Breadtalk

[felixleong]

sometimes net profit margins hor.. must compare with peers than more fair
how are the net profit margins for other F&B business similiar to breadtalk?

But i strongly agree that PE ratio is tooo high

OCBC view on breadtalk
BreadTalk Group: Still pricey for now

Summary: BreadTalk’s 1Q results came in within our expectations with revenue growing 13.4% YoY to S$120.3m on the back of broad segment increases while operating and PATMI increased by 45.6% and 46.0% to S$3.5m and S$2.1m respectively. Although BreadTalk’s move to its new headquarters next month will bring about improvements to its production efficiency and operating expenses, we do not expect cost savings to materialize in the immediate quarters due to the incurrence of transitional expenses. As such, we leave our FY13 projections unchanged. In terms of its share price, we remain cautious at this juncture as current valuations are still too expensive in our view. Coupled with an unattractive dividend yield of 1.0%, we maintain our SELL rating with an unchanged fair value of S$0.77. We will look to re-evaluate the counter once speculative interest arising from the MINT acquisition wanes. (Lim Siyi)

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sometimes I don't mind buying low margin businesses if they are doing well against their competitors

example is walmart, its the biggest and most successful retailer in the US, however their net profit margin is only 3%

Their style is sell cheap be honest and customers will come. I like this kinda businesses.

For breadtalk.. they keep diversifying till I also confused liao haha

[camelking]

Breadtalk is working very hard for shopping malls owners like most retailers anyway...

[CityFarmer]

sometimes net profit margins hor.. must compare with peers than more fair
how are the net profit margins for other F&B business similiar to breadtalk?

But i strongly agree that PE ratio is tooo high

OCBC view on breadtalk
BreadTalk Group: Still pricey for now

Summary: BreadTalk’s 1Q results came in within our expectations with revenue growing 13.4% YoY to S$120.3m on the back of broad segment increases while operating and PATMI increased by 45.6% and 46.0% to S$3.5m and S$2.1m respectively. Although BreadTalk’s move to its new headquarters next month will bring about improvements to its production efficiency and operating expenses, we do not expect cost savings to materialize in the immediate quarters due to the incurrence of transitional expenses. As such, we leave our FY13 projections unchanged. In terms of its share price, we remain cautious at this juncture as current valuations are still too expensive in our view. Coupled with an unattractive dividend yield of 1.0%, we maintain our SELL rating with an unchanged fair value of S$0.77. We will look to re-evaluate the counter once speculative interest arising from the MINT acquisition wanes. (Lim Siyi)

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sometimes I don't mind buying low margin businesses if they are doing well against their competitors

example is walmart, its the biggest and most successful retailer in the US, however their net profit margin is only 3%

Their style is sell cheap be honest and customers will come. I like this kinda businesses.

For breadtalk.. they keep diversifying till I also confused liao haha

Low margin business is not necessary a bad business. If it comes with high asset turnover, the ROA will still creditable .

Take a peek into breadtalk AR 2012

Revenue = $447 mil, Total Asset = $356 mil, Turnover = 1.25 which is average.

ROA is only 3%, ROE is 15% due to debt/equity of more than 3.

[felixleong]

didn't realize they were so highly geared... over 3 times is jin scary leh

end up the winners are the shopping mall owners, no wonder reits are doing so well, lol

[CityFarmer]

OCBC Investment Research, TP $0.77, rating SELL

Seasonally weaker 1Q shows improvement
BreadTalk’s 1Q results came in within expectations with revenue
growing 13.4% YoY to S$120.3m on the back of broad segment
increases while operating and PATMI increased by 45.6% and 46.0%
to S$3.5m and S$2.1m respectively. In terms of its margin
performance, the group managed to arrest the recent increases in
operating expenses and it saw a 0.4 ppt increase in operating and
PATMI margins to 2.8% and 1.7% respectively.

Restaurant losses negated by bakery & food courts
The group’s food court business returned to profitability upon
completion of renovations at two major malls while its bakery
segment saw broad based increases across its Singapore, Hong Kong
and Thailand outlets. These improvements helped to negate losses for
its restaurant division, which was dragged lower by the nonperforming
Ramen Play and Carl’s Jr in China.

