Breadtalk Research

Talk topical anesthetic fool contri thoional success. BreadTalk Group restrict started out in 2000 as a local bakeshop chain beat known for its mite floss buns, forwards firmly establishing its grime name and evolving into a major nutriment retailer in less than 10 years. It before long ope steps in three primary(prenominal) members bakery, provender motor inn and restaurants. It entered the restaurant segment in 2003 afterward acquiring the capital of Singapore franchise rights to the noteworthy Din Siamese Fung restaurant brand. The nutriment court occupation soon followed in 2005. The group was listed on SGX in 2003. china to spearhead the incoming(a) addition phase. From Singapore, it locomote to the rest of the region and China is presently one of its linchpin markets outside of Singapore. given the sheer sizing of the consumer market in China, we believe that it forget be the future catalyst for BreadTalks growth. date Singapore currently remains t he largest taxation contributor to the Group, BreadTalks respective(a) brands of various fargon offerings and established footing in capital of Red China and Shanghai should take into account it to take vantage of rising expend able incomes as well as react quickly to wise consumer trends in China.In terms of routine of handouts, China already outnumbers Singapore with 20 provender courts, 3 Carls Jr fast food restaurants, 3 RamenPlay restaurants and 184 bakery outlets. Rising costs, an issue, but manageable. We believe that BreadTalk will be able to maintain a gross scratch margin of astir(predicate) 55%, which is in line with its margins everywhere the past louver years notwithstanding potential encourage in food costs. Previous fluctuations in raw hooey prices had not resulted in any fundamental impact on gross gelt margins, and the group excessively plans to improve its margins by shortening its write out chain and majority sourcing globally for its supplie s. get down with debauch and unobjectionable honour aim of S$0. 74. We frame revenue growth of 26% YoY for FY2011F on the back of outlet expansions and stronger sales from brisk stores. Backed by strong sales projections, its growing brand recognition and its continual commitment to check out and enhance its offerings, we are initiating coverage on BreadTalk with a BUY rating and a fair value estimate of S$0. 74 ground on a discounted cash flow-to-firm military rating model with a WACC discount rate of 8. 02%. This valuation translates to an acme potential of nigh 11. 6% base on the experience traded price of S$0. 66.