SINGAPORE (Nov 17): RHB is maintaining its “buy” rating on BreadTalk Group with a target price of $1.45, while expressing confidence in the group’s ability to venture into the UK market with the Din Tai Fung chain of restaurants.

Earlier today, BreadTalk filed an announcement to the Singapore Exchange (SGX) stating it has entered into a franchise agreement to operate Din Tai Fung restaurants in the UK through a joint venture company with Fairy Rise Development.

The group expects to open its first Din Tai Fung outlet in London next year.

 (See also: BreadTalk partners Din Tai Fung franchise owner in UK expansion)

In a Thursday note, analyst Juliana Cai opines that the deal is favourable for the group as the domestic market is “relatively mature”.

“Having eaten at Din Tai Fung restaurants in other countries, we believe the BreadTalk-operated variants are amongst the best. According to management, its new restaurant in Thailand managed to break even in less than two months,” she remarks, highlighting Din Tai Fung as the “most significant contributor to BreadTalk’s bottomline at the moment”.

“At the moment, we think the expansion pace of Din Tai Fung restaurants in the UK would be prudent, since it is a new market to BreadTalk as well.”

As at 3:27pm, shares of BreadTalk are trading flat at $1.09.