ANALYSTS are hopeful of Berjaya Food Bhd’s recovery following the loss of RM18.9 mil for its 2020 financial year, with the loss attributed to the Covid-19 pandemic affecting the group’s earnings.
“The poor sales performance in 4Q20 was largely attributed to the Covid-19 pandemic outbreak, which resulted in a marked reduction of tourist arrivals in Malaysia and Singapore.
Furthermore, around half of BFood’s stores ceased operations temporarily during the movement control order (MCO), which started on March 18,” said AmInvestment Bank analyst Nafisah Azmi.
The analyst also noted that BFood’s FY20 net loss of RM18.9 mil missed expectations, as the group had suffered a loss of RM30.2 mil in the fourth quarter of its FY20, ended June 30.
“The variance was largely due to a worse-than-expected Covid-19 impact on the group’s sales. This was further exacerbated by higher interest expense due to a change in
MFRS 16 adoption and calculation method.”
“BFood also recorded an impairment loss and a write-down of PPE as the group closed nine stores in 4QFY20,” said Nafisah.
RHB Investment Bank analyst Soong Wei Siang noted that BFood’s results were disappointing, but believes a sharp recovery is on its way.
“We believe a sharp earnings recovery is underway following the encouraging improvement in 1QFY21 sales volumes.”
“We expect BFood to stage a quick and sharp 1QFY21 earnings rebound. We understand that volume has recovered well – even surpassing pre-MCO levels – following the broader-based relaxation of the MCO,” said Soong.
The analyst noted that this could be due to the strong pent-up demand and higher disposable income, a result of the low interest rate environment and Covid-19 related assistance packages, including the loans moratorium.
“Additionally, the Covid-19 crisis could have phased out financially weaker competitors and rendered BFood additional market share,” said Soong.
AmInvest downgraded BFood to sell from a previous hold, with a lower fair value of 78 sen. RHB, on the other hand, upgraded BFood to buy from a previous sell call, with a higher target price of RM1.38 from a previous 97 sen.
At the end of the trading day, BFood’s shares were last done at RM1.16, up a sen, with 244,600 shares traded. – Aug 24, 2020
