not vested
Divestment Gain Props Up Bottomline This Quarter
Market Cap: USD241m
We expect its Food Atrium division to remain a drag on profitability in 2016, as it continues to close down unprofitable stores and open new locations. Maintain BUY with an unchanged SGD1.42 TP (21% upside).
Bottomline would likely be powered by Din Tai Fung, which remains very profitable and its bakery division that is showing encouraging signs of margin improvements. Management has announced a special dividend of SGD1.35 cents/share this quarter, after a SGD8.5m divestment gain on Katong 112.
Share Data
Avg Daily Turnover (SGD/USD) 0.14m/0.10m
52-wk Price low/high (SGD) 1.02 - 1.45
Free Float (%) 36
Shares outstanding (m) 281
Estimated Return 21%
Shareholders (%)
George Quek 34.0
Katherine Lee 18.6
Primacy Investment 11.0
Expect Food Atrium division to continue losses this year. This division has been the main drag for the past few quarters. We expect further losses in 2Q16, as Breadtalk accounts for store closures in 1Q16 (five stores YTD in China).
Traffic continues to be weak in many shopping malls in China, and is unlikely to improve in the near-term.
Din Tai Fung to be main profit driver in 2016. While some margin improvements are coming through its bakery division, we expect the restaurant division to continue being the main profit driver, post the restructuring completion of Ramen Play.
1Q16 unprofitable without the divestment gain on Katong 112. Bottomline includes a SGD8.5m gain, though it was offset by higher staff costs and store closure provisioning. We estimate PATMI would just break-even this quarter excluding the one-off factors.
Source: RHB
http://rhb.ap.bdvision.ipreo.com/NSight ... 46a16c0aad