Why Breadtalk looks set to outperform

SINGAPORE (July 15): Daiwa is maintaining its “outperform” rating on Breadtalk Group, with a target price of $1.28 on the back of the group’s plans to improve profitability per store via tighter cost controls and store rationalisation.

In the bakery segment, the research house expects a sustained recovery in profitability for the group in 2016E. This comes as the group registered a 10.6% y-o-y increase in EBITDA in 1Q16, attributed to tighter cost control and a reduced focus on outlet expansion, says Daiwa analyst Shane Goh.

In the restaurant segment, the research house expects positive same-store-sales growth for Din Tai Fung outlets and a recovery in Ramen Play stores to drive earnings growth for the group.

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