By Ying Xian Wong
Shares of Berjaya Food fell early Friday after it reported a sharply lower fiscal third-quarter net profit and analysts cast doubt on its outlook.
The stock fell as much as 19% to 0.67 ringgit ($0.22), bringing year-to-date losses to more than 33%.
The food and beverage chain operator late Thursday reported a net profit of MYR15.9 million ($3.5 million), about half of the MYR31.6 million net profit in the same period a year earlier. Quarterly revenue rose 8% to MYR265.8 million.
The company said margin compression due to inflationary pressures pushed operating costs higher, and despite higher revenue, weighed on its earnings.
Maybank Investment Bank said Berjaya Food’s earnings outlook had turned challenging and downgraded its rating to sell from buy and cut target price to MYR0.72 from MYR1.50.
Cost was likely to remain high in the foreseeable future, and there was limited room to raise prices to cover additional costs, Maybank said and cut its earnings forecasts for fiscal 2023 to fiscal 2025 by 29%, 30% and 28%, respectively.
CGS-CIMB also downgraded Berjaya Food’s rating to reduce from hold and slashed target price to MYR0.70 from MYR1.18, on the subdued margin outlook and likely slower sales growth.
Structural cost inflation was likely to keep input costs and operating expenses high, and downward margin pressures were unlikely to abate in the short- to medium-term, it said.
Write to Ying Xian Wong at [email protected]
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