Breadtalk

[CityFarmer]

Good posting corydorus,

Personally speaking, I found it interesting listening to famed US investor Sam Zell on CNBC yesterday evening Singapore time - he was of the very strong and very well articulated view that currently there is simply too much (easy) money chasing too few really good investment opportunities, in the US and Asia Pacific. Some companies and investors seem to believe that de facto means going into real estate.

While I am vested in BreadTalk, I do worry a tad about companies who know little (or nothing) about the real estate business plonking serious shareholder funds into such business activities. While I have seen some succeed, I have been vested in a couple of Hong Kong listed companies where such investments did not work out...... and I believe their lack of real estate nouse got them into bother. BreadTalk Chairman George Quek seems to be arguing the vertically integrated benefits of owning rather than leasing. We'll see.

But whatever I say is irrelevant ............... Mr. Market seems to like something about BreadTalk at the moment...... and like it a lot. At 11.00 hrs a.m. today, BreadTalk's share price was up a further 2.5% to S$ 0.615 in volume of 950,000 shares in the first two hours of otherwise directionless, moderately downwards SGX trading. BreadTalk's share price is now up ~ 11.8% in ~ 5.1/2 trading sessions. And some BreadTalk shares exchanged hands at S$ 0.625 earlier in today's session.

Vested

When we have all sort of industry going into property development, few things come into my mind.

1. Current industries cannot make it ?
2. They have too much cash ?
3. Property is exploding ?
4. Easy money ?

The 1st impression come to my mind is "herd mentality"

Breadtalk is valued as growth stock. Instead of growing its core biz, resources are in non-core biz.

IMO, that is a big minus for growth stock.

[WolfT]

When is the last time u patronize breadtalk in sg?
I find that the quality of their bread not consistent a few years back.(sorry i do not know now as the last time i had one is 3 yrs ago)
You can tell that singaporean expectation is rising since many branded bakery setup shop here!
But that aside, their growth story in China seem legit but their business model seem easily mimic-able...still too early to tell.
This George Quek.. is he the one that crashed his porsche after drinking then licence kanton a few yrs back?

[camelking]

Mr George is probably tired of seeing his margin being squeezed by landlords year in year out...
So, he wants to be a landlord now.
Nothing wrong with this move!

But as a shareholder, if you want exposure to property, u may want to ride with property veterans rather than part-timer........

[RBM]

Good one WolfT !!,

Answering your question from my side: Personally speaking, I'm not a fan of BreadTalk's bread, which I find too sweet. In Kuala Lumpur, I much prefer Lavender over BreadTalk and the other chain Bakery shops you tend to find in modern shopping malls. In Singapore, I like Crystal Jade's bakery in Holland Village - much nicer bread than BreadTalk.

But the point is that BreadTalk is now much more than a mere baker. Din Tai Fung (I like the Xiao Lung Pao), Food Republic, Toast Box, RamenPlay, Carl Jnrs, Icing Room etc. And in my humble view, George is centralising as many activities and processes as he can - all with the aim of levering scale to deliver a highly competitive cost structure.

And ............Similarly, I own shares in Apple ................ but I prefer the Samsung Note to the iPhone. And while I have some shares in a German automobile manufacturer, I prefer to drive the car of another German manufacturer. I like NetFlix's product but I would never by their shares. In summary, I don't get bogged down with personal likes when deciding on where to put my investment money.

Sorry............. but I don't know about friend George's driving history.

Camelking - I'm aligned with you on the property investment concern. If I wanted to invest in a Real Estate Company I wouldn't be looking at a part-timer - as I said in my earlier message I have been burned on this score before.

Vested

When is the last time u patronize breadtalk in sg?
I find that the quality of their bread not consistent a few years back.(sorry i do not know now as the last time i had one is 3 yrs ago)
You can tell that singaporean expectation is rising since many branded bakery setup shop here!
But that aside, their growth story in China seem legit but their business model seem easily mimic-able...still too early to tell.
This George Quek.. is he the one that crashed his porsche after drinking then licence kanton a few yrs back?

[pianist]

which is the german automobile maufacturer that u r vested may i ask

[RBM]

Thank you Pianist,

I am vested in BMW. Why? Primarily because it is a very well managed company, maximises its brand penetration, with a phenomenal growth track record in Asia Pacific - and that very much includes Singapore (No. 1 best auto seller by volume last year if I recall correctly). I don't drive one - the electronics are too clever for me, amongst other excuses

which is the german automobile maufacturer that u r vested may i ask

[mrEngineer]

Just to share some experience. I attended a charity event earlier this year and what surprise me in the same table was sitting 2 listed construction and small time china ppty developer coy CEO (might be more but I only recognize 2) and big time Super (coffeemix) CEO on the same table. Nothing can be concluded but I m led to think that it is not uncommon that the Chinese educated businessman still likes property business in China.

[Contrarian]

> Just to share some experience. I attended a charity event earlier this year and what surprise me in the same table was sitting 2 listed construction and small
> time china ppty developer coy CEO (might be more but I only recognize 2) and big time Super (coffeemix) CEO on the same table. Nothing can be concluded but
> I m led to think that it is not uncommon that the Chinese educated businessman still likes property business in China.

The business environment in China is 10 to 100 times tougher than in Singapore.

Property is a lot easier - connections, bank loans, some marketing, some project management. With so many chinese wanting to buy apartments.

[pianist]

Thank you Pianist,
I am vested in BMW. Why? Primarily because it is a very well managed company, maximises its brand penetration, with a phenomenal growth track record in Asia Pacific - and that very much includes Singapore (No. 1 best auto seller by volume last year if I recall correctly).

thanks for the reply. i asked because i am always impressed by german advancement and interested in their products.

[evilbdboi]

Mr George is probably tired of seeing his margin being squeezed by landlords year in year out...
So, he wants to be a landlord now.
Nothing wrong with this move!

But as a shareholder, if you want exposure to property, u may want to ride with property veterans rather than part-timer........

Just a note, Breadtalk is not going at it alone. Its an investment with numerous parties and their percentage of investment is just a mere 4%. One of the major shareholders in the development is Perennial in which their CEO is Pua who started the Reits in Singappore and was CEO of CapMallAsia in the 2000s. Based on his knowledge in China property environment, most likely breadtalk is tapping onto his expertise.