Kenanga downgrades Oldtown

Kenanga Research downgraded Oldtown Bhd to 'market perform' from 'outperform', citing higher operating and market expenses to be incurred by the cafe outlets operator going forward.

"Fundamentally, we remain positive on the company given its strong growth of its fast-moving consumer goods which is expected to be boosted by its growing regional market share and its vision of opening more café outlets regionally," the research house said in a note on Monday.

However, Kenanga cut its earnings estimates for Oldtown saying it expects the company to incur higher operating and marketing expenses due to a more competitive and challenging market.

It lowered its net profit forecast for Oldtown to RM45.4 million from RM52.8 million for the financial year ending March 31, 2013 and to RM50.3 million from RM59.8 million for the financial year 2014.

The research house lowered its target price to RM2.38 per share from RM2.40.

As of 9.58am, shares of Oldtown were up 1.78 per cent to RM2.29 per share. The benchmark stock index was 0.15 per cent lower.-- Reuters