Singapore Company Guide

Breadtalk Group Ltd

Version 5 | Bloomberg: BREAD SP | Reuters: BRET.SI Refer to important disclosures at the end of this report

DBS Group Research . Equity 7 May 2018

BUY Margin expansion to drive growth

Last Traded Price ( 4 May 2018): S$1.74 (STI : 3,545.38) Maintain BUY, TP at S$1.98. We maintain our positive stance on
Price Target 12-mth: S$1.98 (14% upside) (Prev S$2.05) BreadTalk with S$1.98 TP and 16% total return including
dividends. We are positive on BreadTalk’s outlook of better
Analyst margins from higher restaurant contribution and turnaround of
Alfie YEO +65 6682 3717 [email protected] its Food Atrium business. It is also strengthening its Bakery
Andy SIM, CFA +65 6682 3718 [email protected] business in China and expanding Din Tai Fung into the UK.
While operating profit continues to be resilient, we have
What’s New factored in higher interest costs from increased borrowings
 1Q18 core earnings in line, headline below due to which leads us to lower our earnings forecast and hence lower
absence of one-off gains from property sales last year our TP. Nevertheless, BreadTalk’s valuation remains attractive
with core business excluding property investments now trading
 Growth driven by better margins from higher mix from at close to 19x FY19F PE.
restaurant sales, and Food Atrium earnings recovery
 Cut FY18-19F earnings by 8-10% on higher interest Where we differ. Our earnings forecast is below consensus as
we factor in higher interest costs from increased borrowings in
 Maintain BUY, with lower S$1.98 TP based on SOTP FY18F. BreadTalk has plans to build a larger central kitchen in
Shanghai to cater to its future China expansion plans. Capex
this year is expected to be higher at c.S$60m, up from S$36.5m
Price Relative last year.

Potential catalyst. We see potential for special dividends if

Perennial sells AXA Tower. BreadTalk could potentially pay c.4.5
Scts in special dividend upon the sale of AXA Tower based on
our estimates.

Valuation:
Forecasts and Valuation Our TP of S$1.98 is derived from a sum-of-parts (SOTP)
FY Dec (S$ m) 2016A 2017A 2018F 2019F
valuation. On a per share basis, we value its retail business at
Revenue 615 600 610 641
EBITDA 80.0 76.6 75.6 85.2 22x FY19F PE at S$1.67, investment properties at S$0.49
Pre-tax Profit 29.7 41.0 37.3 40.5 based on market value, net debt at -S$0.18 per share.
Net Profit 11.4 21.8 19.6 21.3
Net Pft (Pre Ex.) 8.63 13.8 20.0 21.3 Key Risks to Our View:
Net Pft Gth (Pre-ex) (%) (29.2) 60.3 44.8 6.5 Operational risks include food safety and licences as well as
EPS (S cts) 4.07 7.77 6.98 7.59
negative publicity. In extreme cases, food operating licences
EPS Pre Ex. (S cts) 3.07 4.92 7.12 7.59
EPS Gth Pre Ex (%) (29) 60 45 7 can be revoked for lapse in food safety procedures. Negative
Diluted EPS (S cts) 4.05 7.73 6.95 7.55 publicity may also result in weaker demand and poorer
Net DPS (S cts) 3.85 7.00 4.00 4.00 marketability when selling its franchises as the public and
BV Per Share (S cts) 46.9 48.0 51.0 54.6 franchisees shy away from their association with BreadTalk.
PE (X) 42.8 22.4 24.9 22.9
PE Pre Ex. (X) 56.7 35.4 24.4 22.9 At A Glance
P/Cash Flow (X) 5.9 5.8 7.8 7.0
Issued Capital (m shrs) 282
EV/EBITDA (X) 6.9 7.1 7.4 6.5
Net Div Yield (%) 2.2 4.0 2.3 2.3 Mkt. Cap (S$m/US$m) 490 / 367
P/Book Value (X) 3.7 3.6 3.4 3.2 Major Shareholders (%)
Net Debt/Equity (X) 0.3 0.2 0.2 0.1 Meng Tong Quek 34.0
ROAE (%) 8.8 16.4 14.1 14.4 Lih Leng Lee 18.6
Earnings Rev (%): (10) (8) Primacy Investment Ltd 14.0
Consensus EPS (S cts): 7.40 8.20 Free Float (%)
Other Broker Recs: B: 2 S: 1 H: 0 3m Avg. Daily Val (US$m) 0.54
Source of all data on this page: Company, DBS Bank, Bloomberg ICB Industry : Consumer Services / Food & Drug Retailers
Finance L.P

