Berjaya Food (B-Food) is a stock to watch in the coming months. As Berjaya Corp is likely to use B-Food as its listed vehicle for F&B, there could be interesting M&A plays for the stock. First in line could be Berjaya’s 50% stake in the Starbucks operator in Malaysia. Next could be Papa John’s pizza, Wendy’s and the overseas operations of Kenny Rogers Roasters. Despite the 30% upsurge in B-Food’s share price over the past two weeks, it continues to trade at a sizeable discount to our RM1.24 SOP estimate, which suggests 51% appreciation potential. Furthermore, 28% of its share price is backed by RM0.23 net cash/share. Any asset injection that could enhance its EPS in the near future would be viewed positively by investors and would bring the company one step closer to its 5-year target of RM1bn market cap.
Among the companies we cover, QSR (QSR MK, Outperform) is the closest comparable to B-Food as it is also in the food-service restaurant business. QSR is currently Malaysia’s largest quick-service restaurant operator with three brands under its wings – Pizza Hut, KFC and Ayamas. Other brands include RasaMas and Life. Our F&B analyst’s target valuation for QSR is 16x CY12 P/E. The stock is currently trading at 11.3x CY12 P/E.
Among the companies we cover, QSR (QSR MK, Outperform) is the closest comparable to B-Food as it is also in the food-service restaurant business. QSR is currently Malaysia’s largest quick-service restaurant operator with three brands under its wings – Pizza Hut, KFC and Ayamas. Other brands include RasaMas and Life. Our F&B analyst’s target valuation for QSR is 16x CY12 P/E. The stock is currently trading at 11.3x CY12 P/E.
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