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What Investors Need to Know About BreadTalk Group Limited’s Stellar Performance in 2017

This morning, BreadTalk Group Limited (SGX: 5DA) announced its financial results for the full-year ended 31 December 2017. Here are 10 key things investors should know from the earnings announcement:

1. Revenue for the period slumped 2.5% year-on-year to S$599.7 million. The company said the fall is in line with its “consolidation strategy” for 2017. BreadTalk has four main business divisions – Bakery, Food Atrium, Restaurant, and 4orth. Sales at the Bakery and Food Atrium divisions fell by 3.2% and 5.4% respectively, while revenue at the Restaurant and 4orth divisions went up by 2.2% and 0.3% respectively.

2. Net profit for 2017 ballooned 91% to S$21.8 million.

3. Earnings per share grew to 7.75 cents in 2017 from 4.06 cents in 2016.

4. In 2017, there was a recognition of S$9.3 million in net capital gain from the divestment of BreadTalk’s investment in TripleOne Somerset, while 2016 saw $8.8 million in net capital gain booked from the divestiture of 112 Katong Mall. Excluding one-off gains, net profit from the core food and beverage (F&B) business in 2017 would have surged 153% year-on-year to S$17.7 million.

5. Core F&B net margin for 2017 stood at 2.9%, up from 1.1% seen a year back.

6. As at 31 December 2017, BreadTalk had S$141.2 million in cash and cash equivalents and S$183.3 million in total debt. This translates to a net debt position of S$42.1 million. The balance sheet improved over the year; at the end of 2016, the company had S$61.5 million in net debt.

7. Return on equity (ROE) for 2017 stood at 16.2%, an improvement from 2016’s 8.7%. Using the adjusted net profit, ROE would have been 13.1% in 2017 versus 5.3% one year back.

8. Cash flow from operations for 2017 came in at S$84.4 million. With capital expenditure at S$37.1 million, the F&B outfit generated free cash flow of S$47.3 million. This marks a decline over 2016 where S$50.6 million in free cash flow was raked in.

9. The board has proposed a final dividend of 2.0 cents per share and a special dividend of 1.0 cent per share for the fourth quarter. This brings the full year dividend to 7.0 cents per share, up 81.8% from 3.85 cents paid out in 2016.

10. The following is a summary of BreadTalk’s outlook:

“Looking into 2018, the Management team is excited to kick-start our partnership with Shinmei Corporation, following our JV signing on 22 December 2017. The team will be working intensively with our partners in FY2018 to improve our procurement efforts, generate greater economies of scale, cost savings and new dining concepts for our core F&B businesses.”

BreadTalk is currently selling at S$1.74 apiece. This gives a trailing price-to-earnings ratio of 22.5 and a trailing dividend yield of 4%.

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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 Sudhan P doesn’t own shares in any companies mentioned.