Posted on February 11, 2012, Saturday
This business model was highly scalable as its food outlets and beverages suited the Asian and Chinese taste. Including the right management and marketing push, Oldtown could well morph into the big time league, believed Kenanga Research. Oldtown planned to open 20 to 40 new food outlets per annum here for a start in addition to expanding and centralising its beverage manufacturing arm to jump on the bandwagon of the booming growth of China’s food and beverage (F&B) industry.
The company was targeting up to 300 outlets by 2015 to expand its coverage locally and overseas. Kenanga Research expected the majority of new outlets to fall under the franchising and licensing model. Additionally, the company was planning to penetrate the market in South Korea and Vietnam through the services provider’s exposure in the financial year 2012. Kenanga Research expected Oldtown to continue to grab even more market shares in its various expansion regions, which should translate into a greater organic growth for it in the near future.
Kenanga Research expected the overall revenue of its cafe chain operation to register nine per cent to 16 per cent growth for the financial year 2011 to 2012 on the back of 21 and 25 new outlets respectively, which conservatively lower compared to the management’s vision of 20 to 40 new outlets locally. Oldtown adopted a policy of distributing a minimum of 50 per cent of its annual profit as cash dividend out. Based on the financial year 2011 to 2012 of net profit estimated RM36.8 million to RM40.2 million, the analyst expected it to distribute a gross dividend per share (GDPS) of about 5.6 sen to 6.1 sen, which translated into an attractive dividend yield of 4.5 per cent to 4.9 per cent.
Oldtown’s fair value was pegged at RM1.46 based on 12 times per over its financial year 2012 earnings per share of 12.2 sen.