New headquarters will benefit only beyond FY13
BreadTalk’s move into their new S$64m headquarters at Tai Seng
next month will help to increase its production efficiency and cost
management by allowing for greater automation and streamlining of
processes. Furthermore, the additional rental revenue from the
unused 40% of space will boost its top-line figure. However, these
improvements should be felt only beyond FY13.

FY13 projections unchanged
As its 1Q13 figures were in-line with our targets, we leave our FY13
projections unchanged. In terms of its share price, we remain
cautious at this juncture as current valuations are still too expensive
(FY12 PE of 23.3x) in our view. Coupled with an unattractive dividend
yield of 1.0%, we maintain our SELL rating with an unchanged fair
value estimate of S$0.77. We will look to re-evaluate the counter once
speculative interest arising from the MINT acquisition wanes.

http://remisiers.org/cms_images/research...09-OIR.pdf

[Dividend Warrior]

Breadtalk is working very hard for shopping malls owners like most retailers anyway...

Good for CapitaMall Trust and Frasers Centrepoint Trust!!!

[natnavi]

sometimes net profit margins hor.. must compare with peers than more fair
how are the net profit margins for other F&B business similiar to breadtalk?

But i strongly agree that PE ratio is tooo high

OCBC view on breadtalk
BreadTalk Group: Still pricey for now

Summary: .......

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sometimes I don't mind buying low margin businesses if they are doing well against their competitors

example is walmart, its the biggest and most successful retailer in the US, however their net profit margin is only 3%

Their style is sell cheap be honest and customers will come. I like this kinda businesses.

For breadtalk.. they keep diversifying till I also confused liao haha

Low margin business is not necessary a bad business. If it comes with high asset turnover, the ROA will still creditable .

Take a peek into breadtalk AR 2012

Revenue = $447 mil, Total Asset = $356 mil, Turnover = 1.25 which is average.

ROA is only 3%, ROE is 15% due to debt/equity of more than 3.

I do believe that there are some really good low margin business around as felixleong pointed out an example - walmart.

The only issue here is that low margin business are typically reserve for the mass market type of business. Luxury brands command premium pricing. You do not expect Toyoto to have a lower profit margin for their Vios as compared to their Lexus.

Lets face it, Breadtalk is a premium bakery in Singapore. $1.70 for a pork floss bun??? That is really high. However, people are still buying it.

Breadtalk really need to look into ways on how to bring their profit margin up. Either that or they are expanding too aggressively too fast.

(was vested; divested when they issued "bonus" shares for a nominal fee)

[CityFarmer]

For those vested and interested...

(not vested)

BreadTalk posts 5% rise in H1 earnings to $4.7mil

BreadTalk Group, the lifestyle F&B group, today reported a 5.2% rise in first-half net profit attributable to shareholders to $4.7 million for the six months ended 30 June 2013.

This was achieved on the back of a 17% jump in group revenue amounting to $246.8 million, led by its Food Atrium division which saw top-line growth of 25.7% and higher profitability achieved across all markets except Taiwan.

The division registered stronger profit contributions from Mainland China and Hong Kong while Singapore’s business normalised after the completion of renovation and upgrading works at two major malls carried out by landlords.

The group’s Bakery division, which posted a 14.4% rise in revenue across all markets, achieved a significant 36% jump in its bottom-line, boosted by improvements in Singapore, Mainland China and Thailand.

Sales from its Restaurants division improved by 14% in 1H2013, however, the division’s net profit attributable to shareholders declined by 88.7% due to a $1 million impairment loss on property, plant and equipment from the closure of 3 non-performing Carl’s Junior stores in Shanghai which is part of a restructuring exercise for this business. Its Din Tai Fung restaurants in Singapore and Thailand continued to register positive growth while Ramen Play was being repositioned and fine-tuned.

http://www.theedgesingapore.com/the-dail...47mil.html

[wsreader]

According to 2Q 2013 result, revenue increased by 20.7% yoy but cost of sales increased by 23.4%.
How much of the cost increase was due to the higher rate of replacement of toothpicks, I wonder ?

(not vested)

[felixleong]

lol on the toothpicks, the ding tai feng one is it? hahahaha