Brahim's Holdings

It provides proxy to the proliferation on air travel but without the baggage of ticket price war and jet fuel price fluctuations.

Moreover shareholders effectively have a free cost option to its sugar venture.

It provides airport centric food businesses and other F&B businesses.

It is having a sustainable earnings from long term concession agreements.

Brahim’s in flight catering services contributes 86.9% of the company’s total revenue.

Post acquisition of the remaining 49% stake in Brahim’s Airline Catering Holdings Sdn Bhd early 2013 would result in a significant jump in Brahim’s overall revenue (up to 30%) and operating profit for FY2013, given that the business segment is the major contributor to Brahim’s earnings.

Brahim’s could also receive an earnings catalysts from its venture into sugar refinery business as it had purchased a 60% stake in Admuda Sdn Bhd.

Brahim’s could have several advantages over MSM’s sugar business in terms of margins and efficiency. Brahim’s have a better costs structure as raw sugar will be supplied Thai Roung Ruang *Thailand’s second largest sugar manufacturer and exporter) based on market price of 16.3 sen per pound against long term contract price of 26 sen a pound.

The LTC is three year engagement between Malaysian government, local sugar refiners and foreign raw sugar suppliers to ensure consistent supply of raw sugar at table prices for the market. The LTC is going to expire at the end of 2014.

However, the company earnings is highly dependent on economic conditions and pandemics. Another delay in the opening of KLIAs airport and Brahim’s sugar refinery plant will also bring negatives to Brahim’s.

Furthermore, additional borrowings by the company for any asset injections could increase net gearing significantly.

As at 1QFY2013, Brahim’s net gearing level was heightened from 0.09 times in FY2012 to 0.7 times due to its total borrowings of rm160 million where rm130 million was used for the acquisition of the 49% stake in Brahim’s Airline Catering.