KUALA LUMPUR, Nov 15 — Shares of Berjaya Food Bhd dropped to their lowest level in six weeks yesterday, following the café-and-restaurant operator’s announcement of its fourth consecutive quarterly loss, as reported by The Edge.

The stock slid by as much as 6 per cent to 38.5 sen, its lowest since October 1. At 9:30am, shares were trading at 39 sen, giving the company a market capitalisation of RM759 million.

Trading volume reached 960,400 shares by that time, according to the business daily.

The latest quarterly loss came as a surprise, and analysts have advised investors to avoid the stock, citing a bleak outlook due to ongoing challenges to its key Starbucks business resulting from a prolonged boycott.

“Despite strong brand equity and active promotions, we believe the boycott headwinds will persist, at least in the near term, which will significantly impact earnings,” Hong Leong Investment Bank was cited by The Edge as saying, while maintaining its “sell” recommendation on the stock.

Shares of Berjaya Food, which generates the majority of its revenue from coffee chain franchise Starbucks, have fallen nearly 37 per cent this year, amid widespread boycotts of brands perceived to be linked to Israel due to the ongoing conflict in Gaza.

Analysts remain largely bearish, with four out of five research houses covering the stock issuing “sell” ratings. Bloomberg’s consensus 12-month target price is 28 sen, suggesting a potential decline of 26 per cent from the current price.

In an effort to diversify, Berjaya Food has focused on expanding its other brands, including Paris Baguette and Krispy Kreme Doughnuts. However, Maybank Investment Bank noted that “meaningful earnings diversification will be slow” due to the company’s heavy reliance on Starbucks.

Increased competition in the industry is also expected to hinder the company’s earnings recovery, according to the research house.

CIMB Securities said that any strategic changes to Starbucks’ operations in Malaysia and Brunei, following the appointment of Brian Niccol as CEO of Starbucks Corp, are likely to take effect at the earliest by next year. “Meaningful results will take longer to materialise,” it noted.

Yesterday, Berjaya Food reported a net loss of RM33.68 million for the first quarter ended September 30, 2024 (1QFY2025), compared to a net profit of RM19.03 million in the same period last year.

The company attributed the loss to the “prolonged impact from the ongoing sentiment in relation to the Middle East conflict,” The Edge reported.