KUALA LUMPUR (Feb 6): Berjaya Food Bhd (KL:BJFOOD) continues to be at risk in the hostile food and beverage landscape despite narrowing losses, CIMB Securities said, due to continuous local and nationwide boycotts towards its franchises. 

While same-store sales grew in its latest financial quarter, CIMB Securities expects the group's loss-making trend to continue for the next few years. 

“While [the first half of its financial year 2026] (1HFY2026) results were broadly within set expectations, we expect a weaker second half of the fiscal year 2026 (2HFY2026) as stronger competition from newer market pressures both revenue growth and increasing operating expenses,” said CIMB Securities.

The group may need to step up marketing and promotional efforts to justify its defence towards its market shares, which could cause further strains on operational expenses.

“In our view, BJFood’s current valuation at three times 2027 price-to-book value has yet to account for our expectations of continued losses through the financial years ending [June] 2026 and 2028,” said CIMB Securities.

The group's net loss narrowed to RM11.9 million in the latest Oct-Dec quarter (2QFY2026) as opposed to RM14.6 million in 1QFY2026.

The improvement was attributed to the year-end festive period and ongoing cost-rationalisation efforts, including the closure of non-performing stores nationwide.

Quarterly revenue edged up 2.59% to RM126.3 million for 2QFY2026, from RM123.1 million a year ago, driven by contributions from the group’s overseas operations, offsetting the lower revenue from domestic operations.

Shares of BJFood closed at 21.5 sen on Thursday, representing a potential downside of 9.1% relative to the research house’s target price.

CIMB Securities maintains its "reduce" call on the stock, with a target price of 20 sen.

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