FW: AmBank Research - Berjaya Food : Disposal of KRR Indo a positive move BUY, 27 Nov 2017

 

 

STOCK FOCUS OF THE DAY         

Berjaya Food : Disposal of KRR Indo a positive move                                        BUY

 

Berjaya Food (BFood) announced the sale of KRR Indo. Although it was a slight delay, we are positive over the development as it removes the earnings variability tied to a multi-year loss-making Indonesian entity. Maintain our BUY recommendation and higher fair value RM1.91/share (from RM1.77/share) in account of our revised earnings. Valuations are pegged to P/E of 25x FY19F aligned to its historical valuations.

 

BFood through its subsidiary, Berjaya Food International, entered into an agreement to dispose of its entire stake of 99.9% in PT Boga. It is effectively Kenny Rogers Roasters (KRR) Indonesia. The disposal is to Rudy Wiguna and Komelia Ersan in return for a token sum of IDR1,000 (RM0.32). In terms of valuations, we think it is fairly reasonable. Token consideration apart, the acquirers will be liable for RM3.1mil of debt to BFood in return for the network of 10 stores. At RM310K per store, it is in the region of standard capex of RM400K-500K per store. Recall, these stores may be suboptimal as KRR Indo has been loss making for more than 5 years (FY15/16/17: -RM6.4/-5.2/-9.3mil).

 

Others :

Ann Joo Resources : 9MFY17 results boosted by higher sales                       BUY

CSC Steel Holdgs : 9MFY17 performance dented by margin squeeze        HOLD

Only World Group : 1QFY18 dragged by FSO segment                                     HOLD

UMW Oil & Gas : Just above breakeven at near full rig utilisation               HOLD

Hap Seng Plant : 4QFY17 to be better than 3QFY17                                           UNRATED

 

 

QUICK TAKE

Plantation Sector : News flow for week 20 – 24 November                           NEUTRAL

 

 

ECONOMIC HIGHLIGHT

Malaysia : Strong signs of rate hikes in 2018

 

 

NEWS HIGHLIGHTS

Power Sector : Edra Power poised to raise RM5.28b

KKB : Eyes Sabah portion of highway

SLP : Targets to sell more plastic packaging products

BHS Industries : Paper mill operations to boost earnings 

 

 

 

 

 

DISCLAIMER:

The information and opinions in this report were prepared by AmInvestment Bank Bhd. The investments discussed or recommended in this report may not be suitable for all investors. This report has been prepared for information purposes only and is not an offer to sell or a solicitation to buy any securities. The directors and employees of AmInvestment Bank Bhd. Bhd may from time to time have a position in or with the securities mentioned herein. Members of the AmBank Group Bhd and their affiliates may provide services to any company and affiliates of such companies whose securities are mentioned herein. The information herein was obtained or derived from sources that we believe are reliable, but while all reasonable care has been taken to ensure that stated facts are accurate and opinions fair and reasonable, we do not represent that it is accurate or complete and it should not be relied upon as such. No liability can be accepted for any loss that may arise from the use of this report. All opinions and estimates included in this report constitute our judgment as of this date and are subject to change without notice.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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