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NewsOldtown could still mitigate impact from removing service change, says AllianceDBS Research
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Oldtown could still mitigate impact from removing service change, says AllianceDBS Research
by Cals Mon 13 Apr 2015, 19:19
Oldtown could still mitigate impact from removing service change, says AllianceDBS Research
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By theedgemarkets.com / theedgemarkets.com | April 13, 2015 : 8:33 AM MYT
KUALA LUMPUR (April 13): [size=14]AllianceDBS Research has maintained its “Buy” rating on Oldtown Bhd ([You must be registered and logged in to see this image.] Financial Dashboard) at RM1.74 with an unchanged target price of RM2.20 and said that the company removing the 10% service charge could reduce earnings by RM8 million per year.
In a note today, the research house said it understood from Oldtown that the 10% service charge had been passed on as benefits to its employees.
“From a simplistic theoretical perspective, assuming that the service charge is removed and the group maintains its employee benefits, we estimate that the group’s bottomline could be reduced by about RM8 million per annum, which represents about 13-14% of FY16-17F earnings.
“Nonetheless, we believe that the adverse impact could be much lower since the group could mitigate this by (1) raising selling prices to compensate for the revenue shortfall since it is an industry-wide phenomenon, and/or (2) reducing benefits to its employees,” it said.
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By theedgemarkets.com / theedgemarkets.com | April 13, 2015 : 8:33 AM MYT
KUALA LUMPUR (April 13): [size=14]AllianceDBS Research has maintained its “Buy” rating on Oldtown Bhd ([You must be registered and logged in to see this image.] Financial Dashboard) at RM1.74 with an unchanged target price of RM2.20 and said that the company removing the 10% service charge could reduce earnings by RM8 million per year.
In a note today, the research house said it understood from Oldtown that the 10% service charge had been passed on as benefits to its employees.
“From a simplistic theoretical perspective, assuming that the service charge is removed and the group maintains its employee benefits, we estimate that the group’s bottomline could be reduced by about RM8 million per annum, which represents about 13-14% of FY16-17F earnings.
“Nonetheless, we believe that the adverse impact could be much lower since the group could mitigate this by (1) raising selling prices to compensate for the revenue shortfall since it is an industry-wide phenomenon, and/or (2) reducing benefits to its employees,” it said.
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