I have a concern with investing in OldTown.
The company has a short listing history, having listed on the Bursa in Jul'11, raising
RM79.2m as a result.
Fast forward 1.5 years later, the company underwent a private placement, issuing 33m new shares(10% of outstanding shares) raising
RM64m as a result with the main purpose for capex to expand their business.
However, Oldtown's balance sheet was strong at the point of placement and debt was minimal(LT debt at RM12m - info from financial times) I do not see why a private placement had to be done to dilute the EPS.
The below post by a Malaysian blogger(I presume) explains my point in further detail.
http://www.intellecpoint.com/2012/09/old...hould.html
Jm2c (not vested)
(20-03-2014, 11:56 AM)yawnyawn Wrote: [ -> ]I have a concern with investing in OldTown.
The company has a short listing history, having listed on the Bursa in Jul'11, raising RM79.2m as a result.
Fast forward 1.5 years later, the company underwent a private placement, issuing 33m new shares(10% of outstanding shares) raising RM64m as a result with the main purpose for capex to expand their business.
However, Oldtown's balance sheet was strong at the point of placement and debt was minimal(LT debt at RM12m - info from financial times) I do not see why a private placement had to be done to dilute the EPS.
The below post by a Malaysian blogger(I presume) explains my point in further detail.
http://www.intellecpoint.com/2012/09/old...hould.html
Jm2c (not vested)
As long as the share placement discount is not significant and the proceeds can be utilized to achieve good ROI, why not? Also, share placement helps to boost the liquidity of the shares. And placement to institutions with long term investment horizon can help to boost the appeal of the stock to retail investors.
If the company was only listed less than 2 years and it's already cutting back on the dividend pay out ratio, the impact on the investor's confidence will be far greater than EPS dilution. Oldtown had put their ipo and share placement proceeds to good use and grew the FMCG business significantly over the years.
There are many examples where company shares rose after sharement issue, as investors perceived that the shares appeal to institution investors.
Q1 not so super for Super Group
Published on May 13, 2014 1:41 AM
By Tee Zhuo
LOWER foreign exchange gains and weaker demand for its products sent earnings down at food and beverage (F&B) firm Super Group in the first quarter.
Net profit fell 19 per cent to $17.8 million in the three months to March 31 while revenue dipped 6 per cent to $124.6 million.
The firm blamed the poor showing on reduced demand for its products across the board, such as cereal products and cup noodles and food ingredients such as non-dairy creamer.
Super said revenue from its branded consumer products decreased due to sluggish sales in South-east Asian markets, particularly Thailand.
"Thailand is one of the group's key branded consumer product markets... the civil unrest in Thailand had dampened consumer spending and discouraged businesses from stocking up their inventories. This had adversely affected the demand," it said.
Earnings per share in the quarter was 3.20 cents, down from 3.97 cents in the same period last year. Net asset value per share rose nearly 13 per cent to 86.23 cents from 76.50 cents in the same period a year earlier.
Chairman and managing director David Teo cited "challenging market conditions" in the region and "rising commodity prices" for the weak performance.
"We will keep up the pace of product innovations, continue offering new products to consumers while further strengthening our brands through continuous brand-building efforts," he added in a statement.
The price of Robusta coffee beans - an important raw material for the firm - rose nearly 38 per cent from December last year to March. Other key ingredients recorded similar increases. Sugar prices climbed almost 17 per cent from January to March this year, while crude palm oil prices rose 15 per cent.
While rising commodity costs will affect the firm, Mr Teo said this has happened in the past, and the firm is closely monitoring price trends. "We will take appropriate actions to mitigate the impact on the group."
Super shares closed down 16 cents to $3.23 yesterday.
teezhuo@sph.com.sg
(19-03-2014, 10:29 PM)Tiggerbee Wrote: [ -> ]I think Super did open an Owl cafe in Star Vista. But aside from it, they do not have any plans to open more cafe outlets.
Super just opened an owl cafe at bedok point.
I went on a weekday, crowd was not too bad! About the same as ajisen (which I am vested).