ed: JS / sa:DT, PY
Company Guide
Breadtalk Group Ltd

WHAT’S NEW

1Q18 results

1Q18 core operations in line. Revenue was S$149m (+0.5% Decent core performance. This was a decent quarter on a
y-o-y) with EBIT at S$8.7m (+53% y-o-y) and headline core earnings perspective. While headline earnings
earnings at S$1.2m (-89% y-o-y, due to absence of non-core disappointed (due to absence of one off gains), core
one off gains mainly from sale of 111 Somerset of S$8m in operations remained healthy. Although there will be some
1Q17 last year). Margins also improved as gross margins drag in the Bakery business in China in the immediate term,
added 1.1ppt to 56%, driving EBIT margins improvement to we believe the outlook is positive in the longer term as
5.9% vs 1Q17’s 3.9%. continued restructuring including closing non-performing
stores and franchisees will strengthen its operations.
Restaurant and Foodcourt segments lead revenue growth,
Nonetheless, margin improvement in Foodcourt and
bakery declined. Revenue was driven by Restaurant (+6% y-o-
Restaurants were more than able to offset by the drag in the
y, S$36.9m) and Foodcourt divisions (+3% y-o-y, S$37.5m).
Bakery division.
New division named 4orth (division for So Ramen, Song Fa
Bak Kut Teh and other new JV brands) grew 42% to S$2.7m. Cut FY18-19F earnings by 8-10% to factor in higher interest
Bakery division saw decline of 4% y-o-y to S$70.4m. Store costs. We have left our core EBIT projections largely
count was at 943, relatively flat from 942 in 1Q17 but down unchanged, but have imputed higher interest costs to reflect
sequentially from 4Q17 led by a drop of 14 outlets from both the increase in net borrowings. Capex this year is expected to
direct and franchised stores in the bakery division, and lower be higher at c.S$60m, up from S$36.5m last year, mainly for
revenue from direct operated stores at Shanghai, Beijing and the construction of the new central kitchen. The S$100m
Hong Kong. The lower outlet count was due to closure of medium term notes with a 4% coupon is due on 17 January
non-performing bakery stores and the continued reduction in 2023.
the number of franchisees in China.
More expansion drivers in place. BreadTalk in 1Q18
Core profit before tax supported by restaurant and announced a slew of expansion developments, starting with
turnaround in Foodcourt division. Core profit before tax of BreadTalk awarding the franchise rights in India for Delhi and
the three key divisions (excluding real estate investment, National Capital Region, following by the opening of the first
group elimination and others including corporate treasury, Song Fa Bak Ku Teh in Shanghai. Recently, BreadTalk
investments, associated companies etc.) grew 18% y-o-y to announced its signing of the JV agreement to operate
S$10.1m. PBT growth was supported again by Restaurants Taiwanese bakery, Wu Pao Chun Bakery in Beijing, Shanghai,
(+26% y-o-y, S$7.4m) and Foodcourt (+136% y-o-y, Shenzhen and Guangzhou. Toast Box also entered Indonesia
S$2.1m). Bakery division’s segment PBT was down 49% y-o-y through a JV agreement with PT. Pura Indah Berkat.
to S$1m on lower franchise revenue/income from lesser
Maintain BUY, S$1.98 TP. The share price currently values the
number of franchise stores in China.
core F&B business excluding properties at under 19x core
Higher net interest expense. Interest cost was higher at FY19F PE. We remain positive on the stock and see growth
S$2.4m from S$1m last year as borrowings increased by ahead driven by margin expansion. Asset sale continues to be
S$75m to S$260m from 4Q17. BreadTalk has plans to build a a stock catalyst. A potential sale of its stakes in properties
larger central kitchen in Shanghai to cater to its China such as CHIJMES and AXA Tower will unlock shareholder
expansion plans. The higher borrowings was also due to value if they materialise. Our TP based on SOTP is S$1.98,
S$100m increase medium term notes. comprising of core F&B business at 22x FY19F PE at S$1.67,
investment properties at S$0.49 based on market value, and
net debt at -S$0.18 per share. Maintain BUY for 16% total
upside.

