Will BreadTalk rise again?

SINGAPORE (Aug 5): RHB is maintaining its “buy” recommendation for BreadTalk Group with a target price of $1.45, despite store closures and the challenging operating environment in 2Q16.

According to RHB analyst Juliana Cai, BreadTalk’s management says the rationalistion exercise for its food atrium division has largely been completed. The group had closed its Tianjin and Chengdu food courts during the quarter to June. The rationalisation exercise is expected to be completed by 2H2016.

In Singapore, the group’s food court at Ion Orchard completed its renovation works in May, and is expected to report a full quarter’s contribution to the food atrium segment. As such, Cai expects the group to perform better in 2H16 due to the fewer write-offs from store closures, even as sales remain weak in China.

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