BreadTalk: JPMorgan initiates OW with $0.70 target price based on 15X FY11 P/E. Highlights company has transformed from bakery chain into regional food & beverage player with strong presence in Spore & China. Notes company more than doubled number of bakeries, restaurants, food courts over FY05-FY09, delivering revenue and net profit CAGR of 27% & 81% respectively. Adds wide range of F&B offerings positions it to take advantage of higher disposable income of China's urban households.
With rising trend of dining out among mass affluent consumers; there is strong potential in BreadTalk's restaurant business, which generates the highest operating margin among its three segments. Stock gapped up 2.5¢ to $0.58 today; support at $0.565.
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