Since its last financial results release, we note that BreadTalk Group’s share price has fallen about 9%. In early September, the group announced that its wholly-owned subsidiary Topwin Investment Holding entered into a share purchase and sale agreement with Idea Xchange Pte Ltd to acquire 1.65m shares in the company’s indirect subsidiary Megabite Hong Kong Limited, whose principal activities involve investment holding and food court operations.

The consideration paid for this transaction is ~S$1.68m, and following which, Megabite HK will be a wholly-owned subsidiary of Topwin.

Separately, the group had engaged in two rounds of share buybacks for 249k shares at S$0.9952/share and 84k shares at ~S$1.016/share. Post 2Q16 results, we had a SELL and fair value estimate of S$0.99 on the stock. Given the current share price, we still prefer to wait out for a pick-up in core profitability, particularly from the Food Atrium segment.

Source: OCBC Research - 3 Oct 2016