KUALA LUMPUR: PublicInvest Research has maintained its neutral call on London Biscuits Bhd over near-term sales translating into earnings improvements due to production set-up costs and promotion expenses.
Its target price of 53 sen on the counter also remains unchanged.
The research house said the earliest contribution to earnings from London Biscuits' new plans are expected to come in 2H19.
"Conservatively, our earnings estimates are still within expectations. Until we see further encouraging progress pertaining to these new efforts however, we keep our estimates and call unchanged.
"Our current earnings estimates reflect an average of 24% growth at net level over the next two years."
In its Monday report, PublicInvest reaffirmed London Biscuits Bhd's growth prospects, especially in the potato chips segment.
It said the confectionary manufacturer's market share in potato chips is less than 5% but is in its growth stage with three production line running at an average 80% utilisaiton rate.
The potato chips segment secured up to RM32mil in sales in 9MFY18 with a target of RM50mil revenue this year, making up less than 15% of total group revenue.
According to the research house, London Biscuits is undergoing negotiations with petrol marts to supply its potato chips and other products. It is targeting the highest traffic perol market in highly populated urban areas and at rest and relaxation areas along the highways.
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