Monday, March 24, 2014

Breadtalk

Breadtalk - Recall, last week readTalk climbed to a high of $1.13 (+7%) in the morning session, advancing for the second consecutive day following the company's statement on Monday that it has isolated the ingredients purchased from Hangzhou Guangqi. Over the weekend, Chinese news portal, Shanghai Daily reported that Hangzhou Guangxi, a food ingredient company, was being investigated for repackaging and selling expired products, some of which were more than two years past their shelf-life. Meanwhile, Maybank-KE wrote in an email today that BreadTalk is incredibly undervalued on its forward earnings growth, underpinned by further penetration of its bakery business in Tier 2 and 3 Chinese cities. At the current price, BreadTalk trades at 21x forward P/E, compared to the regional peer average of 24.1x. Maybank-KE has a Buy rating and TP $1.54

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