Berjaya Food faces steeper losses next three years: CIMB Securities
KUALA LUMPUR: Berjaya Food Bhd (BFood) is projected to post deeper core net losses over the next three financial years, following a weaker-than-expected quarterly performance, according to CIMB Securities Sdn Bhd.
The firm said BFood's core net loss for the third quarter ended March 31, 2025 (3QFY25) widened by 17.9 per cent year-on-year to RM36.7 million, falling short of expectations.
This brought the core net loss for the first nine months of the financial year ending June 30, 2025 (9M FY25) to RM116.5 million, a 112 per cent of its own FY25 previous loss estimate of RM104 million and 126 per cent of the Bloomberg consensus forecast of RM92.1 million.
The earnings miss was attributed to weaker-than-expected revenue from Starbucks and KKR operations, alongside higher-than-anticipated start-up costs related to its overseas expansion efforts.
"While we expect 4QFY25 net earnings to remain in the red, we expect narrower losses on a quarterly basis owing to higher sales following the end of the fasting month as well as abating impact from boycott activities linked to the Israel-Palestine war," the firm added.
Concurrently, CIMB Securities widened its FY25–FY27 loss projections for BFood by 28 per cent to 15 per cent.
"We have raised our core net loss estimates for FY25, FY26 and FY27 to RM133 million, RM71 million and RM23 million respectively, up from RM104 million, RM61 million and RM20 million. These revisions reflect a slower-than-expected sales recover," it added.
The firm kept its "reduce" rating on the company with a lower target price of 28 sen from 32 sen previously.
CIMB Securities also revised its valuation methodology for BFood, now pegging the stock to a lower target multiple of 2.2 times 2026 price-to-book value (P/BV), compared to 2.4 times previously.
This adjustment reflects concerns over Starbucks' weakening brand equity in Malaysia, which has been affected by prolonged consumer boycotts, as well as intensifying competition in the domestic food and beverage (F&B) segment.
The firm noted that while BFood is currently trading at 2.5 times calendar year 2026 forecast price-to-book value (P/BV), this valuation does not yet reflect the group's structural challenges, particularly its continued loss-making trajectory, albeit with narrowing losses, projected through FY25 to FY27.
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