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 Company Guide
Breadtalk Group Ltd

Quarterly / Interim Income Statement (S$m)

FY Dec 1Q2017 4Q2017 1Q2018 % chg yoy % chg qoq

Revenue 148 150 149 0.5 (1.1)

Cost of Goods Sold (66.7) (65.6) (65.4) (1.9) (0.4)
Gross Profit 81.1 84.6 83.2 2.6 (1.7)
Other Oper. (Exp)/Inc (75.3) (73.9) (74.4) (1.2) 0.7
Operating Profit 5.72 10.7 8.73 52.5 (18.1)
Other Non Opg (Exp)/Inc 0.0 0.0 0.0 - -
Associates & JV Inc 0.38 0.07 0.02 (95.8) (75.4)
Net Interest (Exp)/Inc (1.0) (0.7) (2.4) (147.4) (242.5)
Exceptional Gain/(Loss) 9.95 0.0 (0.4) nm nm
Pre-tax Profit 15.1 10.0 5.99 (60.4) (40.3)
Tax (2.6) (2.8) (2.4) (6.6) (14.7)
Minority Interest (1.7) (2.2) (2.4) (37.9) 6.9
Net Profit 10.8 4.97 1.18 (89.1) (76.3)
Net profit bef Except. 0.84 4.97 1.58 89.2 (68.2)
EBITDA 16.9 19.5 17.4 3.3 (10.7)
Margins (%)
Gross Margins 54.9 56.3 56.0
Opg Profit Margins 3.9 7.1 5.9
Net Profit Margins 7.3 3.3 0.8
Source of all data: Company, DBS Bank

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Company Guide
Breadtalk Group Ltd

Bakery outlets
CRITICAL DATA POINTS TO WATCH

Critical Factors
Less aggressive store expansion to focus on driving higher
operating efficiencies and margin improvement. The focus is to
raise efficiency of its existing operations, lower operating costs,
and expand margins. Store openings till year end will therefore
not be aggressive. We see margins improving at the group level,
driven by the swing to profitability at the Food Atrium business,
and improved sales mix from the restaurant business, offset by
lower Bakery business due to slower sales and smaller
Restaurant outlets
franchisee base in China.

Driving margin improvement through cost efficiencies. Initiatives

such as better demand planning, more efficient human resource
planning, tighter cost controls have helped to benefit operating
margins. These have led to lower food wastage, and reduction
in unnecessary payroll expenses. Management has also been
spending less on capex, leading to some moderation in
depreciation expenses going forward.

Non-performing legacy franchisees. We expect to see a stronger Food court outlets

franchisee base with less drag from non-performing accounts
post restructuring of franchisee accounts. As franchise outlets
have higher net margins, and lower direct operational risk, there
is potential for Bakery margins to increase as well given that
franchise revenue is royalty income, recognised as a percentage
of franchisee sales with minimal costs to BreadTalk. We expect
margins to increase when a mix of franchise stores improve.

