Breadtalk

Breadtalk: OCBC downgrade to sell. Note 3Q12 rev growth was stronger than expected but operating expenditure outpaced revenue growth. Cost pressures associated with food and raw materials saw gross margin fall to its lowest point since listing while higher staff and rental expenses depressed operating margins further. With BTG still focused on expanding its regional footprint, we expect margin pressures and low dividend payouts to persist, and revised our FY13 estimates downwards, which lowers house valuation from $0.51 previously to $0.49. Given BTG’s recent 7.1% appreciation since mid-Aug, the counter has emerged as expensive especially in the absence of a compelling near-term catalyst. House urge investors to take the opportunity to lock in profits at current levels, and re-enter when the price moderates lower