KUALA LUMPUR (May 26): Selling intensified on OldTown Bhd, which just hit its record high of RM3.40 on Monday, today after the cafe chain announced a disappointing set of quarterly financial result.
The stock opened at RM2.47 — a sharp discount over yesterday’s closing of RM3.09. It settled at RM2.78 at the closing bell, down 31 sen or 10%.
Trading volume ballooned to 21.79 million shares — the highest level since June 2012.
The counter came under selling pressure for four consecutive days after it reversed its upward trend after hitting record high on Monday. It has tumbled 18% since Tuesday.
OldTown’s net profit for the fourth quarter ended March 31, 2017 (4QFY17) slumped 46% to RM9.91 million from RM18.36 million in the previous corresponding quarter. However, its revenue grew marginally at 2% to RM106.96 million from RM104.5 million, supported mainly by higher topline from beverage manufacturing.
“Its FMCG (fast moving consumer goods) business has disappointed this time around, with 4QFY17 profit before tax (PBT) dropping by 32% y-o-y to RM11.5 million, despite the 11% y-o-y increase in revenue to RM59.2 million during the quarter. The lower PBT can be mainly attributed to high selling and distribution expenses,” AllianceDBS Research’s analyst Cheah King Yoong.
“Its F&B business continued to face challenges. 4QFY17 topline dropped 8% y-o-y at RM49 million. PBT nosedived 72% y-o-y to RM1 million, dragged by RM4.8 million doubtful debts written off and lower revenue,” Cheah wrote in his financial review dated today.
Cheah said the “buy” call recommendation and target price of RM3.05 is currently under review, pending an analyst briefing today.
Meanwhile, AmResearch’s analyst Philip Wong commented that a positive note is the 71% growth on FMCG sales achieved in Greater China in 4QFY17. The growth pace has far exceeded his assumption of 20% in FY18 ending March 31.
Wong pointed out that capex surged in the quarter under review, doubling for the year — suggesting greater automation. He maintains “buy” recommendation with fair value of RM3.
OldTown yesterday said its revenue for the quarter rose slightly to RM106.96 million from RM104.52 million in 2016.
For the financial year ended March 31, OldTown posted net profit of RM60.77 million versus RM52.27 million a year earlier.
It proposed a final single tier dividend of 1 sen per share and a special single tier dividend of 3 sen per share in respect of the financial year ended March 31.