BreadTalk Group released its 1Q17 results yesterday evening, which came in within our expectations. Revenue was down 4.5% YoY to S$147.6m due to Bakery and Food Atrium segments, while PATMI was up from S$2.4m to S$10.7m. This included a S$9.3m net capital gain from the divestment of the group’s investment in TripleOne Somerset.

On the costs front, selling & distribution expenses and admin expenses were down 8% and 11%, respectively. Excluding one-off items, management stated that core F&B net profit would have been S$3.1m for 1Q17 vs. a loss of S$5.4m in 1Q16.

Across segments, EBITDA for Bakery declined 13% to S$5.9m while Food Atrium and Restaurant were up 417% to S$4.9m and 14% to S$7.4m, respectively. We are keeping our HOLD rating and fair value estimate of S$1.21 for now.

Separately, an interim special dividend of 2.0 S-cents/share or S$5.6m has been announced, representing ~60% of the divestment gain from TripleOne Somerset.

Source: OCBC Research - 4 May 2017