Changes to management personnel, tenant-mix and tenant

quality has enabled Food Atrium to turn profitable. Food Atrium
division made a marked turnaround in FY17 after it closed non- Total
performing outlets in China and in tier 2 cities the year before.
It also replaced China Food Atrium’s management team with
new personnel which made changes to tenant quality and
tenant mix, leding to improvements in performance and
occupancy at its China Food Atriums. It will concentrate Food
Atrium operations to Beijing, Shanghai, Shenzhen and
Guangzhou where tables can turn more frequently. We now
expect earnings recovery to continue in FY18F driven by better
profitability and absence of depreciation when some of its
China outlets enter their second period.
Annual sales per outlet S$m
New outlet in London this year. BreadTalk has already planned
for a new outlet in London this year through a JV (BreadTalk is
the major shareholder of the JV) with Fairy Rise Development
(Din Tai Fung franchise owner), Din Tai Fung Taiwan, a UK
partner and a Taiwanese individual. We also see scope for more
outlets in Thailand as there are currently only three Din Tai Fung
restaurants. As restaurant margins are attractive, better sales
mix from restaurant business would improve overall profitability.

Source: Company, DBS Bank

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 Company Guide
Breadtalk Group Ltd

Appendix 1: A look at Company's listed history – what drives

its share price?

Share price has been driven by various factors including earnings, properties and strategic investors

(S$)
Sale and earnings growth
2.50 declined, higher interest
costs, lower net margins

2.00 Re-rated on new BreadTalk

IHQ building and Minor
International taking a stake

1.50

1.00

0.50 Gain in Perennial CHIJMES Earnings turnaround,

investment, operating potential sale of
margin expansion AXA Tower

0.00
Jan-12

Jan-14

Jan-15

Jan-17
Jan-11

Jan-13

Jan-16

Jan-18
Apr-12

Apr-14

Apr-15

Apr-16

Apr-17

Apr-18
Apr-11

Apr-13
Oct-11

Oct-12

Oct-13

Oct-14

Oct-15

Oct-16

Oct-17
Jul-11

Jul-12

Jul-13

Jul-14

Jul-15

Jul-16

Jul-17
Source: DBS Bank

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Company Guide
Breadtalk Group Ltd

Leverage & Asset Turnover (x)

Balance Sheet:

Cash business; balance sheet in net debt. As with all food

service companies, BreadTalk is a cash business. The business
generated S$65-90m of operating cashflows annually and
S$28-54m of positive free cashflows in the last three years. Net
debt as of end-March 18 is about S$50m, equivalent to
approximately S$0.18 per share, or net debt ratio of 0.24x.
BreadTalk was in net cash till FY12 when it built its BreadTalk
IHQ. In FY13 when it opened its IHQ, net debt was S$89m. It
recently issued S$100m of medium term notes in 1Q18 due 17
Capital Expenditure
January 2023 at 4% coupon for general corporate purposes,
including refinancing of existing borrowings, and financing
capital expenditure and general working capital.

Share Price Drivers:

Changes to property holdings are likely to drive share price.

Valuations for BreadTalk re-rated to an all-time high when it
moved into its IHQ in 2013. Similarly, when it sold 112 Katong
last year and declared special dividends, its share price re-rated
as well. In 4Q16, BreadTalk announced the sale of 111
ROE (%)< !--
Somerset, which has also lifted BreadTalk’s share price in PCFBTkNHUkFQSF9ST0UgdHJlbmQoMS42LDMuMil7UzA2MTEyM
anticipation of special dividends. We expect special dividends if DE3MDExMTIxXzAzMTEyMDE3fS8+ -->
and when AXA and/or CHIJMES is sold.

Key Risks:

Food safety and licences. As a restaurant operator, it is

important to maintain food safety. Lapses would lead to
reputational risks and in extreme cases, food operation licences
could be revoked.

Negative publicity affects consumer confidence and the

marketability of its franchise. BreadTalk has had some negative Forward PE Band (x)
publicity, especially in 2015 over food safety and food
preparation procedures in Singapore and China. Incidences
such as these can generate negative responses from the public
which can potentially affect sales as well as the marketability of
its franchise overseas.

Company Background

BreadTalk Group is a Singapore-based food and beverage

(F&B) group engaged in the operations and franchising of
bakery/confectionery outlets, food courts and restaurants PB Band (x)
across the region. BreadTalk’s portfolio currently has six brands
– BreadTalk, ToastBox, Food Republic, Ramen Play, San Pou Tei
and Din Tai Fung. It operates over 900 outlets across 17
countries.

