Breadtalk

[karlmarx]

Is Not Gardenia sir. Is Sunshine sir.

https://www.auricgroup.com/

Not Vested

Oh dear. Thanks for the correction.

[holymage]

Gardenia is owned by QAF (Salim family), while Sunshine is owned by Auric (Riady family).

From the trend, my best guess is the Riady might liquidate it. Auric Pacific is a very small part of the Riady business empire. To me, it looks like managing Auric is more like a training ground / test for Andy Adhiwana, son in law of Stephen Riady. I think over time, more important segment of the Riady business empire will be handed over the Andy Adhiwana.

I am more curious about the fate of the remaining 2% minority shareholders in Auric Pacific. Will they get a respectable payout after waiting for 2-3 years?

[Squirrel]

Gardenia is owned by QAF (Salim family), while Sunshine is owned by Auric (Riady family).

From the trend, my best guess is the Riady might liquidate it. Auric Pacific is a very small part of the Riady business empire. To me, it looks like managing Auric is more like a training ground / test for Andy Adhiwana, son in law of Stephen Riady. I think over time, more important segment of the Riady business empire will be handed over the Andy Adhiwana.

I am more curious about the fate of the remaining 2% minority shareholders in Auric Pacific. Will they get a respectable payout after waiting for 2-3 years?

I expect they would. Few years back when they did a taking private on the basis that Silver Creek, Andy and Stephen Riady are not acting in concert, the price they paid has been more than recovered by the sale of the distribution arm and now the Food Junction sale is a bonus. They reaped in big time with the taking private of the company. Seeking 23.28% of the firm for 48.27m implies $207m equity valuation. They have subsequently sold the distribution arm for around SGD220m and now Food Junction for $80m. And Sunshine bread is still in AP's portfolio. I would say the Raidy's got a very good deal. Up till now I still don't understand how they could considered to be acting not in concert and hence does not require them to buy remaining stocks.

"Unlike other general offers, this one does not entitle Silver Creek to compulsorily buy any remaining stock from shareholders who do not accept the offer.

Shareholders who have not accepted the offer as at the close of the offer will not have any right to request the offeror to buy their shares."

https://www.straitstimes.com/business/co...hares-fair

https://www.businesstimes.com.sg/compani...a-for-160m

The minority holders would basically earn 45% above the takeout price while still holding sunshine bread, that is assuming that the cash does flow back to them in the end. All that in 2 years.

[dreamybear]

Why It Makes Zero Sense For BreadTalk To Buy Food Junction At $80 Million
Author: Irving Soh | Date: September 10, 2019

BreadTalk Group (SGX: CTN), recently announced its acquisition of food court operator Food Junction Management (FJM) for S$80 million through subsidiary Topwin Investment Holding on 2nd September 2019.......

We were appalled when we saw that the net asset value of FJM is around S$12.3 million and the half-yearly profits come up to only around S$3,183 (annualized would be S$6,366).

Taking the price tag of S$80 million, BreadTalk is essentially paying a sky-high valuation of 6.5x book value and a whopping 12,566 times earnings! Yes, you didn’t read the latter wrongly – S$80 million divided by an annualized S$6,366 profits would give you a twelve thousand five hundred and sixty-sixt times Price to Earnings........

Read more : https://www.drwealth.com/why-it-makes-ze...80-million

[Bibi]

Did I see wrongly or was it a typo error? Annual profit of just S$6k? A fresh first class honours engineering grad mthly salary is already S$5k plus. Perhaps there was a huge writedown resulting in the S$6k profit.

[dreamybear]

Did I see wrongly or was it a typo error? Annual profit of just S$6k? A fresh first class honours engineering grad mthly salary is already S$5k plus. Perhaps there was a huge writedown resulting in the S$6k profit.

I also did a double take; but apparently not, just came across another article which provides more insight ....

