Friday, September 20, 2013

BreadTalk Group: Why the rush? (OCBC)

BreadTalk Group:
Fair value S$0.77
add: 12m dividend forecast S$0.010
versus: Current price S$0.96

Why the rush?
• Recent appreciation unwarranted
• Investors paying ahead of results
• No takeover story at this point

With BreadTalk’s share price seemingly poised to cross the S$1 barrier again, we remain steadfast in our analysis and assertion that valuations are stretched at current levels.
While the group’s growth proposition appears attractive, realizing future potential takes time, and more importantly, carries significant operating and execution risks. Its operating margins have also remained in the low single-digit region. Furthermore, the group’s valuation is expensive when compared to more established regional peers that compete in the same markets. We maintain our SELL rating with an unchanged fair value at S$0.77, and will look to re-rate the stock only when its margins arrest their decline and operations approach a steady-state. A takeover angle at this juncture is also unlikely as we do not envision MINT launching a takeover bid anytime soon in the coming quarters at current price levels.

Too fast too much too soon
With BreadTalk’s share price seemingly poised to cross the S$1 barrier again, we remain steadfast in our analysis and assertion that valuations are looking stretched at current levels. BreadTalk’s growth prospects appear attractive: i) targets emerging consumer markets such as China and Taiwan, ii) owns a high-profile bakery brand and franchise rights to the popular Din Tai Fung restaurant, and iii) operates a chain of domestic food courts. However, realizing future potential takes time, and more importantly, carries significant operating and execution risks. With BreadTalk currently trading at a trailing twelve month (TTM) PE of 22.4x, which is an all-time high for the group since its listing in 2003, it appears that the current price has already priced in the future potential of its business. As a recap, from FY09-12, the group’s operating profit and PATMI only grew by a CAGR of 4.6% and 2.7% respectively, despite revenue increasing by a CAGR of 22.0%. Operating margins also remained in the low single-digit territory, and we expect this trend to continue in the coming quarters.

Valuation is high versus peers
Because of these low operating margins, it is hard to justify BreadTalk’s current valuation against its more established regional peers in the bakery or restaurant segments that compete in the same markets. In our comparison, the average gap can be as wide as 8ppt.

No takeover from MINT; maintain SELL
MINT’s recent addition to its shareholdings notwithstanding, we reiterate our stand that a takeover is unlikely at this point. We maintain our SELL rating with an unchanged fair value at S$0.77, and will look to re-rate the stock only when its margins arrest their decline and its operations approach a steady-state.



Source/Extract/Excerpts/来源/转贴/摘录: OCBC-Research,
Publish date: 19/09/13

No comments:

Post a Comment

Warren E. Buffett(沃伦•巴菲特)
Be fearful when others are greedy, and be greedy when others are fearful
别人贪婪时我恐惧, 别人恐惧时我贪婪
投资只需学好两门课: 一,是如何给企业估值,二,是如何看待股市波动
吉姆·罗杰斯(Jim Rogers)
“错过时机”胜于“搞错对象”:不会全军覆没!”
做自己熟悉的事,等到发现大好机会才投钱下去

乔治·索罗斯(George Soros)

“犯错误并没有什么好羞耻的,只有知错不改才是耻辱。”

如果操作过量,即使对市场判断正确,仍会一败涂地。

李驰(中国巴菲特)
高估期间, 卖对, 不卖也对, 买是错的。
低估期间, 买对, 不买也是对, 卖是错的。

Tan Teng Boo


There’s no such thing as defensive stocks.Every stock can be defensive depending on what price you pay for it and what value you get,
冷眼(冯时能)投资概念
“买股票就是买公司的股份,买股份就是与陌生人合股做生意”。
合股做生意,则公司股份的业绩高于一切,而股票的价值决定于盈利。
价值是本,价格是末,故公司比股市重要百倍。
曹仁超-香港股神/港股明灯
1.有智慧,不如趁势
2.止损不止盈
成功者所以成功,是因为不怕失败!失败者所以失败,是失败后不再尝试!
曾淵滄-散户明灯
每逢灾难就是机会,而是在灾难发生时贱价买股票,然后放在一边,耐性地等灾难结束
  • Selected Indexes 52 week range

  • Margin of Safety

    Investment Clock

    World's First Interactive Investment Clock