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BreadTalk gets too pricey for RHB's taste; FY18 earnings projected to decline

Michelle Zhu
Michelle Zhu8/3/2018 04:14 PM GMT+08  • 2 min read
BreadTalk gets too pricey for RHB's taste; FY18 earnings projected to decline
SINGAPORE (Aug 3): RHB Research is downgrading its call on BreadTalk to “sell” from “neutral” with a lower target price of $1 compared to $1.04 previously, as the research house expects FY18F earnings to decline on rising overhead costs and weaker
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SINGAPORE (Aug 3): RHB Research is downgrading its call on BreadTalk to “sell” from “neutral” with a lower target price of $1 compared to $1.04 previously, as the research house expects FY18F earnings to decline on rising overhead costs and weaker JV & associates performance.

This comes after the group’s 2Q18 results missed expectations due to losses from associates and joint ventures (JVs), as well as a higher-than-expected effective tax rate over the quarter. Notably, the weaker performance was attributed to Jumbo China, Carl’s Jr Shanghai, and BreadTalk-Minor Thailand.

At the share price of $1.14, the stock is trading at 33 times FY19F P/E, which analyst Juliana Cai considers steep compared to the peer average of 18 times.

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