BJFOOD: Better Earnings Reported

Results Update

For QE31/1/2019, BJFood reported a net profit of RM9.0 million as compared to a net loss of RM11 million incurred in the same quarter last year. The net profit was 28% higher than the net profit reported in the immediate preceding quarter (QE31/10/2018). Revenue rose 8% q-o-q or 10% y-o-y to RM181 million.

Revenue rose q-o-q mainly due to the calendar year end festive promotions, school holidays and the Christmas season during the third quarter, which contributed positively to the higher profit from operations and pre-tax profit for the quarter under review.


Table: BJFood's last 8 quarterly results

If we exclude the extraordinary gain of RM158.6 million recognized in QE31/10/2014, the improved performance in the last quarter became quite clear. This gain was from the recognition of the gain arising from re-measurement of the 50% equity interest in BStarbucks.


Graph: BJFood's last 37 quarterly results 

Valuation

BJFood (closed at RM1.60 at end of morning session) is now trading at a PE of 30 times (based on last 4 quarters' EPS of 5.25 sen. At this PER, BJFood is deemed overvalued.

Technical Outlook

BJFood may have broken above its downtrend line, RR at RM1.55.


Chart: BJFood's weekly chart as at Mar 15, 2019_2.50 (Source: Malaysiastock.biz)

Conclusion

Based on improved financial performance and mildly positive technical outlook, I revise BJFood's rating to a HOLD. Upside maybe limited due to demanding valuation.

Note:
I hereby confirm that I do not have any direct interest in the security or securities mentioned in this post. However, I could have an indirect interest in the security or securities mentioned as some of my clients may have an interest in the acquisition or disposal of the aforementioned security or securities. As investor, you should fully research any security before making an investment decision.