Journey to Wealth

OldTown - Serving Up More Good Cuppas

kiasutrader
Publish date: Thu, 28 Feb 2013, 09:32 AM

OldTown's 12MFY13 results  were  well  within  consensus  and  our  estimates.  Sales and earnings surged 16.7% and 46.1% y-o-y, mainly fuelled by stronger performance at its FMCG business. Gross margin widened due to stable raw material prices and a growing topline. We remain upbeat on the group's outlook in view of its aggressive F&B  outlet  expansion  and  completion  of  its  upcoming  FMCG  factory  in  Ipoh. Maintain BUY, with FV unchanged at RM2.60.
 
In  line.  Oldtown's 12MFY13 revenue and  core  net  profit  (excluding  a  RM2m  goodwill impairment  incurred  this  quarter)  expanded  by  16.7%  and  46.1%  y-o-y  respectively.  The decent  topline  was  buoyed  by  stronger  showing  from  both  the  food  and  beverage  (F&B) and  fast  moving  consumer  goods  (FMCG)  segments,  which  perked  up  by  12.7%  and 23.2% y-o-y respectively. PBT at the FMCG advanced by 43.3% y-o-y, bolstered by better sales  volume  and  higher  average  product  selling  prices,  while  that  in  its  F&B  segment eased marginally  by  2.3%,  largely  due  to  a  RM2m  goodwill  written  off  during  the quarter. The top- and bottom-lines rose 5.9% and 7.3% respectively mainly owing to: i) higher sales from  F&B  outlets  and  collection  of  franchisees' fees,  and  ii)  better  sales  from  FMCG (+2.9%).

Gross margin widens. The group's gross margin rose to 31.9% vs 30% y-o-y amid stable commodity  prices  and  robust  sales.  However,  its  EBIT  margin  weakened  by  80ppts  to 18.2% vs 19% y-o-y due to higher marketing and staff costs.

In  expansion  mode.  As at end-2012, the group had a total of 220 F&B outlets, of which 197 were in Malaysia, 10 in Singapore, nine in Indonesia and four in China. It also plans to adorn  its  Singapore  outlets  with  innovative  deco,  while  adding  more  licensed  outlets  in Indonesia  and  China  this  year.  We  expect  production  capacity  at  Oldtown's  FMCG business to increase when its new factory in Ipoh is ready next month.

Maintain  BUY.  As  the  results  were  within  estimates,  we  are  leaving  our  forecasts unchanged for now. We like the group's aggressive expansion as well as growth potential for its overseas business. Maintain BUY, RM2.60 FV, based on 15x FYE13 EPS.
Source: OSK
Related Stocks
Market Buzz
Discussions
Be the first to like this. Showing 0 of 0 comments

Post a Comment