In a research note, CIMB highlighted that this forecast holds despite BFood’s plans to open new stores in Malaysia and the Nordic market next year.
The firm noted that BFood permanently closed three Starbucks outlets and temporarily suspended operations at 25 underperforming stores in the fourth quarter of financial year 2024 (Q4 FY2024) due to the ongoing boycott.
These closures contributed to a 5.8% quarter-on-quarter decline in revenue, bringing it down to RM130 million in Q4 FY2024.
“For FY2024, revenue fell by 34.6% to RM730.3 million, mainly due to lower sales following the onset of the boycott in the second quarter of the financial year 2024 (Q2 FY2024),” it said.
As of Q4 FY2024, BFood operated 408 Starbucks stores and 60 Kenny Rogers Roasters outlets in Malaysia.
However, CIMB noted a narrowing of BFood’s core net losses to RM0.1 million in Q4 FY2024 from RM31.1 million in the third quarter of the financial year 2024 (Q3 FY2024), after excluding exceptional items totalling RM38.1 million.
This improvement was attributed to better profit margins following the closures of non-performing Starbucks stores.
“This brought FY2024 core net losses to RM38.5 million, outperforming our forecast and consensus estimates of RM64 million and RM62 million, respectively,” CIMB added.
CIMB has revised its FY2025 core net loss estimate by 34% down to RM17 million and increased its FY2026 core net profit estimate by 24% to RM19 million, reflecting higher profit margin assumptions.
Despite these adjustments, CIMB maintained a “sell” rating and raised its target price to 38 sen.
In a separate analysis, Hong Leong Investment Bank Bhd (HLIB) noted that BFood’s sales recovery is expected to take time, especially given the persistent Israel-Palestine conflict.
HLIB pointed out that the group has paused business expansion, resulting in no new store openings for the quarter.
“FY2024 registered a total of 408 Starbucks stores, with three permanently closed during the quarter. The group also temporarily closed 25 inactive stores.
“To mitigate challenging market conditions, the group is focusing on cost optimisation, labour productivity, and effective marketing strategies,” it said.
HLIB subsequently revised its FY2025 and FY2026 forecasts downward by 35% and 7%, respectively, and maintained a “sell” rating with a lower target price of 20 sen.
As at 1.11pm, BFood’s share price was down by 4.5 sen or 8.91% at 46 sen, giving the group a market capitalisation of RM895.9 million.