Source: Company, DBS Bank

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 Company Guide
Breadtalk Group Ltd

Key Assumptions
FY Dec 2015A 2016A 2017A 2018F 2019F
Bakery outlets 862 862 871 878 883 Includes 4orth division outlets.
Restaurant outlets 30.0 32.0 32.0 40.0 42.0
Food court outlets 65.0 57.0 53.0 55.0 58.0
Total 957 951 956 973 983 Corporate services, treasury
Annual sales per outlet 0.65 0.65 0.63 0.63 0.65 functions, investment holding
S$m activities, and associated
Segmental Breakdown companies.
FY Dec 2015A 2016A 2017A 2018F 2019F
Revenues (S$m) Negative on higher expenses
Bakery operations 308 307 297 284 291 for corporate services,
Restaurant sales 143 138 149 156 167 treasury functions.
Food Atrium income 173 158 141 152 164
4orth 0.0 7.84 7.86 13.9 14.6
Others 0.0 4.73 4.62 4.39 4.39
Total 624 615 600 610 641
Operating profit (S$m) Expect decline on drag from
Bakery operations
(S$m) 5.15 11.5 9.63 8.52 8.74 China.
Restaurant sales 25.8 23.1 24.4 26.0 27.9
Food Atrium income (2.9) (7.0) 8.90 11.4 12.3
4orth (0.6) (0.6) (0.3) (0.3) (0.3)
Others 5.16 5.61 (6.7) (4.2) (4.8) Relatively flat on London start-
up expenses offset by
Total 32.6 32.5 35.9 41.4 43.7
efficiencies from better scale
Operating profit margin (%) in Thailand and Singapore.
Bakery operations 1.7 3.7 3.2 3.0 3.0
Restaurant sales 18.0 16.8 16.4 16.7 16.7
Food Atrium income (1.7) (4.4) 6.3 7.5 7.5
4orth N/A (8.3) (4.2) (2.4) (2.3)
Others N/A 118.6 (144.9) (95.7) (109.4) Uptick on recovery of China
Foodcourts.
Total 5.2 5.3 6.0 6.8 6.8

Income Statement (S$m)

FY Dec 2015A 2016A 2017A 2018F 2019F
Revenue 624 615 600 610 641
Cost of Goods Sold (294) (278) (266) (269) (282)
Gross Profit 330 337 333 342 359
Other Opng (Exp)/Inc (298) (305) (297) (300) (315)
Operating Profit 32.6 32.5 35.9 41.4 43.7
Other Non Opg (Exp)/Inc 0.0 0.0 0.0 0.0 0.0
Associates & JV Inc (1.3) (0.8) 0.21 0.23 0.24
Net Interest (Exp)/Inc (1.3) (4.8) (3.2) (4.0) (3.5)
Exceptional Gain/(Loss) (4.6) 2.80 8.01 (0.4) 0.0
Pre-tax Profit 25.4 29.7 41.0 37.3 40.5
Tax (10.8) (12.1) (11.0) (10.0) (10.9)
Minority Interest (7.0) (6.2) (8.1) (7.6) (8.2)
Preference Dividend 0.0 0.0 0.0 0.0 0.0
Net Profit 7.60 11.4 21.8 19.6 21.3
Net Profit before Except. 12.2 8.63 13.8 20.0 21.3
EBITDA 80.9 80.0 76.6 75.6 85.2 Include gain on sale of 111
Growth Somerset.
Revenue Gth (%) 5.9 (1.5) (2.5) 1.7 5.0
EBITDA Gth (%) 0.6 (1.1) (4.2) (1.3) 12.7
Opg Profit Gth (%) 30.8 (0.2) 10.5 15.2 5.6
Net Profit Gth (Pre-ex) (%) (45.0) (29.2) 60.3 44.8 6.5
Margins & Ratio
Gross Margins (%) 52.9 54.9 55.6 56.0 56.0
Opg Profit Margin (%) 5.2 5.3 6.0 6.8 6.8
Net Profit Margin (%) 1.2 1.9 3.6 3.2 3.3
ROAE (%) 6.0 8.8 16.4 14.1 14.4
ROA (%) 1.4 2.1 4.0 3.3 3.3
ROCE (%) 5.2 5.4 7.4 7.6 7.1
Div Payout Ratio (%) 55.6 94.7 90.1 57.3 52.7
Net Interest Cover (x) 24.7 6.8 11.3 10.4 12.6
Source: Company, DBS Bank

