Singapore Stock Market News

BreadTalk Group - Improvement in 2H13 unlikely

StockFanatic
Publish date: Tue, 13 Aug 2013, 01:21 PM
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BreadTalk's 2Q13 results disappointed despite double-digit revenue growth to S$126.5m as operating profit fell by more than expected (15.1% YoY to S$3.8m) and operating profit and PATMI margins remained low at 3.0% and 2.4% respectively.

In the coming months, we expect this trend to persist in light of its ongoing store expansion and the two non-performing restaurant brands (Ramen Play and Carl's Jr), which will remain a drag on overall performance. With a FY13F dividend yield of 1.1%, the investment proposition is unattractive in our view and the counter remains expensive at current valuations, especially given the low-single digit margins.

We maintain SELL on BreadTalk with an unchanged fair value estimate of S$0.77.
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