BreadTalk Group’s (BTG) FY11 earnings came in within expectations: revenue came in slightly under our estimates (-0.6%) at S$365.9m (+20.8%) while net profit of S$11.8m (+5.3%) was 3.2% below. In terms of costs, gross profit margin remained stable at 54.7%. Management also proposed a final dividend of 1 SG cent per share to bring the total dividends declared for the year to 1.5 SG cents versus 1 SG cent last year. Going forward, BTG’s growth prospects will come from continued expansion into Thailand, and in the longer term, will be aided via its investment in Chjimes. With BTG’s results largely in-line, we retain our FY12 growth assumptions and roll our valuation forward to 12x blended FY12F/13F EPS for a higher fair value estimate of S$0.57 (S$0.54 previously). Reaffirm HOLD.
4Q results in-line with expectations
As expected, BreadTalk Group (BTG) turned in its strongest quarterly performance in 4Q11. Revenue grew 20.7% YoY (+4.6% QoQ) to S$100.5m while its bottom line fell 15.4% YoY (+20.5% QoQ) to S$4.4m due to the absence of one-time disposal gains. The Bakery segment retained its status as the main revenue contributor at 53.2% (S$71m), and along with the Restaurant segment (S$22.2) recorded strong QoQ growth of 37% and 12.5% respectively. Despite a traditional dip in takings during 4Q for the Food Court Segment, it managed to buck the trend and turn in a respectable 1.5% QoQ growth to S$24.9m. In terms of FY11 earnings, BTG’s revenue came in slightly under our estimates (-0.6%) at S$365.9m (+20.8%), and net profit of S$11.8m (+5.3%) was 3.2% below. Gross profit margin remained stable at 54.7%. Management proposed a final dividend of 1 SG cent per share to bring the total dividends declared for the year to 1.5 SG cents versus 1 SG cent last year.
Thai expansion and Chjimes investment
BTG’s expansion into Thailand is proceeding well and will continue exploring other food court and restaurant opportunities, which took a backseat during the earlier floods. In addition to its Thai aspirations, BTG invested S$18m in PRE 8 Investments, which bought Chjimes for S$177m. Similar to its Katong Mall investment, BTG will benefit from the asset enhancement of Chjimes as well as allow it to extract additional value via a selection of its F&B offerings at the popular hotspot.
Reaffirm HOLD with higher FV
With BTG’s results largely in-line with expectations, we keep our FY12 revenue growth assumptions of 14.3% unchanged. Furthermore, we retain confidence in management’s ability to control costs as gross profit margins have been stable over the past four years despite fluctuating raw material costs. Reaffirm HOLD at a higher fair value estimate of S$0.57 (S$0.54 previously) after rolling forward our valuation to 12x blended FY12F/13F EPS.
As expected, BreadTalk Group (BTG) turned in its strongest quarterly performance in 4Q11. Revenue grew 20.7% YoY (+4.6% QoQ) to S$100.5m while its bottom line fell 15.4% YoY (+20.5% QoQ) to S$4.4m due to the absence of one-time disposal gains. The Bakery segment retained its status as the main revenue contributor at 53.2% (S$71m), and along with the Restaurant segment (S$22.2) recorded strong QoQ growth of 37% and 12.5% respectively. Despite a traditional dip in takings during 4Q for the Food Court Segment, it managed to buck the trend and turn in a respectable 1.5% QoQ growth to S$24.9m. In terms of FY11 earnings, BTG’s revenue came in slightly under our estimates (-0.6%) at S$365.9m (+20.8%), and net profit of S$11.8m (+5.3%) was 3.2% below. Gross profit margin remained stable at 54.7%. Management proposed a final dividend of 1 SG cent per share to bring the total dividends declared for the year to 1.5 SG cents versus 1 SG cent last year.
Thai expansion and Chjimes investment
BTG’s expansion into Thailand is proceeding well and will continue exploring other food court and restaurant opportunities, which took a backseat during the earlier floods. In addition to its Thai aspirations, BTG invested S$18m in PRE 8 Investments, which bought Chjimes for S$177m. Similar to its Katong Mall investment, BTG will benefit from the asset enhancement of Chjimes as well as allow it to extract additional value via a selection of its F&B offerings at the popular hotspot.
Reaffirm HOLD with higher FV
With BTG’s results largely in-line with expectations, we keep our FY12 revenue growth assumptions of 14.3% unchanged. Furthermore, we retain confidence in management’s ability to control costs as gross profit margins have been stable over the past four years despite fluctuating raw material costs. Reaffirm HOLD at a higher fair value estimate of S$0.57 (S$0.54 previously) after rolling forward our valuation to 12x blended FY12F/13F EPS.
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