January 27, 2014

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SEE PAGE 27 FOR IMPORTANTDISCLOSURES AND ANALYST CERTIFICATIONS Co. Reg No: 198700034E MICA (P) : 099/03/2012


Breadtalk Group (BREAD SP)




Why this bread wont talk
Initiate BUY on this under-researched company with a TP of
SGD1.40, implying 50% upside. BreadTalk is by far the most
successful Singapore F&B company, boasting a solid regional
presence for its homemade brands via more than 800 outlets
across 15 countries. Its target for 2014 is to raise store count
to 1,000.
Operational statistics are healthy with EBITDA growing
rapidly. This should allay fears on BreadTalks lacklustre
profit growth, hitherto blamed on poor management or a
flawed business model though our analysis shows it is a
matter of accounting. Going forward, higher-margin
businesses should also help lift earnings.
Thailand-based Minor Internationals 11% stake may be a
prelude to a takeover offer in the next 12-24 months. If so,
this would be a bonus for investors.
China presence an attractive trait
Minor International (MINT TB, BUY, TP 24.30THB) has accumulated
an 11% stake in BreadTalk Group since Aug 2013. The Thai
hospitality and F&B group is noted for its history of acquisitions but
reputation aside, we think its portfolio complements that of
BreadTalks. We believe BreadTalks presence in China more than
300 outlets in 48 cities is definitely a key attraction.
Value emerging, act before its too late
We see value emerging. Our TP of SGD1.40 is based on 7X FY14E
EV/EBITDA, which is only half of regional peers average. We
expect BreadTalks net profit to grow at 26% CAGR over the next
three years as expansion efforts start to bear fruit. Using a SOTP
approach to cross-check the replacement value of the firm, we
coincidentally arrive at a conservative net value of SGD1.40 per
share (SGD403m). Initiate with BUY.

Key Data


Share Price Performance




Maybank vs Market



Share Price: SGD0.94 MCap (USD): 206M Singapore
Target Price: SGD1.40(+50%) ADTV (USD): 0.1M Consumer Staples
(New)
BUY
52w high/low (SGD)
Free float (%)
Issued shares (m)
Market capitalization
Major shareholders:
-QUEK MENG TONG 34%
-LEE LIH LENG 19%
-Minor International PCL 11%
1.17/0.74
282
35.4
SGD263.6M
2,700
2,900
3,100
3,300
3,500
3,700
3,900
4,100
0.40
0.50
0.60
0.70
0.80
0.90
1.00
1.10
Oct-11 Apr-12 Oct-12 Apr-13 Oct-13
Breadtalk Group (L) Straits Times Index (R)
1 Mth 3 Mth 12 Mth
Absolute(%) 2.2 2.2 27.2
Relative to country (%) 3.9 6.9 34.3
Positive Neutral Negative
Market Recs na na na
Maybank Consensus % +/-
Target Price (SGD) 1.40 na na
2013 PATMI(SGDm) 12 na na
2014 PATMI(SGDm) 16 na na
Source: FactSet; Maybank
James Koh
(65) 6432 1431
jameskoh@maybank-ke.com.sg
Juliana Cai
(65) 6432 1417
julianacai@maybank-ke.com.sg
FYE Dec (SGD m) FY12A FY13A FY14E FY15E FY16E
Revenue 447.3 532.7 629.8 731.4 860.6
EBITDA 49.6 60.6 70.4 79.6 91.0
Core net profit 12.0 12.5 15.6 19.1 25.1
Core FD EPS (cts) 4.3 4.4 5.5 6.8 8.9
Core FD EPS growth(%) 3.6 3.8 25.3 22.5 31.1
Net DPS (cts) 1.3 1.4 1.7 2.0 2.6
Core FD P/E (x) 22.0 21.2 16.9 13.8 10.5
P/BV (x) 3.2 2.9 2.6 2.3 2.0
Net dividend yield (%) 1.4 1.5 1.8 2.2 2.8
ROAE (%) 13.6 13.0 14.5 15.7 18.0
ROAA (%) 3.9 3.2 3.5 4.2 5.3
EV/EBITDA (x) 4.7 5.5 4.7 3.9 3.0
Net debt/equity (%) 39.0 76.3 53.9 26.7 net cash

January 27, 2014 2

Breadtalk Group

Jan-13 Mar-13 May-13 Jul-13 Sep-13 Nov-13 Jan-14
0.6
0.7
0.8
0.9
1.0
1.1
1.2
1.3
Minor Intl
took initial
5.9%
Up
stake to
6.3%
Up stake
to 8.9%
Up stake
to 10.0%
Up stake
to 11.0%
Breadtalk Gr oup Li mi ted
0. 91 0. 00 0.00% 11:05:15 AM VWAP:0.90 High: 1.20 Low: 0. 67 Chg: 31. 62%
Investment summary

