This is a presentation regarding BreadTalk and Old Chang Kee\'s financial position. The purpose was to compare the two company\'s financial position and recommend which company\'s stocks would be better for investment.
2. Food and Beverage (F&B) Industry
• Food & beverage services comprise
establishments engaged in the sale
of prepared food and drinks for
immediate consumption.
• Integral part of Singapore’s
economy
• Caters to local consumption and
tourism industry
5. BreadTalk Group Ltd
Introduction
• Incorporated in 2000
• 26 retail outlets island wide
• Listed in 2003
• IPO shares offered at S$0.24
• 32 million shares bought at S$0.30
• 189 times subscribed
• Signature food items are chicken
and pork floss buns
6. BreadTalk Group Ltd
Introduction
(cont’d)
• Bakery: BreadTalk, The Icing Room, Toast
Box
• Food Atrium: Food Republic
• Restaurant: Din Tai Fung, The Station
Kitchen and Cosmopolitan Cafe
• Overseas: China, Malaysia, Indonesia,
Philippines, Korea, Bahrain, Saudi Arabia,
Vietnam, Hong Kong, Kuwait, Oman,
United Arab Emirates and India
14. Old Chang Kee Ltd
Introduction
• Incorporated in 2004
• Listed in 2008
• IPO shares offered at S$0.20
• 25 million shares bought at S$0.18
• 5.4 times subscribed
• 70 retail outlets island wide
• Signature food item is Curry ’O
15. Old Chang Kee Ltd
Introduction
(cont’d)
• Retail outlets locally: Old Chang
Kee, Take 5 and The Pie Kia Shop
• Retail outlets overseas: Chengdu
Eatery
• Other services: delivery, catering
and O’ My Darling
• Overseas: China, Malaysia,
Indonesia and Philippines
16. Old Chang Kee Ltd
Internal Strengths
Corporate social responsibility
Extensive network of retail outlets
Diversified customer base
17. Old Chang Kee Ltd
Internal Strengths
Experienced management team
High quality standards
Promotions
18. Old Chang Kee Ltd
Internal Weaknesses
No risk management committee
Labour-intensive business
19. Old Chang Kee Ltd
Internal Weaknesses
Fluctuations in foreign exchange rates
Expansion decisions
20. BreadTalk Group Ltd &
Old Chang Kee Ltd
Opportunities
• Expansion opportunities
• Working capital increment
• Increase outlets
21. BreadTalk Group Ltd &
Old Chang Kee Ltd
Threats
• Outbreak of food-related
diseases
• Strong presence of
competitors
22. BreadTalk Group Ltd &
Old Chang Kee Ltd
Threats
• Changes in consumer response and
preferences
• Changes in governmental
regulations
23. Competitors
• Four Leaves
• Prima Deli
• Polar Puffs & Cakes Pte Ltd
• Jollibean
• Mr Bean
• Any bakeries and food retail
outlets within the vicinity of their
retail outlets
25. We will be
covering
analysis on:
Sales / Turnover
/ Revenue
Gross
Profit
Margin
Net Profit
Margin
Fixed Assets
Turnover
Debt-Equity
Ratio
Interest
Coverage
26. What makes up revenue?
BreadTalk
Bakery Sales
Restaurant Sales
Sales to
Franchisee
Franchisee
Income
Food Court Income
Old Chang Kee
Outlet Income
Franchise and
Royalties Income
Interest Income
Rental Income
37. Year /
Company
2008 2007 Change
BreadTalk 3.94% 5.39% -1.45
percentage
point
Old Chang
Kee
4.61% 6.52% -1.91
percentage
point
Net Profit Margin
38. Cross-Sectional Analysis
• Increase of 35.53% of
revenue
• Sales & market
diversification strategies
• Grown substantially
• Tight rein on expenses
due to economic crisis
• Increase of 19.46% of
revenue
• Launched 1st mobile
kitchen, O’ My Darling
• Investments have yet to
contribute materially
• Future revenue from
investments are
expected
BreadTalk Old Chang Kee
39. Cross-Sectional Analysis
• Increase of 35.53% of
revenue
• Sales & market
diversification strategies
• Grown substantially
• Tight rein on expenses
due to economic crisis
• Increase of 19.46% of
revenue
• Launched 1st mobile
kitchen, O’ My Darling
• Investments have yet to
contribute materially
• Future revenue from
investments are
expected
BreadTalk Old Chang Kee
40. Analysis - Are the Profits of BreadTalk
adequate and sustainable?
