KUALA LUMPUR (June 22): CIMB Research said today Berjaya Food Bhd's Starbucks operations in Malaysia will continue to sustain Berjaya Food's earnings growth on expectation of 25 to 30 Starbucks outlets to be opened per year.

In a note today, CIMB said progressive earnings recovery from Kenny Rogers Roasters Malaysia (KRR Malaysia) is also expected to help Berjaya Food's earnings growth, as KRR Malaysia hones its product offerings and offers lower meal prices to attract more consumers.

"The uplift in consumer sentiment and spending from the removal of GST should also help boost the demand for its products, in our view. We retain our Hold call as we think its current valuation fairly reflects the positives from the disposal of its key earnings drag, KRR Indonesia, and the continued earnings growth from Starbucks," CIMB said.

CIMB said the research firm had adjusted its target price for Berjaya Food shares to RM1.74 from RM1.75. The research house's note today followed Berjaya Food's announcement yesterday on its financial results.

Yesterday, Berjaya Food said it posted a net profit of RM837,000 in the fourth quarter ended April 30, 2018 (4QFY18) against a net loss of RM3.37 million a year earlier. The company said full-year net profit fell to RM1.14 million from RM11.44 million a year earlier.

Today, CIMB said: "Berjaya Food closed its books and reported FY18 core net profit of RM19.3 million, falling short of expectations, at 93% of our and 87% of Bloomberg consensus forecasts."

The research house said Berjaya Food's core net profit of RM19.3 million excluded a one-off RM15.3 million loss from the disposal of KRR Indonesia.