Bread and creativity
BreadTalk Group is a Singapore-based food and beverage (F&B) company
founded by current chairman George Quek in 2000. From first popularising
the artisan bread retail concept, the company has seen its footprint in the
region growing rapidly. Mr Queks initial target of opening 10 BreadTalk
outlets in three years is a far cry from the 800 retail stores in 15 countries
the company now has under its umbrella. Throughout this time, we believe
it has stayed true to its commitment to brand building and creativity.
Enviable regional footprint
BreadTalk has a presence across 15 countries in the Asia Pacific and the
Middle East through a variety of formats and brands. Most notably in China,
where the retail environment is notoriously difficult, it has more than 300
outlets in 48 cities. We believe it has also been able to make inroads into
ASEAN over the last 12 months, making its regional footprint truly
enviable.
More impressively, much of the footprint is secured through BreadTalks
own internally created brands, which are typically unique concepts. This
gives the company better control over its own branding.
Corporate action from MINT may be a bonus
Minor International (MINT), a Thailand-based F&B company, has chalked up
an 11% stake in BreadTalk since Aug 2013. Given its history of acquisitions,
this may be a prelude to a bigger corporate action in the next 12-24
months.
It could come in the form of an outright M&A and/or a privatisation of
BreadTalk. If so, this would be positive for BreadTalks share price. But
even without any action by MINT, we believe the two companies can form
a working alliance that is mutually beneficial and profitable as they have
complementary business portfolios.
Value is emerging on its own, act before its too late
Granted, BreadTalks bottom-line growth over the years has underwhelmed
compared to the speed of its operational development. But we believe this
is largely a matter of accounting for expansion and does not truly reflect
its cash generation ability. We expect EBITDA to grow at 15% CAGR to
SGD91m from FY13E-FY16E. In our view, the current EV/EBITDA of 4.5x
severely undervalues the company.
We estimate the replacement value of its current network of stores alone
to be worth SGD245m. This excludes other assets like brands, its new
Singapore headquarters and various real estate stakes.
3 Charts that Matter
MINTs shareholding structure Growth in number of stores

EBITDA has risen significantly








278
342
448
534
686
824
1,006
0
400
800
1,200
2008 2009 2010 2011 2012 2013E 2014E
27.0
33.0
38.2
41.4
49.6
60.6
70.4
0
10
20
30
40
50
60
70
80
2008 2009 2010 2011 2012 2013E 2014E
Replacement cost of stores (SGD m) 244.7
Singapore HQ (SGD m) 67.0
Real estate investments (SGD m) 84.1
Brand value (SGD m) 77.0
Net debt (SGD m) (70.0)
Total (SGD m) 402.8
Per share value (SGD) 1.40
Source: Company, Maybank KE
BreadTalk SOTP replacement cost

January 27, 2014 3

Breadtalk Group

Enviable regional footprint
Taking Singapore brands abroad
BreadTalk is a Singapore-based F&B company founded by its current
chairman, Mr George Quek, in 2000 and listed on the Singapore Exchange
(SGX) in 2003. After popularising the artisan bread retail concept under the
namesake brand, the company went on to create several other brands in-
house, including Food Republic, Toast Box and RamenPlay. More
impressively, it has successfully grown these brands overseas, from China
to the Middle-East.

Figure 1: BreadTalk bakery Figure 2: Toast Box



Source: Company Source: Company
Figure 3: RamenPlay Figure 4: Food Republic



Source: Company Source: Company

Across different geographies
Following its listing in 2003, BreadTalk opened its first overseas outlets in
Jakarta, Indonesia, and Shanghai, China. In the same year, the China
market was deemed important enough for a separate headquarters. Today,
the company has outlets across 15 countries and a staff of more than
7,000. We believe this regional footprint stretching from Asia to the Middle
East is invaluable as it enables the company to simultaneously tap into
different growth markets.