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I'm not so sure of the coffee shop business model's profitability because of:
1. Rentals in the current mall market (being scalped by REITS).
2. Wage costs for wait staff in the govt-tightened labour market.
3. Consumer behaviour of buying one cup and sitting 2 hrs (or studying for exams, selling insurance etc).
4. Saturation by incumbents (Starbucks, CBTL, etc). Red ocean strategy.
Of course this is from my layman point of view. I welcome other perspectives / comments. I may be wrong because I dont have data to back up.
(13-05-2014, 11:35 AM)thor666 Wrote: [ -> ] (19-03-2014, 10:29 PM)Tiggerbee Wrote: [ -> ]I think Super did open an Owl cafe in Star Vista. But aside from it, they do not have any plans to open more cafe outlets.
Super just opened an owl cafe at bedok point.
I went on a weekday, crowd was not too bad! About the same as ajisen (which I am vested).
Sent from my iPad using Tapatalk
Not only at Bedok Point, but 1 more outlet at Republic Plaza in Raffles Place. It will be interesting to see how they expand the cafe chain segment and if they can match Old Town's cafe PBT margins of 16.8%.
http://sg.openrice.com/restaurant/articl...icleid=862
There is an Old Town's cafe and Starbucks at Bedok Mall too. I often see empty tables at Old Town's cafe but occupied tables at Starbucks. It must be the branding as Starbucks is like the place students/yuppies go i presume?
Old town and Owl café are not café similar to starbucks.
The former two are more like eateries, while starbucks main stay are coffee and cakes.
In my opinion, supergroup has to secure good venue for their owl café. OCK Curry Times has been successful at this where their outlets are placed at areas where there are high lunch crowd traffic during the weekdays. Super is going to have a tough time competing in this new segment, in my view. The opening of republic plaza is a good move but how it will affect Super's profitability is anybody's guess. Will see their future Q results to gauge.
Not too optimistic of Super's Growth prospect in the near term for now. Its current valuation of 22x PE is factoring in very optimistic growth prospects for a FMCG company. Personally, think Market has overvalued it.
Why are they going into cafe? Isn't the ingredient business a much better business?
(13-05-2014, 07:53 PM)CY09 Wrote: [ -> ]Old town and Owl café are not café similar to starbucks.
The former two are more like eateries, while starbucks main stay are coffee and cakes.
In my opinion, supergroup has to secure good venue for their owl café. OCK Curry Times has been successful at this where their outlets are placed at areas where there are high lunch crowd traffic during the weekdays. Super is going to have a tough time competing in this new segment, in my view. The opening of republic plaza is a good move but how it will affect Super's profitability is anybody's guess. Will see their future Q results to gauge.
Not too optimistic of Super's Growth prospect in the near term for now. Its current valuation of 22x PE is factoring in very optimistic growth prospects for a FMCG company. Personally, think Market has overvalued it.
(14-05-2014, 09:22 AM)LLI Wrote: [ -> ]Why are they going into cafe? Isn't the ingredient business a much better business?
(13-05-2014, 07:53 PM)CY09 Wrote: [ -> ]Old town and Owl café are not café similar to starbucks.
The former two are more like eateries, while starbucks main stay are coffee and cakes.
In my opinion, supergroup has to secure good venue for their owl café. OCK Curry Times has been successful at this where their outlets are placed at areas where there are high lunch crowd traffic during the weekdays. Super is going to have a tough time competing in this new segment, in my view. The opening of republic plaza is a good move but how it will affect Super's profitability is anybody's guess. Will see their future Q results to gauge.
Not too optimistic of Super's Growth prospect in the near term for now. Its current valuation of 22x PE is factoring in very optimistic growth prospects for a FMCG company. Personally, think Market has overvalued it.
I presume going into the cafe business segment will increase the brand value of Super, particularly for its OWL brand, since it exposes the brand to more people. It also provides the company a new channel to sell more roasted coffee beans to the cafe outlets, which is what Old Town is doing to their 222 outlets now.
10 years(2004-2013) CAGR for Super's revenue and net profits are 12.47% and 19.06%. At today's price of 2.95(14 May 2014), it is trading at ~17x earnings as compared to Power Root(Ah Huat White Coffee) 16x earnings and Old Town 19x earnings. Looks to be a good growth stock to buy into if company can continue growing both top and bottom line at growth rates similar to the past 10 years.
Today Super closed at $2.95, are they being shorted or is it because of recent bad quarterly result and dividend going XD? Looks like there are people shorting this company.