In an already congested consumer market in Malaysia, KFC will most probably bring in similar revenue sheets annually with the usual unimpressive incremental profit growth.
However, this year, it can be different.
OSK Research has revised upward KFC Holdings (Malaysia) Bhd's earnings for the financial year 2011 by three per cent to RM162.9 million from its earlier estimate of RM158.2 million based on expansion and potential contribution from India.
"We are positive over KFC's prospects on the back of its expansion to the under-penetrated India, coupled with continuous product innovation to drive demand," the firm said in a research note today.
KFC Holdings is targeting to open another 12 outlets in India by year-end to capture a further market share in the fast food business, after having opened its first two new stores in Pune and Mumbai in April and June respectively.
"We think India is the next growth catalyst for the group, given that the Malaysian market is rather saturated and could potentially only accommodate another 200 to 300 new restaurants," it explained.
KFC restaurants on a year-to-year comparison, saw a decent operating profit growth of 14.1 per cent, largely due to new innovative products launches as well as restaurants opened.
In addition, its Singapore operations also saw a quarter-over-quarter increase of 7.4 per cent in operating profit mainly attributed to value products and new products.
Despite the new forecast, the firm said it is maintaining its neutral recommendation for KFC.
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