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By Pehon | June 25, 2007
Breadtalk has in recent months made a quiet come back in terms of financial results, and stock price appreciation.
It was not long ago that the price was at $0.19, and Breaktalk was a loss making business, till today, its a profit reaping brand owner of several popular brands here in Singapore and the region, with stock price of $0.50.
If you haven’t noticed the tremendous success of Food Empire at several high traffic location, and Ding Tai Fung Restaurant that made the headlines at The Paragon, those are just some of the recent successes by Breadtalk’s management.
Looking at the FY2006 results, revenue grew 29.7% and profit from operations grew 81.7%, on the back of economies of scale seen in the cost of distribution and selling expenses and administrative expenses. As a result of extreme profit growth, we are looking at a EPS growth YOY of 289%.
“Whats most important in its business is business wide growth of bakery sales, franchise revenue, restaurant sales and food court sales.”
“I’m looking favourably at the franchise revenue, and that really has the potential of growing even more over the next few months. ”
As of 2006 FY, we are only looking at 73 franchises (vs 38 in 2005), with the largest % change in Indonesia and China.
One might think Breadtalk has run out of space to grow in Singapore. Probably true. But as the revenue breakdown of just the bakery business shows, they have already started growing in China and Thailand. In addition, Food Republic is not only a Singapore brand name. There are outlets in Shanghai, Beijing, Tianjin, Nanning, HongKong, 17 to be exact. To be fair, there were only 4 new outlets since 2005 (excluding Suntec’s), 1 point to note is Breadtalk’s extension to HongKong, where the food court business has tons of room to grow.
The same success is seen in Breadtalk’s restaurant business as shown below.
“If there’s anything to fall back on, its Breadtalk’s consistant ability to turn normal brands into popular brands that everyone can know about.”
Whats another plus point is the recent anouncement of dividends. This really shows the management’s confidence that Breadtalk is left is loss making history behind.
BUY, 1 Year Possible Target of $0.90, pending 1H 07 results.
Vested at $0.505 at 141500H, 25 Jun 07
Topics: Breadtalk |
June 25th, 2007 at 11:36 pm
Here’s offering another perspective as a TA swing trader.
This stock is a perfect candidate for a bull flag play. It’s currently in the flag formation stage, having reached a high of $0.555 on 14/15 Jun. The flag poles of the last two bull advances (5-12 Apr and 18-29 May) have indicated a consistent length of roughly $0.13, which is 26% of last done price and achievable in 1-1.5 weeks.
Drawing the flag down from 15 Jun, we are currently at $0.50 with the breakout point at $0.5025 for tomorrow 26 Jun (this changes from day to day). Buy trigger is $0.52 (my own conditions) but has to be confirmed by heavy volume, which in this case is >1.5 million for an entire day. If these conditions are met, target price will be $0.625 to be achieved within 1-1.5 weeks.
For medium duration holdings, I usually rely on the following for BUY triggers:
1. P-SAR chart (I’m using a 0.025 acceleration at this price and tick size) indicated a BUY cover on 18 Jun, meaning a SELL signal. Simply put, the BUY signal hasn’t arrived yet.
2. MACD (10, 22) indicated a negative MA crossover on 18 Jun and the start of histogram negative convergence since 30 May. The divergence pattern doesn’t look like it will slow down for a couple more days yet, unless there’s unforseen upsides e.g. good news.
Wish I could attach charts here to illustrate better, but anyway, it’s great to see you back! Your FAs have been critical in deciding what to buy, and I use my own TAs to determine when to buy them. Thanks.
June 26th, 2007 at 9:22 am
Excellent! =) why don’t you register using the links on the bottom right. and we’ll talk about you adding the charts!
June 26th, 2007 at 11:29 am
Done.
June 26th, 2007 at 11:40 am
Done. What do I do next?
June 26th, 2007 at 3:57 pm
Hi JL, just curious,how did you come up with the parameters for your parabolic and macd. If it ok with you, can you share your parameters for the other indicators. Thanks
June 26th, 2007 at 5:43 pm
Hi WL, no problem. I’m using what I think are the most appropriate parameters for the Singapore market through months and months of observation and trial-and-error paper trades. I’m sure there are others who use something different and find it suits them. To me, the most important characteristics to factor in are price volatility and general market sentiment.
MACD is what I rely on the most, being both a trend plotter and a momentum predictor. Its default parameters are (12,26,9). I use these numbers as a base for all my analysis. For stable, relatively slow-moving stocks without big upswings and downswings, this has proven to be pretty accurate. I switch to (10,22) and (8,17) to back up what I see in standard parameters because they kick in BUY/SELL signals earlier. BUT the downside is, they are prone to whipsaws which can lead to false signals. For weekly charts, I’ll use something else again.
P-SAR is something of a personal preference. Because of varying tick sizes at different price ranges, every bid up and down causes the price to jump a different percentage. For example, from $0.25, the next bid is $0.255, a difference of 2%. Whereas from $2 to $2.01, the difference is 0.5%. For this reason, different parameters must be used to catch the signal at the right time/price. I stick to the default 0.02 acceleration for price ranges where tick size causes ruoghly a 0.5% fluctuation. As the percentage goes up, I increase the acceleration appropriately, and vice versa.
My main tools for anlysis are MACD (to predict future trend) + RSI (to see if overbought/oversold) + CMF (to see if buying or selling is greater). I’m not a big fan of Stochastics, which I feel is just a complicated version of the RSI.
I wish to point out though, I’m not so much a buy-and-hold guy, so my knowledge on these TA tools is still raw and has only been applied to less than a dozen stocks. Usually, I prefer to catch the right stuff, get in and get out within the contra period (sometimes minutes) to minimise exposure to external factors.
June 26th, 2007 at 6:06 pm
Thanks JL, Really appreciate your sharing. Your consideration of the tick size to percentage price change is a real eye openner. I use to adjust the parameters to get what I think would give me a better “resolution” but in reality I think I was just playing around stupidly. Once again Thanks alot JL. Hope will be able to keep in touch with you.
July 3rd, 2007 at 12:05 pm
BreadTalk moved but no volume.