How BreadTalk’s share price can only get hotter

How BreadTalk’s share price can only get hotter

Michelle Zhu
04/04/17, 01:36 pm

SINGAPORE (April 4): DBS Vickers Securities is reinstating coverage on BreadTalk Group with a “buy” recommendation and a target price of $1.69 following the counter’s turnaround in 2H16 earnings, on the notion that its earnings recovery momentum will spill over to FY17F to lift margins and improve earnings quality.

In a report on Tuesday, analysts Alfie Yeo and Andy Sim say they believe BreadTalk is well-positioned to capitalise on growing food consumption trends in Asia, as well as more opportunities to expand in China.  

More importantly, they reckon the group is poised for earnings growth this year after “dismal performances” in FY15 and 1H16, particularly on the recovery of its food court business segment through outlet rationalisation in China.

“All three business segments are now better positioned for earnings growth. We forecast core earnings CAGR of 63% for FY16-FY18F on the back of earnings recovery and a low base. Turnaround of its foodcourt business in China, better bakery cost efficiencies, and outlet expansion of high margin Din Tai Fung restaurants will collectively drive earnings growth in the medium term,” assert the analysts.

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

Noting that BreadTalk’s current core earnings valuation is “compelling” at 18x FY17F PE, Yeo and Sim add that the valuation of the group’s property investments based on the current market value also implies an upside of 3% over their book value, with 43 cents per share worth of investment properties.  

“BreadTalk has a track record of monetising its property investments (111 Somerset and 112 Katong). Successful sale of property investments above market valuation is a possible share price catalyst,” conclude the analysts.  

(See also: Perennial-led consortium divests 70% stake in TripleOne Somerset)

As at 1:31pm, shares in BreadTalk are trading 3.3% higher at $1.40. 

CapitaLand Mall Trust upgraded to 'buy' by UOB on Jurong Lake District plans, Funan launch

SINGAPORE (May 27): CapitaLand Mall Trust will benefit from the development of Jurong Lake District (JLD) as it has three retail malls located within Jurong Gateway, says UOB KayHian. See: CapitaLand Mall Trust declares 3.6% higher DPU of 2.88 cents on higher income IMM Building, JCube and Westgate, which in total accounts for 20% of CMT’s portfolio valuation, are located within Jurong Gateway and adjacent to Jurong East MRT station. Meanwhile, Funan, which is about 90% pre-committed for retail space and 98% pre-committed for office space, is scheduled to open next month. See als....

Time to 'buy' MindChamps as growth initiatives bear fruit: RHB

SINGAPORE (May 27): RHB Research continues to keep MindChamps Preschool at “buy” at a lower target price of 83 cents compared to 87 cents previously, indicating a 26% upside plus 2.2% yield. The reduced target price comes after cutting FY19-20F earnings by 7% and 11%, respectively, upon management indications that adopting SFRS 16 has negatively impacted the group’s 1Q19 pre-tax profit by about $90 million or -15%. In a May 17 report, analyst Juliana Cai says she nonetheless remains positive on MindChamps as she expects the group to start reaping returns from its investments as its....

Ascendas-Singbridge establishes co-innovation lab with IMDA & Enterprise Singapore

SINGAPORE (May 27): Singapore’s smart nation ambitions have been further bolstered by a new partnership between Ascendas-Singbridge, Infocomm Development Authority of Singapore (IMDA) and Enterprise Singapore (ESG) to form the Smart Urban Co-Innovation Lab. All three parties are looking to have a total of 30 co-innovation projects come out from the lab, which is expected to be launched at the end of the year as the first developer-led lab in Southeast Asia. This announcement follows last year’s call for innovation led by IMDA, Ascendas and JTC. Ascendas has published 12 probl....