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Understanding BreadTalk Group Limited From The Perspective Of An Investor

Singapore appears to be a place with food that both locals and foreigners adore. I was recently queueing at a Toast Box outlet to buy some food and drinks when I overheard the conversations of two foreigners who were standing beside me.

One of them was explaining the food that Singaporeans typically eat for breakfast, which are found in Toast Box’s menu. He even exclaimed to his friend: “It’s really good! You should try it.”

Some of you may be aware that Toast Box is just one of the many food & beverage retail brands that are owned by BreadTalk Group Limited (SGX: 5DA), the brainchild of local entrepreneur George Quek. The company’s portfolio of brands include its namesake BreadTalk bakeries, Food Republic, Ramen Play, Din Tai Fung, and more.

BreadTalk opened its first BreadTalk outlet in Bugis Junction in 2000. It has come a long way since then. As of the first quarter of 2016, the company has a total of 948 F&B retail outlets in the world across its various brands.  Some of BreadTalk’s more important geographies are Singapore, China, and Hong Kong; they respectively accounted for 53%, 29%, and 12% of the company’s total revenue in the first quarter of 2016.

BreadTalk was listed on the Singapore stock market nearly 13 years ago on 13 June 2003 and its shares closed at a price of S$0.27 on their first day of trading. At the company’s current share price of S$1.15, it represents a 326% return.

Let’s look at BreadTalk’s financials as well to see how its business has grown. Over the past 10 years from 2005 to 2015, BreadTalk’s revenue has jumped by 555% from S$95.3 million to S$624.1 million. The company’s net profit has similarly climbed nearly eight-fold over the same period, from S$1 million to S$7.6 million. BreadTalk’s dividend also showed healthy growth, increasing from 0.35 cents in 2006 (first year when dividends were given out) to 1.5 cents in 2015.

When BreadTalk’s business numbers are compared with its share price changes, it would seem like the company’s earnings have been growing in tandem with its share price. In other words, the company’s share price growth since its IPO appear to be well-supported by improvements in the fundamentals of the business.

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The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. Motley Fool Singapore contributor Esjay does not own shares in any companies mentioned.