BreadTalk’s FY13 revenue met our expectations as it increased 19.9% to S$536.5m, forming 99.6% of our forecast. PATMI came in slightly below our expectations, up 13.3% at S$13.6m, making up 96.3% of our forecast. Segmental sales growth is led by Food Atrium at 29.2%, followed by Restaurants at 19.1% and finally Bakery at 16.4%. In line with its aggressive expansion plans, total outlets increased by 21.9% to 836 from 686. We note that these come with increased leverage as BreadTalk’s debt also increased by 74.8% to S$168.5m from S$50.6m as a result. A final cash dividend of 1.3 S-cents is proposed, bringing the full year dividend to 1.8 S-cents, or 1.9% yield based on yesterday’s closing price. We will speak more with management later. For now, we maintain our SELL and our fair value estimate of S$0.77 is under review.

Source: OCBC Research - 26 Feb 2014