InNature Bhd, a well-known beauty and skincare company, is making a strategic move into the food and beverage (F&B) market to diversify its revenue streams. This decision comes as the company aims to reduce its reliance on The Body Shop, which is facing challenges on a global scale.
Recently, InNature Bhd acquired the operator of Burger & Lobster restaurants for RM21.25 million in a related party agreement as part of its business diversification plan. The group is currently seeking shareholder approval for its expansion into the F&B sector and plans to fund the acquisition through the proceeds from its initial public offering (IPO).
With its international brand recognition and 19 branches worldwide, Burger & Lobster is expected to attract a unique customer base for its food products, catering to both domestic consumers and tourists. InNature Bhd intends to open additional branches in Malaysia, Indonesia, and Vietnam once the acquisition is finalized.
According to a research note, the group’s net profit is projected to increase by RM1.7 million annually based on a cost of funds of 4% and the net profit of FY23 Blu Restaurant Sdn Bhd amounting to RM2.6 million. Assuming that the net profit of FY23 Blu Restaurant remains stable, InNature Bhd’s net profit for FY24-FY26 is expected to increase by 4% to 11%.
The research firm maintains a ‚buy‘ recommendation for InNature Bhd with a target price of 34 cents per share. This strategic move into the F&B market is seen as a positive step towards diversifying the company’s business portfolio and reducing its dependence on The Body Shop.
In conclusion, InNature Bhd’s foray into the F&B sector is a strategic decision that is expected to drive growth and profitability for the company in the coming years. With its strong brand presence and expansion plans, the acquisition of Burger & Lobster restaurants is poised to be a successful venture for InNature Bhd. Investors are advised to consider the potential benefits of this diversification strategy when evaluating the company’s stock.