-------------------------------------------------------------------------------------------

Is BreadTalk's S$80m offer for Food Junction worth the dough?
Tue, Sep 10, 2019 - 5:50 AM

.......Last week, in a teleconference briefing with analysts, following several reports that called BreadTalk's S$80 million offer for Food Junction exorbitant given the latter's paltry earnings, management clarified that Food Junction's weak net profit for the first half of 2019 of just S$3,183 was due to several factors that would no longer persist once the acquisition is completed.

This is because BreadTalk would not be taking over Food Junction's head office, so this would eliminate the high cost amounting to S$3 million of the latter's centrally-located headquarters. Food Junction had also been told to shut down several unprofitable direct-operated stalls before the acquisition announcement. Hence, the impairment costs of these stall closures that contributed to its weaker H1 FY19 results are not likely to continue.

In addition, BreadTalk's management said that Food Junction had opened a premium food court - Five Spice - at Jewel Changi Airport in April this year. Five Spice incurred start-up costs but had only two months of revenue to show for H1 2019.

Doing the math, management also compared Food Junction's FY18 enterprise value-to-Ebitda ratio prior to the adoption of the SFRS 16 accounting standard to other listed peers, and deemed the acquisition price at 7.6 times to be in line with competitors such as Kimly and Koufu. Kimly's EV/Ebitda ratio, for instance, was 10.3...........

Read more : https://www.businesstimes.com.sg/compani...-the-dough

[cyclone]

Profit Guidance on the Unaudited Financial Results for the Financial Year Ended 31 December 2019

The Board of Directors of BreadTalk Group Limited announced that after preliminary assessment of the Group’s unaudited results for the financial year ended 31 December 2019 ("FY2019"), the Board deems it appropriate to issue a profit guidance that the Group is expected to report a net loss for the FY2019.

The expected net loss is mainly attributable to the following factors:
1. Widening of losses at the Bakery business in China and Thailand,
2. Widening of losses across several brands within the 4orth Division, i.e. Wu Pao Chun, SongFa, Tai Gai and Nayuki, due to challenging operating environment, and
3. Significant deterioration in the financial performance of the Group’s businesses in Hong Kong across both the Bakery and Food Atrium Divisions due to the social unrest in the region.

The Group is still in the process of finalising its unaudited financial results for FY2019. Further details of the Group’s financial results will be disclosed when the Group finalises and announces its unaudited financial results for FY2019 on or around 24 February 2020.

[karlmarx]

There are only 3 businesses in BT that is worth something. Its Singapore bakeries, DTF, and food courts.

The rest of its overseas bakeries are not doing well at all, and has been holding back the company from profitability. Most of the time, their stores have no customers and few products. It has been many years since it made its international expansion, but the Asian markets perhaps wasn't yet ready for high-quality premium-priced bread. The Chinese still very much prefer their noodles.

Given the years and money they have spent developing their overseas markets, it will be interesting to see if BT will close their loss-making overseas bakeries, and re-focus on the business segment that are profitable. The weak cashflow and hefty debt burden that they are carrying leaves them with little space to maneuver.

At current prices, BT is still an expensive and risky proposition.

[dzwm87]

The math isn't that hard to work out. Bakery franchise should be profitable since it's all franchise fees with almost zero operating cost. Observing the crowd at their Singapore bakeries (BT & Toastbox), it should be highly profitable. Yet overall, bakery's net margin is so narrow-thin. Either something is not right or their China operation is losing heavily.

Margins for DTF and food courts are high too. Yet consolidated margins are so low. I am not so sure where along the P&L has all the profit gone to...

It's unfortunate that DTF's performance is diluted by their other under-performing businesses. The one brand that they don't own is their best performing one.

[specuvestor]

Agree their Capex and OPEX is strangely high. Though their business is kneading dough, the gravy seems to be somewhere else

CFO is 30+ chap and CEO resigned after supposely trying to rein in the costs. But I'm just a spectator and not invested, so what do I know except caveat emptor