Figure 5: Revenue breakdown by
geography, FY12

Source: Company, Maybank KE
Singapore
51%
Hong
Kong
9%
Mainland
China
32%
Rest of
the World
8%

January 27, 2014 4

Breadtalk Group

Figure 6: BreadTalks regional footprint from Asia to the Middle East

Source: Company
New concepts, constant innovations
In our view, BreadTalk has stayed true to its commitment to creativity
through the years. For one, its brand image has not stopped evolving, with
the BreadTalk bakery concept having undergone three distinct generations
since 2000 and is now heading into Generation Four, which combines a
rustic retail concept with healthy recipes. The company has even launched
a Get Talking multimedia campaign to promote this change.
In addition, there was no let-up in the creation/promotion of new brands
across different food genres from Japanese food to fast food. Reception
has generally been good, as is evident from the significant growth in
revenue. As further testament, the company has won many international
and local branding awards. Most recently, World Brand Laboratory, an
international branding consultancy, ranked BreadTalk among the 3,000
leading brands in the world.
Figure 7: Generation One - boutique bakery, 2000-2004 Figure 8: Generation Two eye on elegance, 2004-2008



Source: Company Source: Company
Figure 9: Generation Three - jewellery casing, 2008-2011 Figure 10: Generation Four rustic feel, 2012



Source: Company Source: Company

January 27, 2014 5

Breadtalk Group

Brand footprint to get bigger
Since 2000, BreadTalk has expanded at breakneck pace. Chairman Queks
initial target of opening 10 Breadtalk outlets in three years is a far cry
from the more than 800 retail stores in 15 countries the company now has
under its umbrella. With established brands facilitating franchising, we
believe its brand footprint will just get bigger and bigger.
helped by new headquarters
In mid-2013, BreadTalk completed the building of its new international
headquarters in Singapore. The iconic 10-storey building, sitting on 7,000
sq m of land at Paya Lebar, houses offices, warehousing facilities, training
academies, production lines, central kitchens and flagship stores. We
believe the headquarters will serve as an important platform for
international expansion as it will allow BreadTalk to achieve economies of
scale. For example, the company recently succeeded in piloting the use of
frozen dough without compromising on quality.
Figure 11: New headquarters in PayaLebar

Source: Company

Figure 12: BreadTalks business at a glance

Owned bakery Franchise Restaurant Food court
Brands BreadTalk BreadTalk Din Tai Fung Food Republic
Icing Room Carl's Junior (China) Da Shi Dai
Toast Box Station Kitchen Da Zhi
Thye Moh Chan Ramen Play
Bread Society
Main brands BreadTalk BreadTalk Din Tai Fung Da Shi Dai
Toast Box
Countries China Indonesia India Singapore China
Singapore Philippines Oman China Singapore
Thailand China Jordan Thailand Hong Kong
Hong Kong Kuwait Vietnam Taiwan
Malaysia Bahrain Malaysia
Thailand
Main countries China China Singapore China
Singapore Indonesia
Main region of store growth in past 5 years
China China Singapore Singapore
Singapore Indonesia

Hong Kong
Source: Company, Maybank KE
The use of frozen
dough may reduce cost.

January 27, 2014 6

Breadtalk Group

Profitability under scrutiny

Expansion with no profit growth myth or reality?
In the past five years, BreadTalk has expanded its scope of operations
visibly, in terms of geographical markets, new brands and number of
outlets. This has led to a twofold jump in revenue in the corresponding
period. There has also been more substantial investor interest.
Yet there is heard a very common criticism the companys bottom line
has failed to catch up. This has caused many to conclude that BreadTalk is
either poorly run or its business is simply not scalable. Another common
refrain is the company has expanded a lot but it is too much effort for too
little profit.
The price of expansion
Our analysis suggests that the comments are not a fair reflection of
BreadTalks profit potential. Net profit growth has indeed lagged behind
revenue growth despite the respectable 12% CAGR from 2008-2012. But, in
our view, it is the very aggressive store expansion by the company that was
the real drag. BreadTalk has spent big on capex, resulting in significant
non-cash depreciation and amortisation (D&A) costs hitting profitability.
Figure 13: Net profit trailed revenue, which saw a twofold
increase over 2008-2012
Figure 14: The real drag on net profit was non-cash
depreciation and amortisation costs



Source: Company, Maybank KE Source: Company, Maybank KE

Accounting treatment of store expansion
For retailers, renovation and fit-out of new stores are accounted for under
property, plant and equipment and are depreciated over their useful
lives, according to accepted accounting rules. This is no different from
companies in other industries. However, since a company like BreadTalk
typically rents its outlets, useful life in this case is restricted by the
contracted lease period.
Based on our understanding, lease agreements in the markets BreadTalk
operates in are typically short-term in nature. This is especially the case in
China, where leases may be as short as 12 months even though the store
will likely continue to operate beyond that period by extending the initial
lease agreement. This implies that the accounting cost of opening new
outlets aggressively is very high, as capex is depreciated quickly over a
short period of time (1-5 years).
212.2
246.5
302.9
365.9
447.3
7.8
11.1
11.3
11.6
12.0
0
5
10
15
20
25
30
0
100
200
300
400
500
2008 2009 2010 2011 2012
SGD m SGD m
Revenue - LHS Net Profit - RHS
36.9
92.6
107.2
49.7
46.8
13.7
16.7
21.6
24.4
31.0
0
20
40
60
80
100
120
2008 2009 2010 2011 2012
SGD m
CAPEX Dep & Amort.


