Essay Example on White Coffee conglomerate of cafes

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NEWS OldTown White Coffee conglomerate of cafes plagued by higher labor costs and dampening consumer sentiment as well as weaker transport in its fast moving consumer goods FMCG segment in its first half ended Sept 30 2014 As a result OldTown s FMCG division reported a profit before tax of RM9 72 million in the second quarter down 12 year on year dragged down by lower sales from the segment s overseas market according to JF Apex Research in a note in November They did not perform well in the first quarter ended 30 of June 2014 because of longer approval times for product labeling and Food and Drug Administration FDA registrations in Indonesia China and Hong Kong as well as a restructuring of its distributorship that resulted in delayed shipments to Sabah and Sarawak and China According to AllianceDBS Research vice president for equity research Cheah King Yoong told to the Edge Financial Daily through telephone the issues have been solved by now 



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Besides that Oldtown White Coffee has experienced the weaker financials because it s share price dropped by one third from a near one year high of RM2 26 in June last year to RM1 50 early this month But after a period of time Oldtown white coffee has a spirit of never give up to look forward to substantial shareholders For example foreign fund management companies US based Franklin Resources Inc and Canadian based Mawer Investment Management Ltd have started raising their stakes in Old Town which is seen as a sign of their confidence in the company's outlook Over the past two weeks Franklin Resources acquired 5 81 million shares in OldTown raising its equity interest in the company to 7 06 from 5 74 Mawer picked up an additional 3 29 million OldTown shares which raised its stake in the food and beverage group to 9 19 OldTown s share price reacted favorably to the announcements rising 18 sen or 12 to RM1 68 As at 15th of July in 2016 Old Town Bhd s China arm has entered into a territorial license agreement TLA with China s G L to give it the rights to operate and to sub license the rights to operate the Old town White Coffee restaurant business in Jiangsu China this news was obtained by The Star news G L a Chinese company aimed to withhold the territorial license rights in Jiangsu to own operate and sub license the right to operate Old Town White Coffee restaurants within the district



 According to October 2016 G L planned to open its first China outlet in the city of Wuxi in the southern Jiangsu In a filing to Bursa Malaysia on Friday the group said Old town s Shenzhen coffee houses Asia Pacific Limited had earlier executed a TLA with Old town Asia Pacific Limited to accept the Territorial License for Jiangsu The TLA is for five years from May 1 2016 to April 30 April 2021 and shall be automatically renewed for two successive five year terms In addition Old town transport its white coffee products to more than 13 countries worldwide which include countries in South East Asian region as well as Hong Kong and China According to Maybank IB Research Old Town Bhd s share price was gained on 5 July 2016 because the company's stock is fairly valued with its near term earnings potential largely in the price They also expected 4 to 6 earnings growth for the financial year 2017 and 2018 in order to a gradual recovery of its food and beverages operations and fast moving consumer goods to sustain its positive momentum on an improved distribution network Maybank IB Research added Besides that they also believe that the company will keep its current pricing strategy for FMCG and F B to increase its market share and benefit from favorable raw material prices Furthermore Maybank IB Research feels the impact of minimum wage hike would be minimal to the company as it only has about 100 staff members that are paid below the new minimum wage 



The monthly minimum wage increased from RM900 to RM1 000 for Peninsular Malaysia and from RM800 to RM920 for Sabah Sarawak and Labuan are effective on 1st of July on 2016 On the other hand Maybank IB Research understands that OldTown is looking into mergers and acquisitions as the company has a strong balance sheet and net cash position of RM154mil at end March 2016 According to the latest news the owner of the Old Town White Coffee franchise has been taken over by a Dutch coffee company Jacobs Douwe Egberts that specializes in the beverage industry worldwide on 12 Dec 2017 In a filing with Bursa Malaysia on Monday the company of Jacobs Douwe Egberts had offered to set up the former at RM3 18 per share for RM1 47bil stated by Oldtown As yet JDE has secured acceptance from 51 45 of Old Town s shareholders The share price of Old Town Bhd has surged to a seven month high after had been taken over by Dutch coffee company Jacobs Douwe Egberts Besides that Old Town also declared that the group has obtained a pre conditional cash offer for all the general problem shares of the company by Jacobs Douwe Egberts Holdings Asia NL B V an indirect wholly owned subsidiary of JDE The offer will be the main point to the requirement of green lights obtained by the Competition Commission of Singapore without conditions or on conditions reasonably satisfactory to JDE and the offer does not breach any other appropriate antitrust authorizations However if the offer is breached the green light will be obtained from the relevant authorities going forward Conductive to privatize Old Town JDE have need minimum a total stake of 90 The steps also require consent from the Competition Commission of Singapore and any other antitrust director


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