This article first appeared in The Edge Malaysia Weekly on May 13, 2024 - May 19, 2024

InNature Bhd’s (KL:INNATURE) share price has more than halved to 30 sen from its initial public offering price of 64 sen over four years ago in February 2020. The Body Shop franchisee has been suffering from shrinking margins and sales.

Early this year, investors were spooked by the news of The Body Shop’s owner — The Body Shop UK — being put under administration by German private equity firm Aurelius to facilitate a restructuring of the business. To allay investors’ concern, InNature has assured that there will sufficient product supply until past 2025.

Given the challenging operating environment, InNature’s plans to diversify its revenue stream come as no surprise.

Last Friday, the group announced a food & beverage (F&B) venture — a takeover of Blu Restaurant Sdn Bhd for RM21.25 million cash in a related-party deal.

Blu Restaurant, which is controlled by InNature’s chairman Datuk Simon Foong and managing director Datin Mina Cheah-Foong, has the exclusive rights to open and operate restaurants under the Burger & Lobster brand in Malaysia (excluding the outlet in Genting Highlands), Indonesia and Vietnam. Cheah is Foong’s wife.

Currently, Blu Restaurant operates a Burger & Lobster outlet in Suria KLCC mall.

The deal appears to be a sensible move for InNature, enabling it to reduce its dependency on The Body Shop franchise. It is paying for the British F&B franchise business at a price-to-earnings multiple of 8.32 times based on its 2023 net profit of RM2.55 million.

The total investment cost of the vendors, namely Aquablu Technologies Sdn Bhd, Adventuria Sdn Bhd and Aquawalk Sdn Bhd, was RM11.95 million. Two years later, their business is being sold for RM21.25 million.

Hopefully, it will be the same for ­InNature, with the high-end restaurant that specialises in lobsters and burgers satisfying the taste buds of Malaysians, Indonesians and Vietnamese, and bringing in a fresh revenue stream.

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