KUCHING: Berjaya Food Bhd’s (Berjaya Food) growth in 2016 is expected to be driven by Starbucks, while the group also scales up the expansion of Kenny Rogers Roasters and slowly but surely grows Jollibean.
The research arm of CIMB Investment Holdings Bhd (CIMB Research) expected strong growth at Starbucks to lead Berjaya Food’s growth in 2016.
According to CIMB Research, with a total number of stores of 195 as at July 31, 2015, Starbucks Malaysia recorded same-store-sales-growth (SSSG) of mid-teens for five years in a row (based on Starbucks International financial year (FY) September 30), achieving a global record for Starbucks worldwide.
“Berjaya Food has expanded its operations into Brunei, with currently three stores in the country,” the research arm said.
CIMB Research noted that Starbucks Malaysia targets to open 25 new outlets in FY16.
The research arm further noted that for Brunei, Berjaya Food targets to open two new outlets in FY16, with a long term target of opening in total ten new outlets for the next five years.
“Diversifying its offering, Starbucks Malaysia opened its first merchandise store in Batu Ferringhi on May 30, 2015, with a target to open another two within this year.
“Berjaya Food is also looking to launch its ready-to-drink products in Malaysia under its consumer packaged goods (CPG) new business portfolio,” the research arm said.
On Kenny Rogers Roasters, CIMB Research noted that with a total number of 99 stores (as at July 31, 2015), Berjaya Food expects to open another eight restaurants in Malaysia in FY16, and is introducing meals at slightly lower price points in view of the economic slowdown.
The research arm further noted that Berjaya Food’s Indonesia operations, with 28 stores currently, need another two years to breakeven, needing scale to succeed with minimum 40 stores, with three restaurants to be opened in FY16.
“It also plans to add another five restaurants in Cambodia on top of its sole restaurant there currently,” the research arm said.
As for Jollibean, CIMB Research pointed out that with two stores currently in Malaysia, Berjaya Food plans to further expand Jollibean into Malaysia, with a plan to open one outlet in Malaysia in FY16.
The research arm said that Berjaya Food is also looking to strengthen the group’s position in its home market Singapore as the most premium soya bean outlets in Singapore, as it looks to open another five outlets in FY16.
All in, CIMB Research expected Berjaya Food’s overall long term growth to be led by the group’s star performer Starbucks.
The research arm noted that Starbucks’ growth will be driven by Berjaya Food’s continuous new store openings in Malaysia and Brunei, the group’s new merchandise stores, and securing the new consumer packaged goods (CPG) business.
CIMB Reserach maintained its ‘add’ call on Berjaya Food and target price of RM3.27 per share, with stronger sales and new contribution from the group’s CPG as re-rating catalysts.