Streamlined BCorp to see jump in net profit

Brokerage says this will come from property, consumer businesses

PETALING JAYA: Berjaya Corp Bhd's (BCorp) net profit is expected to jump 63.11% to RM367.1mil on the back of a projected turnover of RM2.39bil for the financial year ending April 30 (FY08).

The huge improvement would largely come from its property development and consumer marketing businesses, SJ Securities Sdn Bhd said in a research note.

BCorp staged a strong comeback in FY07 following a three-year restructuring exercise that was completed in FY06.

“For the first half of FY08, we see pre-tax profit (PBT) augmented by 257% to RM477.1mil from RM133.8mil.

“This is mainly due to the one-off gains from its disposal of investments and placement for Berjaya Land Bhd (BLand) irredeemable convertible unsecured loan stocks (Iculs),” it said.

The research house added that stripping the exceptional gains, the company would have posted a core PBT of about RM280mil, or a jump of 240%.

BLand is a 58.65% subsidiary. BCorp had disposed of some of its assets in Roadhouse Grill Inc, Gribbles Pathology Sdn Bhd and Dunham-Bush (M) Bhd to improve its debt position and operating cash flow, the research outfit said.

“We're bullish on the company's earnings growth outlook, propelled by the spike in earnings contribution from its core businesses as well as the one-off gains from the Iculs placement and disposals of its investments.

“In its first half results, we see remarkable improvements from its financial services as well as consumer product and services divisions, with double-digit growth,” SJ Securities said.

It said BCorp's 48.8% associate Berjaya Sports Toto Bhd continued to register strong underlying operating performance, with low capital expenditure requirements and fixed costs.

The company, the research outfit added, is also investing heavily in property development in Vietnam where it has five projects with a gross development value of RM38.7bil.

Its food and beverage division signed a franchise agreement with Wendy's International Inc last year to open about 70 outlets in South-East Asia over the next 10 years.

The division already has the franchise for the Starbucks chain of cafes and Kenny Rogers Roasters restaurants.

SJ Securities said the division, which had proven its ability in running franchise businesses, would see a modest contribution from the Wendy's chain of restaurants initially.

However, it said, the future of the company's fast-food chain operation looked good.

By The Star (by Fintan Ng)