Tuesday, October 21, 2014

OldTown ... High Foreign Holding Vulnerable !!

Its share price falling is mainly due to a confluence if factors, including overall market sentiment, expectation of weaker consumer spending as well as selling foreign funds.

It has a high foreign shareholding at about 36% currently (Oct 2014). Oldtown did increase its share buyback in Aug 2014 to Sept 2014 offering some support but it has since stopped.

It has net cash of rm143 million as at end June 2014 which is supportive of a minimum 50% net profit payput policy.

Net profit is likely to remain flattish for 2014 on the back of slower consumer spending, rising costs and competition.

To improve sales, it is re branding different outlets/locations to target different market segments.

It is also looking to overseas markets to boost growth. It had opened an outlet in China and plans to add several more. The first café in Australia is expected in 1H2015 under a new master license agreement. Currently (Oct 2014) there are 237 Oldtown cafes, local and abroad, about half of which is wholly or partially owned.

Meanwhile it is working with key distributors in existing and new markets to expand demand for its instant white coffee products.

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Please note that all data given are merely blogger's opinion. It is strongly recommended that you do your own analysis and research before investing.