KUALA LUMPUR: Analysts have revised their earnings forecasts for Starbucks Malaysia operator in financial year 2025 and 2026, pencilling in bigger losses as the boycott on the Starbucks brand continues unabated.
CIMB Securities Sdn Bhd has revised its financial year 2025, financial year 2026 and financial year 2027 (FY25/FY26/FY27) core net profit forecasts for Berjaya Food Bhd (BFood) from RM17 million, RM19 million and RM32 million.
This comes after BFood reported a net loss of RM33.7 million for the first quarter of the financial year 2025 (1QFY25).
The firm said it expects a deeper core net loss of RM98 million in FY25, narrowing to RM58 million and RM19 million in FY26 and FY27, respectively.
"This is to account for the slower-than-expected recovery in sales due to the ongoing boycott."While the group plans to expand its Paris Baguette store count in Malaysia and the Philippines (FY25: +7–8 stores collectively), as well as increase Starbucks stores in the Nordic countries (FY25: +4–5 stores), the smaller scale of these expansions means the group is unlikely to fully offset the negative impact from the boycott," it added.
Similarly, Hong Leong Investment Bank Bhd (HLIB Research) has also lowered its FY25 and FY26 forecasts for BFood to RM93.5 million and RM85.5 million.
HLIB Research noted that the group is focusing on cost optimisation, labour productivity and effective marketing strategies.
"Still, we opine that sales will take time to normalise considering the still intense Israel-Gaza conflict that is unfortunately seeing little signs of abating," it added.
However, CIMB Securities said BFood is anticipated to record higher quarter-on-quarter (QoQ) revenue in the second quarter of the financial year 2025 (2QFY25), driven by year-end festive celebrations.
It said while the company might still face losses in 2QFY25, these losses are expected to shrink progressively due to stronger sales and better operating leverage.
"We believe any strategic changes to BFood's Starbucks operations in Malaysia and Brunei, following Brian Niccol's appointment as chief executive officer of Starbucks Corp in Sept 2024, will likely take effect earliest by the second half of financial year 2025 (2HFY25), with any meaningful results to take a longer time to materialise, in our view," the firm added.
CIMB Securities has maintained its 'Reduced' call on BFood with a lower target price of 32 sen, from 38 sen.
Meanwhile, HLIB Research maintained its 'Sell' call with a slightly higher target price of 25 sen, from 20 sen.
"Despite strong brand equity and active promotions, we opine the boycott headwinds will stay, at least for the near term, which will greatly drag earnings," it added.