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Company Guide
Breadtalk Group Ltd

Quarterly / Interim Income Statement (S$m)

FY Dec 1Q2017 2Q2017 3Q2017 4Q2017 1Q2018

Revenue 148 148 154 150 149

Cost of Goods Sold (66.7) (65.0) (69.2) (65.6) (65.4)
Gross Profit 81.1 82.6 85.1 84.6 83.2
Other Oper. (Exp)/Inc (75.3) (73.4) (74.7) (73.9) (74.4)
Operating Profit 5.72 9.16 10.4 10.7 8.73
Other Non Opg (Exp)/Inc 0.0 0.0 0.0 0.0 0.0
Associates & JV Inc 0.38 (0.2) 0.0 0.07 0.02
Net Interest (Exp)/Inc (1.0) (0.8) (0.7) (0.7) (2.4)
Exceptional Gain/(Loss) 9.95 (1.3) (0.7) 0.0 (0.4)
Pre-tax Profit 15.1 6.81 9.02 10.0 5.99
Tax (2.6) (2.8) (2.9) (2.8) (2.4)
Minority Interest (1.7) (1.9) (2.2) (2.2) (2.4)
Net Profit 10.8 2.11 3.98 4.97 1.18
Net profit bef Except. 0.84 3.41 4.63 4.97 1.58 Include gain on sale of 111
EBITDA 16.9 19.4 20.9 19.5 17.4 Somerset.

Growth
Revenue Gth (%) (3.6) (0.1) 4.5 (2.6) (1.1)
EBITDA Gth (%) (17.2) 15.1 7.7 (6.6) (10.7)
Opg Profit Gth (%) (41.0) 60.1 13.4 2.6 (18.1)
Net Profit Gth (Pre-ex) (%) (48.6) 307.7 35.8 7.4 (68.2)
Margins
Gross Margins (%) 54.9 55.9 55.2 56.3 56.0
Opg Profit Margins (%) 3.9 6.2 6.7 7.1 5.9
Net Profit Margins (%) 7.3 1.4 2.6 3.3 0.8

Balance Sheet (S$m)

FY Dec 2015A 2016A 2017A 2018F 2019F

Net Fixed Assets 206 181 169 196 195

Invts in Associates & JVs 33.9 35.3 36.7 36.9 37.2
Other LT Assets 126 106 121 121 120
Cash & ST Invts 102 138 154 213 231
Inventory 9.88 9.81 9.72 10.1 10.4
Debtors 60.0 57.5 57.8 58.6 61.6
Other Current Assets 7.28 6.43 8.37 8.37 8.37
Total Assets 545 534 557 643 664

ST Debt 82.0 31.5 57.1 43.7 43.7

Creditor 94.1 86.8 88.1 90.8 93.2
Other Current Liab 86.1 97.6 111 111 111
LT Debt 120 150 126 206 206
Other LT Liabilities 16.8 16.3 14.5 14.5 14.5
Shareholder’s Equity 129 132 135 143 153
Minority Interests 17.2 19.9 25.5 33.0 41.3 Issued S$100m 4% notes due
Total Cap. & Liab. 545 534 557 643 664 January 2023.

