Strong earnings beat

■ BFood recorded a strong core net profit in 3QFY6/22 of RM31.9m, bringing
its 9MFY22 results to RM85.8m, far above our and consensus expectations.
■ The earnings outperformance was due to: i) stronger-than-expected SSSG
for Starbucks MY and KRR operations, and ii) higher-than-expected margins.
■ Reiterate Add on BFood as a strong reopening play with a robust 3-year EPS
CAGR of 30.5%. TP is raised to RM5.50 (19x CY23F P/E).

Another superb quarterly performance in 3QFY22

Berjaya Food’s (BFood) 3QFY22 core net profit jumped by almost three-fold to RM31.9m
while its revenue grew by 35.4% to RM246.0m. The higher earnings were driven by
robust same-store-sales growth (SSSG) for Starbucks Malaysia (+c.20.0% yoy) and
Kenny Rogers Roasters (KRR) (+c.30.0% yoy) as footfall rebounded strongly and
operating efficiency improved with EBITDA margin expanding to 31.7% (+1.2% pts yoy)
during the quarter. KRR also remained profitable for the second consecutive quarter with
an EBIT of c.RM3.0m (2QFY22: RM5.5m) due to higher dine-in sales on a yoy basis as a
result of menu upgrades and relaxation of dine-in restrictions. Although 3Q core net profit
declined by 17.3% qoq, we still deem this a strong set of results considering the
resurgence of Omicron cases in Feb 22 and as 2QFY22 is seasonally a stronger quarter.

9MFY22 results exceeded our and consensus full-year estimates

Cumulatively, the group’s 9MFY22 core net profit rose by 140% to RM85.8m, which
strongly outperformed our and consensus expectations, accounting for about 101% and
100% of FY22 forecasts, respectively. The earnings beat was mainly due to the strongerthan-expected 3QFY22 results. 9MFY22 EBITDA margin also expanded to 34.1%
(+2.4% pts yoy) on greater economies of scale and minimal impact from the rising raw
material prices due to better cost control. BFood announced a third interim DPS of 1.5
sen/share, bringing 9M22 DPS to 3.5 sen/share (16% dividend payout).

Accelerating its store expansion plan in 4QFY22

We gather that BFood aims to open 10-13 new Starbucks stores (c.5 with a drive-through) in 4QFY22 after only two new stores in 3QFY22 due to delays in obtaining
relevant authority approvals (YTD openings: 18). KRR could also open four new
stores/kiosks in 4QFY22 after the relocation of two outlets to areas with higher footfall in
3QFY22. Moving forward, we expect 4QFY22 to see a strong sales growth trajectory on i)
capturing Raya festive sales, ii) longer operating hours, and iii) a higher store count.

A strong reopening play; reiterate Add with a higher TP of RM5.50

In line with our earnings upgrades on higher revenue and margin assumptions, our TP
rises to RM5.50 (19x CY23F P/E, a 30% discount to its average P/E since listing in
2011). We continue to like BFood i) as a solid reopening play, ii) for the strong brand
equity of Starbucks, iii) its robust earnings growth profile with a 3-year EPS CAGR (FY21-
24F) of 30.5%, and iv) the sustainable turnaround of its KRR operations.