Friday, 20 April 2012

Oldtown shares at record high

KUALA LUMPUR (April 20) : Oldtown Bhd shares rose 4% to reach its highest since the coffee manufacturer and café operator’s listing in July 2011 after Alliance Research Sdn Bhd initiated coverage on the stock.

Shares of Oldtown climbed six sen to RM1.57 before erasing gains to trade in the red at RM1.50 at 2.41pm. Some 3.6 million shares changed hands.

Alliance analyst Ian Wan expects Oldtown’s earnings to rise at a three-year compound annual growth rate of 26% in anticipation of its café chain and production capacity expansion.

“We initiate coverage on Oldtown with a buy recommendation and target price of RM1.69, based on its 12-month forward price-to-earnings ratio of 13 times,” Wan wrote in a note.

The analyst said Oldtown is also a “good yield play” by virtue of its projected dividend yields of between 4% and 6.6% for financial years ending December 31, 2012 to 2014. This assumes a payout ratio of 50%.

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