Maybank IB Research maintains Buy on Oldtown on steady FMCG growth.

Business & Markets 2013
Written by Jonathan Gan of theedgemalaysia.com
Tuesday, 10 December 2013 13:49
A + A - Reset
KUALA LUMPUR (Dec 10): Maybank IB Research has maintained its
Buy buy call on Oldtown Berhad with an unchanged target price of
RM3.34, and said it expects the company’s FMCG segment of the
business to grow faster than F&B in the next few quarters.
Steady growth is expected in the region driven by volume growth from
cities in China, Thailand and Taiwan.
“Export revenue for the FMCG segment has expanded tremendously
from 36% of total FMCG revenue in 2007 to 57% in 2QFY3/14,” it said
in the note.
The F&B segment’s pretax profit has plunged 46% y-o-y to RM4.4
million mainly due to additional advertising & promotions (A&P) for both
its domestic and overseas operations totalling RM3.1 million
The research house expects pretax margins should improve in the
2HFY2014 on lower A&P expenses.
“The stock currently trades at 15.4x CY 14 PER, which is at a discount to its regional peers average of 23x. Net dividend
yields are decent at 3-4% for FY15-16,” it said in the note.