BreadTalk

BreadTalk: 3Q15 results missed. Net profit fell 60% to $1.6m, bringing 9M15 net profit to $6.5m (-22.7%).

9M15 revenue climbed 7.9% to $469.1m, driven by growth in all segments, mainly from stronger same store sales growth (SSSG).

Bakery revenue came in at $232.4m (+7.1%) from an increase of outlets to 835 (9M14: 772), as well as improved SSSG from the Singapore Toast Box business.

Food atrium revenue was $130.2m (+6.8%) on the back of stronger Singapore SSSG. Hong Kong performance remained steady despite lower tourists from mainland China, while recovery at Taiwan and Thailand are progressing.

Restaurant revenue jumped 11% to $106.4m. Aside strong SSSG, ramp up in revenue in Thailand Din Tai Fung outlets, and contribution from the new ramen concept Sanpoutei contributed to growth.

Other income rose 20% to $14.3m, mainly from higher food atrium management fee income.

Elsewhere, bottom line was hit by increased depreciation from new outlets and higher operating costs in China and Singapore.

JV and associates’ losses widened to $0.6m from $0.2m from a challenging environment in China and Malaysia.

At large, BreadTalk aims to streamline costs and resources, as well as close underperforming gaps to boost profitability. This is amid the economic slowdown in China, and the broader shift from offline to online spending affecting mall footfalls.

Other updates include:
1) Opening a new BreadTalk concept store in 4Q
2) Four new food atrium outlets will continue to exert pressure during gestation period
3) Opening another Din Tai Fung restaurant in Thailand
4) Streamlining of Ramen Play outlets in Singapore and China to be completed by end FY16
BreadTalk is currently trading at a hefty 32.5x trailing P/E.