Breadtalk

[RBM]

Thanks for your one-liner of this morning regarding BreadTalk's "margin discipline" Contrarian,

I have had a further look at BreadTalk's 1H 2012 financials. Whichever way I look at it, BreadTalk is doing a fairly decent job on its margins - I realise there is quite some room to improve further but I believe BreadTalk is doing a better job on margin preservation and enhancement than most others in the Catering/Restaurant/Hospitality sector, certainly those listed on the SGX. In Q2 2012 Breadtalk converted S$ 104.8 Mln of revenue into S$ 3.54 Mln of NetPAT - about a 3.4% after tax margin ............. up from ~ 2.9% in Q2 2011.

BreadTalk's management is clearly focused on bringing down their unit costs - centralisation of food processing, culling of non-performing outlets etc. They also lever scale effectively, in my view.

I would be interested to know what data/numbers in BreadTalk's 1H 2012 results prompted your remark. Thanks again for your response Contrarian.

Vested, so I admit to a bias.

Got growth but no margin discipline...

[Contrarian]

1. Their icing room is not doing well. It's more a white elephant. George Quek agreed concept is not doing well. Why he is still keeping it, I dont know.

2. The operations at the outlets is not very efficient. U can go to the shops and take a look

Thanks for your one-liner of this morning regarding BreadTalk's "margin discipline" Contrarian,

I have had a further look at BreadTalk's 1H 2012 financials. Whichever way I look at it, BreadTalk is doing a fairly decent job on its margins - I realise there is quite some room to improve further but I believe BreadTalk is doing a better job on margin preservation and enhancement than most others in the Catering/Restaurant/Hospitality sector, certainly those listed on the SGX. In Q2 2012 Breadtalk converted S$ 104.8 Mln of revenue into S$ 3.54 Mln of NetPAT - about a 3.4% after tax margin ............. up from ~ 2.9% in Q2 2011.

BreadTalk's management is clearly focused on bringing down their unit costs - centralisation of food processing, culling of non-performing outlets etc. They also lever scale effectively, in my view.

I would be interested to know what data/numbers in BreadTalk's 1H 2012 results prompted your remark. Thanks again for your response Contrarian.

Vested, so I admit to a bias.

Got growth but no margin discipline...

[mrEngineer]

I took a course and it was evaluating Breadtalk as an investment. One basic problem identified was the reliability of the management. In few years ago, Breadtalk mentioned that they are targeting to open an incredible number of stores in China. If you verify now, the numbers are much less. (I forgot the numbers but you get the idea)

One problem with Breadtalk may be the management and their ego. My 2 cents.

[camelking]

My take on breadtalk

1. PE is trading at 13 times.......Is it too high? STI is trading at 10 times or so i read from somewhere

2. Dividend yield is less than 2%.....STI ETF gives you 3% plus....

3. Any excess profit made from higher efficiency will be wiped out by the next rental revision or profit sharing by managment

4. Will Breadtalk become the "macdonald/KFC" of asia in 10/20 years time?
Else, it will remain as another listed company which exists for the benefits of majority shareholders...not people like you and me.

My Apology if i offended anybody.

[corydorus]

You stated exactly why i have not been vested on this. It will be nice to know the unknown. Maybe is well known to many of us.

[RBM]

While I realise that BreadTalk cannot count many supporters among VB forummers, I have to say that I am rather pleased with the performance of BreadTalk's shares over the last five (5) SGX trading sessions - today's 3.5% increase in the share price to S$ 0.60 in "heavyish" trading volume of 877,000 shares makes that a healthy ~ 9.1% gain since the SGX closing of 25th September 2012.

Could this be down to any of the following??...........................
a) conclusion (or near-completion) of the offloading of BreadTalk shares by former substantial shareholder, Fang Zheng (and his Keywise company), and/or
b) recognition that management's efforts to bring unit operation costs to heel and to get operating margins up may be beginning to seriously pay off?, and/or
c) yesterday's announcement/disclosure of a ~ S$ 20 Million investment by a BreadTalk subsidiary in a Joint Venture to pursue an integrated mall development in South-East Beijing’s Tongzhou District? This is together with, amongst others, their new found chums at Perennial China Retail Trust. BreadTalk Chairman George Quek ("Arrogant George" I hear some of you say?!) highlighted in his associated press release that QUOTE this investment allows BreadTalk the opportunity to integrate upstream along the retail supply chain by co-investing with industry veterans in markets that are crucial to BreadTalk's growth UNQUOTE.

This one is not performing too badly. May we live in interesting times.

Vested

[pianist]

funny breadtalk a bread seller doing property development in china now..well done.

[Nick]

The PowerPoint slides from Perennial China Trust give a pretty good outline of this property investment and its merits -

http://perennial.listedcompany.com/newsr...2D7A.1.pdf [Presentation]

(Not Vested in either companies)

[corydorus]

When we have all sort of industry going into property development, few things come into my mind.

1. Current industries cannot make it ?
2. They have too much cash ?
3. Property is exploding ?
4. Easy money ?

[RBM]

Good posting corydorus,

Personally speaking, I found it interesting listening to famed US investor Sam Zell on CNBC yesterday evening Singapore time - he was of the very strong and very well articulated view that currently there is simply too much (easy) money chasing too few really good investment opportunities, in the US and Asia Pacific. Some companies and investors seem to believe that de facto means going into real estate.

While I am vested in BreadTalk, I do worry a tad about companies who know little (or nothing) about the real estate business plonking serious shareholder funds into such business activities. While I have seen some succeed, I have been vested in a couple of Hong Kong listed companies where such investments did not work out...... and I believe their lack of real estate nouse got them into bother. BreadTalk Chairman George Quek seems to be arguing the vertically integrated benefits of owning rather than leasing. We'll see.

But whatever I say is irrelevant ............... Mr. Market seems to like something about BreadTalk at the moment...... and like it a lot. At 11.00 hrs a.m. today, BreadTalk's share price was up a further 2.5% to S$ 0.615 in volume of 950,000 shares in the first two hours of otherwise directionless, moderately downwards SGX trading. BreadTalk's share price is now up ~ 11.8% in ~ 5.1/2 trading sessions. And some BreadTalk shares exchanged hands at S$ 0.625 earlier in today's session.

Vested

When we have all sort of industry going into property development, few things come into my mind.

1. Current industries cannot make it ?
2. They have too much cash ?
3. Property is exploding ?
4. Easy money ?