BCorp’s strategic plan still short on investor expectations

Its stock price hit a high of 34.5 sen after the announcement last week, but selling pressure saw the stock close at 29 sen last Friday

by NUR HANANI AZMAN

BERJAYA Corp Bhd’s (BCorp) new three-year strategic plan (2021-2024) did not address core issues like improving earnings of the group but its focus on remaining a consumer group suggests a foundation to build on.

The much-anticipated reorganisation of BCorp disappointed over optimistic investors with the announcement last week failing to lift its share price.

BCorp stock price hit a high of 34.5 sen after the announcement last week, but selling pressure saw the stock close at 29 sen last Friday.

“BCorp group CEO Jalil Rasheed didn’t reveal anything on how to improve BCorp’s profit. Instead, he just tidies up the business’s structure.

“Jalil at the end of the day is a fund manager. What he’s doing is to streamline the organisation to make it simpler and more institutional investor-friendly,” an analyst with a local brokerage told The Malaysian Reserve (TMR).

In its transformation plan, BCorp plans to reduce its debt level to RM2.5 billion from RM5 billion over three years, which includes divesting of non-core assets.

The group will seek to raise cash through divestments worth RM2 billion over the next two years and raise that to RM5 billion of divestment over five years, Jalil said last week.

“We had identified at least 60 dormant companies across its business segments to either go through merger and acquisitions, IPOs or divestments. We are waiting for the right timing and will reveal as and when it happens.

“The divestments and potential IPOs will involve a wide range of industries. We have established a team to look at identifying these in order to raise money and divest there,” he told reporters at a virtual briefing on the strategic plan on June 15.

The analyst said investors and analysts in general, want more clarity on how the group is going to enhance business competitiveness, divestments and raising earnings prospects.

“What would be the point of parking Krispy Kreme under Berjaya Food Bhd. Krispy Kreme’s profit or loss can hardly move the needle for Berjaya Food.

“Krispy Kreme either makes minimal profit or loss in any given year. So, I think what Jalil meant was selling assets rather than companies like land tracts that they think aren’t worth developing,” the analyst added.

BCorp’s three-year strategic plan aims to transform the diversified group into an institutionalised high-performing organisation as it transforms into a consumer group with five focused core business segments.

Despite its being economic in terms of information, Aberdeen Standard Islamic Investment (M) Sdn Bhd CEO Gerald Ambrose said BCorp’s plan is a welcome and a positive move.

“While BCorp targets being ambitious, it makes it more attractive and a lot of its discount to net asset value has been removed but it’s still at a discount,” he told TMR.

On the consumer sector focus, he said there were signs in April and May that consumer spending was recovering but that’s likely to be dampened by the Movement Control Order 3.0.

“Online expenditure has definitely risen and will continue to rise. Local supermarkets and hardware stores like MR DIY continue to do okay.

“Problem is the worldwide inflation in basic consumer goods which affects the average Malaysian. Banks as a rule have been good in offering continued moratorium in loan repayments to small retailers but there has been no ‘revenge spending’ that we’ve seen in countries which have Covid-19 under control,” he added.

Areca Capital Sdn Bhd CEO Danny Wong told TMR he is positive on the consumer sector’s recovery over the next few quarters especially of companies with the right business model and healthy cashflow positions.

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