BRAHIMS ... May12

Inflight catering services provider has seen its revenue affected by the route rationalization exercise undertaken by MAS. It acquired a 51% stake in BLSG in 2008. BLSG in turn owns 70% stake in LSG Sky Chef-Brahim Snd bhd, which holds the concession for the provision of inflight catering and related services for MAS. MAS owns the balance 30% in LGSB.

When MAS started closing some of the long haul routes, Barhim will definitely be affected. But that has somehow stabilized and now they are improving the short haul networks and they will have more regional flights. Some industry observers pointed out that the new management of MAS could be looking at reviewing a few operating areas, including the inflight catering contracts, in its bid to restructure its cost base due to its record losses for the financial year ended Dec 31, 2011.

Inflight catering services made up 93% of the group’s total revenue of rm185 million for FY2011. About 80% of its inflight catering services revenue comes from the 25 year contract with MAS which ends in 2028.

Barhim also owns 51% stake of Dewina Host Sdn Bhd, which is an operator of airport F&B outlets. Brahims is a significant player in the F&B scene in KLIA with outlets such as Burger King, Taste of Asia and Café Barbera. Dewina has put up about six proposals to open restaurants in KLIA2. F&B’s contributed to 5% of Brahim’s revenue.

In its effort to diversify its earnings base, it had acquired 60% equity interest in Admuda Sdn Bhd, which has a license for a sugar refinery for the east Malaysia market. It will be the first company producing sugar in east Malaysia . It will finance about rm130 million for capex by bank borrowings but it will do some corporate exercise to restructuring some of external borrowings.