Non-Cash Wkg. Capital (103) (111) (124) (125) (124)

Net Cash/(Debt) (99.6) (43.5) (28.5) (37.4) (18.9)
Debtors Turn (avg days) 33.5 34.9 35.1 34.8 34.2
Creditors Turn (avg days) 143.3 144.1 141.3 139.2 139.5
Inventory Turn (avg days) 15.3 15.7 15.8 15.4 15.6
Asset Turnover (x) 1.2 1.1 1.1 1.0 1.0
Current Ratio (x) 0.7 1.0 0.9 1.2 1.3
Quick Ratio (x) 0.6 0.9 0.8 1.1 1.2
Net Debt/Equity (X) 0.7 0.3 0.2 0.2 0.1
Net Debt/Equity ex MI (X) 0.8 0.3 0.2 0.3 0.1
Capex to Debt (%) 18.6 17.6 20.0 24.0 16.0
Z-Score (X) 2.2 2.4 2.3 2.3 2.4
Source: Company, DBS Bank

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 Company Guide
Breadtalk Group Ltd

Cash Flow Statement (S$m)

FY Dec 2015A 2016A 2017A 2018F 2019F

Pre-Tax Profit 25.4 29.7 41.0 37.3 40.5

Dep. & Amort. 49.6 48.3 40.5 34.0 41.2
Tax Paid (6.9) (9.1) (10.1) (10.0) (10.9)
Assoc. & JV Inc/(loss) 1.31 0.83 (0.2) (0.2) (0.2)
Chg in Wkg.Cap. 0.42 4.47 15.0 1.44 (0.8)
Other Operating CF (3.4) 8.26 (1.7) 0.0 0.0
Net Operating CF 66.5 82.5 84.4 62.4 69.7
Capital Exp.(net) (37.5) (31.9) (36.5) (60.0) (40.0)
Other Invts.(net) (20.4) 16.3 14.6 0.0 0.0
Invts in Assoc. & JV (22.9) (2.8) (3.3) 0.0 0.0
Div from Assoc & JV 1.19 0.46 0.06 0.0 0.0 Capex includes new central
Other Investing CF 21.7 (0.4) (12.7) 0.0 0.0 kitchen in Shanghai
Net Investing CF (57.9) (18.2) (37.9) (60.0) (40.0)
Div Paid (4.2) (8.0) (16.9) (11.3) (11.3)
Chg in Gross Debt 3.60 (20.6) 1.34 67.5 0.0
Capital Issues (0.7) 0.0 0.0 0.0 0.0
Other Financing CF (8.7) (9.6) (8.9) 0.0 0.0
Net Financing CF (10.0) (38.2) (24.4) 56.2 (11.3)
Currency Adjustments 0.82 (0.4) (1.5) 0.0 0.0
Chg in Cash (0.6) 25.7 20.7 58.6 18.4
Opg CFPS (S cts) 23.5 27.7 24.7 21.7 25.1
Free CFPS (S cts) 10.3 18.0 17.0 0.85 10.6
Source: Company, DBS Bank

Target Price & Ratings History

Source: DBS Bank

Analyst: Alfie YEO
Andy SIM, CFA

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Company Guide
Breadtalk Group Ltd

DBS Bank recommendations are based an Absolute Total Return* Rating system, defined as follows:
STRONG BUY (>20% total return over the next 3 months, with identifiable share price catalysts within this time frame)
BUY (>15% total return over the next 12 months for small caps, >10% for large caps)
HOLD (-10% to +15% total return over the next 12 months for small caps, -10% to +10% for large caps)
FULLY VALUED (negative total return i.e. > -10% over the next 12 months)
SELL (negative total return of > -20% over the next 3 months, with identifiable catalysts within this time frame)
Share price appreciation + dividends

Completed Date: 7 May 2018 14:01:24 (SGT)

Dissemination Date: 7 May 2018 17:07:39 (SGT)

Sources for all charts and tables are DBS Bank unless otherwise specified.

