PETALING JAYA: Hong Leong Investment Bank (HLIB) Research believes the impact from Oldtown Bhd’s venture into Myanmar is minimal as it only accounts for less than 1% of total earnings.
Hence, the research house is maintaining its earnings forecasts for the company as well as a “buy” call with a target price of RM2.09
Oldtown boasts a loyal customer base domestically, exemplified by its status as the market leader in white coffee. HLIB Research said its foray into Asean and China also provides potential room for growth going forward.
However, it cautioned that escalating raw material and labour costs going forward will cause margin pressure.
Last Friday, Oldtown announced that it had signed an area licensing agreement with Nikmat Mujur Sdn Bhd to expand its café operations to Yangon, Myanmar, with a view of becoming a full-fledged master licensing agreement in expanding its network of cafes across Myanmar.
Under the agreement, Nikmat Mujur will hold an exclusive licence to operate three outlets in Yangon for 24 months and will also have a non-exclusive right to use the OldTown White Coffee trade name and trade mark, to operate the system, to sell the approved products and provide specialised services within Yangon.
Its share price fell one sen to close at RM1.89 on some 154,300 shares done.
Source: The Sun Daily