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Alliance reiterates 'strong buy' call on Brahim's

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Alliance reiterates 'strong buy' call on Brahim's Empty Alliance reiterates 'strong buy' call on Brahim's

Post by Cals Fri 16 May 2014, 02:14

Alliance reiterates 'strong buy' call on Brahim's
Business & Markets 2014
Written by Bernama   
Thursday, 15 May 2014 15:13

KUALA LUMPUR (May 15): Alliance Research has reiterated its "strong buy" call on Brahim's Holdings Bhd, driven by its entry into sugar refining and overseas expansion projects in Mecca and Tokyo.

However, it said, the key risk to the recommendation was the unfavourable outcome of a contract renegotiation with MAS.

"Brahim's stock price has been under heavy selling pressure following media reports that MAS is planning to renegotiate the terms of its major procurement contracts, including the catering contract with Brahim's Airline Catering (BAC), Brahim's in-flight catering and cabin handling division.

"With MAS accounting for 70 per cent of BAC's revenues, investors are understandably concerned over the group's future earnings," it said in a research note today. 

Alliance Research said Brahim's remained the sole-in-flight caterer that has sufficient capacity to serve MAS at Kuala Lumpur International Airport, which suggest a strong bargaining power in the future renegotiation with MAS.

"And, it is unlikely for MAS to unilaterally terminate its long-term contract with Brahim's as it would have to compensate Brahim's for loss of future income under the current agreement," it added.    
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