Breadtalk

Breadtalk: OCBC downgrades to Sell with $0.77 TP. Note that the 12% correction in BreadTalk’s share price over the past two days has helped to temper the sudden spike from late-Mar, and house take this opportunity to caution investors against getting too carried away. In view, a takeover by Minor International is remote at this juncture. Despite impressive yearly double-digit revenue growth, BreadTalk has yet to translate the success to its operating margins. Although its ongoing expansion plans are partly to blame, the pace of the margin declines does create some concerns over its operational efficiencies in the long-run. In addition, with FY13 PATMI and dividend growth unlikely to differ much from recent performances, deem BreadTalk expensive at current price levels and urge investors to take profit.