HLIB Research Summary - 7 Oct 2014

Oldtown: Taking the​ Long Term View

• Recent share price weakness from active disposals from foreign investors of ~6.3m shares (1.4% of total shares outstanding) could due to weak 1QFY15 results.
• Despite that, we believe the group would be able to meet our earnings forecasts of RM54.6m, supported by its various plans in both café chain ( China ) and FMCG ( China , Hong Kong , Indonesia and Philippines ) business segment.
• Domestically, Oldtown will be reaching out to family and kids segment as well as experimental trials on the use of discounting coupons.
• Despite concerns of weaker consumer sentiment, we believe F&B operators would not be impacted significantly as long as pricings remain competitive.
• BUY recommendation and target price of RM2.17 (based on 18x FY3/15 EPS) remained unchanged. We advise investors to take the opportunity to accumulate.

 

Traders Brief: Sideways ahead of the 2015 Budget

• Technically, short-term daily KLCI oscillators are leveling off to indicate reducing downward momentum but weaker weekly chart suggests a near-term recovery remains elusive following the breakdowns below the long term downtrend line since Oct 2011 (near 1863) and the daily 200-d SMA (near 1852). Overall, investors sentiment to remain muted after the surprised 20sen petrol hike effective 1 Oct and ahead of the widely-anticipated Budget 2015 to be tabled on 10 Oct.
• Weekly key resistance zones are situated near 1852, 1860 (50-d SMA) and 1867 (23.6% FR) whilst supports fall on 1833 (50% FR) and 1829 (6-month low).
• Today’s recommendation (refer FIG5): Timeous BUY on OLDTOWN (TP RM1.83-1.92; Cut loss RM1.63).

 

Time*ous - Oldtown: Oldtown: Technical rebound is on the card

• Our institutional research maintained BUY rating and RM2.17 target price for OLDTOWN and advocate long term investors to accumulate on weakness.
• Technically, share price tumbled 26% to RM1.69 on 2 Oct 2014 from the high of RM2.29 on 23 Jun 2014, we see signs of impending reversal mainly due to the Hammer candlestick formed on daily chart last Thursday. On weekly chart, 50% Fibonacci Retracement of RM1.69 provided a solid support to prevent share price from further selldown. Key technical rebound targets are RM1.83-1.92 whilst supports fall on RM1.69-1.73.