today.

       In a report yesterday, RHB Research said the strong showing by Berjaya Food is expected despite the tightened movement restrictions in June that resulted in receding footfall and a halt to its expansion plans.

       RHB Research said the various lockdown measures and on-and-off restrictions on dine-in over the past year have had little impact on the group’s revenue, as temporary store closures have been minimal.

       It said earnings have been resilient on a sequential basis, demonstrating about 4% quarter-on-quarter (q-o-q) growth since coming out of the loss-making Q4 of financial year 2020 (FY20).

       It outperformed estimates for three quarters in a row after having closed down 12 unprofitable Kenny Rogers Roasters (KRR) stores, and leveraging on alternative sales channels during the lockdown, the research house said.

       It expects a full year profit of RM42mil on the back of RM720mil in revenue.

       The research house has raised its FY21 earnings by 8% as it believes contributions from alternative sales channels have been robust in spite of the movement restrictions.

       It also raised FY22-FY23 earnings by 7%, as it had added a more aggressive sales growth assumption.

       It kept its “buy” rating on the stock with target price maintained at RM2.33 a share, implying a 19 times FY22 price-to-earnings ratio.

       However, it cited risks to its recommendations include persistent losses for KRR and a prolonged resurgence in Covid-19 cases. This will result in an extended lockdown or more stringent standard operating procedures.

       “Looking into FY22, the further easing of restrictions should result in an inevitable return in foot traffic, which will bode well for the strong F&B player – on top of a pick-up in expansion plans,’’ RHB added.

       It expects contributions from dine-in to normalise in the second quarter of FY22 upon the broader reopening of the economy, which should prove attractive atop a heightened drive-through and delivery base.

       “Berjaya Food is poised to benefit from the steady return in footfall and revenge-spending, considering its strong brand equity as an F&B player and entrenched nationwide store network,’’ it said.

       It also noted that delivery and drive-through contributed to about 60% of Starbucks’ nine month FY21 sales. “That said, we view management’s focus on expanding its drive-through store count positively,’’ it said.