GENERAL DISCLOSURE/DISCLAIMER
This report is prepared by DBS Bank Ltd. This report is solely intended for the clients of DBS Bank Ltd, its respective connected and associated
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The research set out in this report is based on information obtained from sources believed to be reliable, but we (which collectively refers to DBS
Bank Ltd, its respective connected and associated corporations, affiliates and their respective directors, officers, employees and agents (collectively,
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Any valuations, opinions, estimates, forecasts, ratings or risk assessments herein constitutes a judgment as of the date of this report, and there can
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The information in this document is subject to change without notice, its accuracy is not guaranteed, it may be incomplete or condensed, it may
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This publication has not been reviewed or authorized by any regulatory authority in Singapore, Hong Kong or elsewhere. There is no planned
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The valuations, opinions, estimates, forecasts, ratings or risk assessments described in this report were based upon a number of estimates and
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(a) such valuations, opinions, estimates, forecasts, ratings or risk assessments or their underlying assumptions will be achieved, and
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Please contact the primary analyst for valuation methodologies and assumptions associated with the covered companies or price targets.
Any assumptions made in this report that refers to commodities, are for the purposes of making forecasts for the company (or companies)
mentioned herein. They are not to be construed as recommendations to trade in the physical commodity or in the futures contract relating to the
commodity referred to in this report.

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Breadtalk Group Ltd

DBSVUSA, a US-registered broker-dealer, does not have its own investment banking or research department, has not participated in any public
offering of securities as a manager or co-manager or in any other investment banking transaction in the past twelve months and does not engage
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ANALYST CERTIFICATION
The research analyst(s) primarily responsible for the content of this research report, in part or in whole, certifies that the views about the
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issuer or the new listing applicant (which includes in the case of a real estate investment trust, an officer of the management company of the real
estate investment trust; and in the case of any other entity, an officer or its equivalent counterparty of the entity who is responsible for the
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have a proprietary position in the securities recommended in this report as of 30 Mar 2018.
2. Neither DBS Bank Ltd, DBS HK nor DBSV HK market makes in equity securities of the issuer(s) or company(ies) mentioned in this Research
Report.

Compensation for investment banking services:

3. DBSVUSA does not have its own investment banking or research department, nor has it participated in any public offering of securities as a
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should contact DBSVUSA exclusively.

Disclosure of previous investment recommendation produced:

4. DBS Bank Ltd, DBS Vickers Securities (Singapore) Pte Ltd (''DBSVS''), their subsidiaries and/or other affiliates may have published other
investment recommendations in respect of the same securities / instruments recommended in this research report during the preceding 12
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1
An associate is defined as (i) the spouse, or any minor child (natural or adopted) or minor step-child, of the analyst; (ii) the trustee of a trust of
which the analyst, his spouse, minor child (natural or adopted) or minor step-child, is a beneficiary or discretionary object; or (iii) another person
accustomed or obliged to act in accordance with the directions or instructions of the analyst.
2
Financial interest is defined as interests that are commonly known financial interest, such as investment in the securities in respect of an issuer or a
new listing applicant, or financial accommodation arrangement between the issuer or the new listing applicant and the firm or analysis. This term
does not include commercial lending conducted at arm's length, or investments in any collective investment scheme other than an issuer or new
listing applicant notwithstanding the fact that the scheme has investments in securities in respect of an issuer or a new listing applicant.

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Company Guide
Breadtalk Group Ltd

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For any query regarding the materials herein, please contact Paul Yong (CE. No. ASE988) at [email protected].

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Wong Ming Tek, Executive Director, ADBSR

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intended for institutional clients only and no other person may act upon it.

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 Company Guide
Breadtalk Group Ltd

United This report is produced by DBS Bank Ltd which is regulated by the Monetary Authority of Singapore.
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This report is disseminated in the United Kingdom by DBS Vickers Securities (UK) Ltd, ("DBSVUK"). DBSVUK is authorised
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jurisdictions professional, institutional or sophisticated investors as defined in the laws and regulations of such jurisdictions.

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Company Guide
Breadtalk Group Ltd

DBS Regional Research Offices

HONG KONG MALAYSIA SINGAPORE

DBS Vickers (Hong Kong) Ltd AllianceDBS Research Sdn Bhd DBS Bank Ltd
Contact: Paul Yong Contact: Wong Ming Tek (128540 U) Contact: Janice Chua
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Securities and Exchange Commission, Thailand

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