Empire Sushi growth driven by store expansion: analyst

KUALA LUMPUR: Empire Premium Food Bhd, the owner-operator behind Malaysia's largest sushi chain Empire Sushi is expected to deliver stronger earnings in the second half of its financial year 2027 (2H27).

CIMB Securities Sdn Bhd said this will be supported by 20 new store openings in FY27, with 12 delivered in 1H27 and the bulk of the remaining eight expected in the third quarter (Q3) of FY27F.

The firm said continued launches of higher-margin seasonal products and better operating leverage will also support its growth.

"Its fast-moving consumer goods (FMCG) products are also seeing encouraging traction, with the company planning to refresh its offering in Q3 FY27 through new stock-keeping units (SKUs).

"This includes potato chips and a youth-targeted beverage, alongside further product launches," it noted.

On the impact of the minimum wage increase, CIMB Securities said Empire Sushi estimated that about 400 of its 1,500 employees, or 27 per cent of its workforce, would be affected.

The firm said this will translate into incremental staff costs of RM150,000 per month or RM1.8 million per annum.

"Empire Sushi expects to mitigate this through a more profitable sales mix and new products aligned with consumer trends.

"Notably, margins remained resilient through previous minimum wage hikes over the past decade, partly supported by higher transaction volumes and sales," it said.

Meanwhile, CIMB Securities said Empire Sushi's net profit for 1H27 rose 32.1 per cent year-on-year to RM26.7 million, which the firm deemed to be in line with expectations.

The earnings accounted for 45.6 per cent of the research house's full-year forecast and 46.6 per cent of Bloomberg consensus estimates.

"With Q2 FY27 results in line with expectations, we make no changes to our FY27 to FY29 earnings per share (EPS) estimates.

"We reiterate our "Buy" call and a target price of RM1.36," it added.