Share price: MYR2.46
Target price: MYR3.55 (unchanged)
FMCG To Grow Faster
More excitement in FMCG. Post analyst briefing, we maintain our view that OTB will perform better from 2QFY3/14 onwards, mainly driven by stronger growth in the FMCG segment, which has already penetrated the Thailand and Taiwan markets. For the F&B segment, the Malaysian operations will still be the growth driver. We keep our earnings forecasts, BUY call and TP of MYR3.55 (21x CY14 PER).
FMCG sets foot in Thailand and Taiwan. OTB’s products are now listed in the major hypermarkets and supermarkets in Thailand (The Mall, Big C and Tops) and Taiwan (Carrefour, Jasons and PX Mart). OTB expects to list its products in Tesco Thailand, Makro Thailand and Costco Taiwan by end-Nov 2013. As such, OTB will have presence with more than 400 retail outlets in Thailand and more than 700 outlets in Taiwan by end-2013. These new developments bode well for the new capacity in the FMCG plant in Perak.
China F&B depends on the central kitchen. The store opening in China is highly dependent on the central kitchen in Guangdong, which is expected to be ready by Dec 2013. YTD, OTB has not opened any store in China but our new store assumption of four outlets p.a. for FY3/14-16 is unchanged. Positively, the implementation of set menus all day long and the Halal campaigns have helped to improve the diner traffic in its outlets in Malaysia. Over the longer term, OTB plans to move towards the semi self-service model in order to reduce the reliance on labour.
Third kiosk to open soon. OTB is opening its third kiosk in Avenue K in KL CBD on Oct 17, after KLCC and Senai Airport. The kiosk model is now still in its infancy stage but it will contribute positively to the group’s earnings if the model is rolled out on a bigger scale. We understand that OTB plans to open a kiosk in a Shell petrol station along the New Klang Valley Expressway (NKVE) and there could be more kiosks in the other Shell stations.
Publish date: 13/09/13