SINGAPORE (Nov 12): RHB Research is downgrading its call on Japan Foods to “neutral” from “buy” with a lower target price of 48 cents compared to 58 cents previously, as it believes the group’s share price could “take a breather” after delivering 8.3% YTD returns and outperforming the STI Index by 17.4%.

The research house nonetheless continues to like Japan Foods for its strong balance sheet, thriving Japanese restaurant franchise as well as the ability to successfully launch new brands.

In a report last Friday, analyst Shekhar Jaiswal says a recent discussion with the group’s management has indicated that weak consumer sentiment, higher costs from launching premium restaurant concepts, and rapid expansion in restaurant numbers could keep Japan Foods’ profitability in check over the next few quarters.

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