Brahim’s-All Nippon Airways JV to boost profit, says Hong Leong

by **Cals** Mon 06 Jan 2014, 14:50

Business & Markets 2013

Written by Ahmad Naqib Idris Adzman Shah of theedgemalaysia.com

Monday, 06 January 2014 11:12

KUALA LUMPUR (Jan 6): Brahim’s Holdings Bhd's speculated planned partnership with Japan's All Nippon Airways (ANA) may result in an incremental RM1.6 million operating profit for the former, Hong Leong Investment Bank Bhd (HLIB) says.

HLIB has issued its note on Brahim's, an in-flight meal provider, in respond to a report in The Edge Malaysia. Under the collaboration, Brahim’s is expected to provide in-flight halal meals for Middle Eastern airlines landing in Haneda and Narita, Japan.

HLIB said : “This news is positive to the group as the partnership would not only allow Brahim’s to enter into the Japanese market but also penetrate into the Middle Eastern market.

"With RM5m potential gross profit contribution to Brahim’s (as reported in The Edge), the group would experience an incremental of ~RM1.6m in operating profit, assuming similar gross and operating profit margin as its current catering business of 58.5% and 18.5% respectively".

The collaboration may be done through a joint venture (JV) between Brahim’s and ANA. But the stake to be owned by Brahim’s and ANA in the JV is still unclear.

“If there is a JV, we opined that Brahim’s would negotiate with ANA with hopes to gain a meaningful stake in order to consolidate or equity account the JV,” said HLIB.

HLIB maintained its “buy” call on Brahim shares with a target price of RM2.13.