PETALING JAYA: The reopening of international borders from April 1 would further drive sales for Berjaya Food Holdings Bhd, which has been seeing robust recovery across its stores.

       Hong Leong Investment Bank (HLIB) Research noted that as of the second quarter ended Dec 31, 2021 (Q2 of FY22), year-on-year (y-o-y) same store sales growth figures for Starbucks Malaysia, Kenny Rogers Roasters (KRR) and Starbucks Brunei were up 51%, 61% and 12%, respectively.

       “Higher transaction counts, which led to better sales, helped in expanding earnings before interest, taxes, depreciation and amortisation (Ebitda) margin.

       “Additionally, the group has made efforts in ramping up its marketing and promotions for seasonal drinks and merchandise, which command higher margins,” it said in a report following a virtual meeting with the food and beverage group’s management.

       The research firm noted that promotional drinks had contributed more than 10% of sales in Q2 of FY22 where Berjaya Food recorded expansion in Ebitda margin by 2.2 percentage points y-o-y.

       Meanwhile, the group has also introduced a new division of retail hospitality to be the point of contact for customers to obtain more information on Starbucks offerings.

       As for KRR stores, it has expanded its menu selection with fish fillet and meatball options for its consumers.

       The group has also incorporated a new subsidiary called Berjaya Kelava, which is principally involved in manufacturing, trading and producing vegan ice cream.

       However, following the commodity rally and increase in labour cost, HLIB said there was a slight increase in selling prices to ease the pressure.

       “Management shared that Starbucks menu prices are unchanged, with only upsize options subject to price increase of less than RM1.

       “For KRR, the group has started to increase the menu prices by a low single-digit percentage,” it added

       Going forward, the research house pointed out that Starbucks would continue to grow via new outlet openings and higher sales from the active promotions and innovative products, while a leaner KRR store concept would enable the group to maintain its profitability.

       HLIB has maintained its “buy” call and target price of RM3.80 on the stock based on 20 times price earnings multiple pegged to 2022 earnings per share.