BreadTalk Group's profits soared 46% to S$2.1m

Check out what boosted this growth.

According to OCBC Investment Research, BreadTalk’s 1Q results came in within expectations with revenue growing 13.4% YoY to S$120.3m on the back of broad segment increases while operating and PATMI increased by 45.6% and 46.0% to S$3.5m and S$2.1m respectively.

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In terms of its margin performance, the group managed to arrest the recent increases in operating expenses and it saw a 0.4 ppt increase in operating and PATMI margins to 2.8% and 1.7% respectively.

The group’s food court business returned to profitability upon completion of renovations at two major malls while its bakery segment saw broad based increases across its Singapore, Hong Kong and Thailand outlets.

These improvements helped to negate losses for its restaurant division, which was dragged lower by the nonperforming Ramen Play and Carl’s Jr in China.

BreadTalk’s move into their new S$64m headquarters at Tai Seng next month will help to increase its production efficiency and cost management by allowing for greater automation and streamlining of processes. Furthermore, the additional rental revenue from the unused 40% of space will boost its top-line figure.

However, these improvements should be felt only beyond FY13. FY13 projections unchanged As its 1Q13 figures were in-line with our targets, we leave our FY13 projections unchanged. In terms of its share price, we remain cautious at this juncture as current valuations are still too expensive (FY12 PE of 23.3x) in our view