• Yes, profits are adequate and sustainable
well into future
• Well-prepared to face challenges in then
future economy
• Secured 2 franchise agreements
• Likely to attract more F&B collaborations
• Able to generate more revenues in the
near future
45. Cross-Sectional Analysis
• Analysis of ratio
• Expansion opportunity
with increasing popularity
of bread product of Asia
• Note 10 to financial
statement
• More sales will be
generated in the future
• Analysis of ratio
• Increase and
refurbished local
outlets, like Take 5!
• Note 11 to financial
statement
• Perform better than
BreadTalk
BreadTalk Old Chang Kee
46. Cross-Sectional Analysis
• Analysis of ratio
• Expansion opportunity
with increasing popularity
of bread product of Asia
• Note 10 to financial
statement
• More sales will be
generated in the future
• Analysis of ratio
• Increase and
refurbished local
outlets, like Take 5!
• Note 11 to financial
statement
• Perform better than
BreadTalk
BreadTalk Old Chang Kee
47. Is BreadTalk investing enough to
safeguard future profitability?
• Yes
• The company has put much money in
investing fixed assets
• The fixed assets were effectively utilized to
generate more income.
58. • Yes.
• Increase in debt-equity ratio -> more aggressive
financing and more probability resulting in
volatile earnings.
• Increase in interest coverage -> investors will be
more confident that they would be able to meet
interest obligations.
Analysis - Are the finances of the company
sensibly and effectively structured?
65. • Current liabilities >
current assets
• May seem that they
are not able to pay
debts when due
• Intercompany loans
for financing
• Ideal balance
between assets and
liabilities
• Able to pay liabilities
when they fall due
66. • Did not invest too much
on stocks and
prepayments
• Ideal balance between
assets and liabilities
• Able to pay liabilities
when they fall due in the
short term
2008 2007 Change
BreadTalk 0.86 0.87 - 0.1
Old Chang Kee 1.61 1.03 0.58
68. 2008 2007 Change
BreadTalk 24.66 27.88 - 3.22
Old Chang Kee 26.12 31.47 - 5.35
• Might be due to
stock obsolescence
• Food wastage
• Similar to BreadTalk
69. Is the company managing its liquidity position well, will it be able
to sustain its operations in the short and medium term?
71. • Favourable and
attractive
• Advantage over
constant expansion
plans
2008 2007 Change
BreadTalk 3.31 3.23 0.08
Old Chang Kee 2.42 3.87 -1.45
72. • Investors are paying 20 times
more
• Different investors have their
own opinions
• Bigger change compared to
BreadTalk
• Still lower than BreadTalk and
less attractive
2008 2007 Change
BreadTalk 22.19 21.98 0.21
Old Chang Kee 9.71 6.07 3.64
73. • Share prices
decreased though
dividend per ordinary
share constant
• No dividends paid in
year 2008
• Reserve cash for
funding of future
overseas expansions
2008 2007 Change
BreadTalk 9.86 8.45 13.31
Old Chang Kee 0.00 77.77 -77.77
74.
75. • Increase in value of
shares
• Worth of share higher
due to increase in
cash and bank
balances
2008 2007 Change
BreadTalk 17.14 13.84 3.30
Old Chang Kee 22.35 18.77 3.58
76. • Larger decrease than
OCK
• Ratio still maintained
at >1
• Not a significant
change when
compared to
BreadTalk and ratio
still close to 1
2008 2007 Change
BreadTalk 4.12 5.00 -0.88
Old Chang Kee 1.07 1.23 -0.16
77.
78. • Comparison for both BreadTalk and Old Chang Kee
may be different in terms of size of enterprise as
BreadTalk has other investments such as restaurants
and food courts while Old Chang Kee does not.
• Non-quantifiable items, which could have aided in
a comprehensive analysis, not reflected in financial
statements such as efficiency and effectiveness of
the company’s management.
• 31st December year end for both companies may
not represent the position of both companies for
whole year from January to December