Stock Name: BreadTalk
Company Name: BREADTALK GROUP LIMITED
Research House: OCBC
“We project revenue growth of 26% for FY2011F on the back of BreadTalk’s strong growth prospects in China and higher same store sales in Singapore, whilst maintaining a gross profit margin of about 55%.”
Company Name: BREADTALK GROUP LIMITED
Research House: OCBC
OCBC starts BreadTalk Group (5DA.SG) at Buy with a $0.74 fair value estimate “on strong growth prospects”. It notes the company operates three main business segments - bakery, food court and restaurants - across Singapore, China, HK, South-East Asia and the Middle East, and brands under its management include BreadTalk, Toast Box, Din Tai Fung and Food Republic.
“We project revenue growth of 26% for FY2011F on the back of BreadTalk’s strong growth prospects in China and higher same store sales in Singapore, whilst maintaining a gross profit margin of about 55%.”
Although there are concerns of the impact of rising food costs on gross profit margins, it adds “we believe BreadTalk’s margins will remain consistent as it moves towards centralized sourcing, better control of costs and continuous focus to improve its product offerings.”
The house likes its growing brand recognition in the region, and says management is likely to leverage on this to expand its regional operations. The shares are flat at $0.660.
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