Fit-out of new stores
represent a maj or capex
cost
D&A is the real drag
on bottom line.
Such capex is depreciated
very aggressively

January 27, 2014 7

Breadtalk Group

Bottom line will show strength when expansion slows down
Perversely, we think the bottomline will actually show much better growth
when the companys expansion slows down, as D&A will plateau. All said,
we believe the current cost of expansion should not deter investors as the
underlying cash returns still appear to be healthy.
EBITDA growth tells a different story
Against an accounting treatment which is unfavourable for retailers in
expansion mode, we think EBITDA provides a better reflection of the
underlying profit growth of a company as well as its intrinsic value. For
BreadTalk, EBITDA showed reasonably consistent growth at 16% CAGR over
2008-2012. Another point to note is that the company also generates very
healthy operating cash flow, with consistent growth in recent years a sign
of business viability.
Figure 15: EBITDA grew at much faster pace than net profit Figure 16: Operating cash flow consistently positive



Source: Company, Maybank KE Source: Company, Maybank KE

Segmental operational statistics still healthy
BreadTalk provides annual statistics for its four main businesses: 1) its own
bakeries, 2) bakery franchises, 3) restaurants, and 4) food courts. A study
of the average sales per store in tandem with the number of new stores
opened should, in our view, provide a good gauge of whether business at
the ground level is healthy. But we also note that the bulk of the increase
in BreadTalks new stores from 2008 has been in the less developed
markets, which means lower sales per store are not necessarily a sign of
business health deterioration.

1) Bakery (self-owned stores) = 45% of FY13E revenue
This is BreadTalks biggest segment, accounting for around 45% of group
revenue. The main contributing brands include BreadTalk and Toast Box.
Over the past five years, sales per store have contracted by around 10%.
Nevertheless, seen as a whole, we think the statistics are still positive,
given that overall store count has more than doubled and a large part of
the increase has been in China, where sales per store are generally lower
than for stores in a developed market like Singapore.



27.0
33.0
38.2
41.4
49.6
7.8
11.1 11.3 11.6 12.0
0
10
20
30
40
50
60
2008 2009 2010 2011 2012
SGD m
EBITDA Net Profit
32.6
39.1
45.5
48.9
53.7
0
10
20
30
40
50
60
2008 2009 2010 2011 2012
SGD m
Figure 17: Business revenue breakdown,
2013E

Source: Company, Maybank KE

Owned
Bakery
45%
Franchise
7%
Restaurants
23%
Food Atrium
25%
Operating cash flow is
very healthy.
BreadTalk and Toastbox

January 27, 2014 8

Breadtalk Group

Figure 18: Bakery (self-owned stores) sales per store p.a Figure 19: Bakery (self-owned stores) number of outlets


Source: Company, Maybank KE Source: Company, Maybank KE

2) Bakery (franchise) = 7% of FY13E revenue
Outside of Singapore, BreadTalk employs the franchise model for its stores
to complement its own outlets. This helps to expand its global presence
without putting undue strain on its balance sheet. In this segment, revenue
comes from franchise fees as well as goods sold to franchisees. Average
revenue per franchisee has declined around 26% over the past five years,
but again this is not a negative indicator, considering that the number of
franchisees has almost tripled and the majority of new stores were in
China and Indonesia, where sales per store are understandably lower.

Figure 20: Bakery (franchise) sales per franchisee p.a Figure 21: Bakery (franchise) number of franchisees



Source: Company, Maybank KE Source: Company, Maybank KE

3) Restaurants = 23% of FY13E revenue
Din Tai Fung, Carls Junior in China, Station Kitchen and RamenPlay are
some of the brands BreadTalk operates under in this segment. We believe
Din Tai Fung in Singapore is the majority revenue contributor. Average
revenue per outlet has fallen by around 20% since 2008, though it should
be noted that the decline occurred after the company expanded store
count substantially in 2010. We believe cannibalisation of Din Tai Fung
restaurants in Singapore (from six to 19 outlets since 2008) and expansion
of store count for other less successful brands may be some of the reasons
behind the shortfall in revenue.


41
56
52
94
96
120
120
141
182
238
290
384
480
600
720
-50
50
150
250
350
450
550
650
750
2008 2009 2010 2011 2012 2013E 2014E 2015E
BreadTalk
Din Tai Fung is the
main contributor.
1,097
1,008
993
1,002
984
953
964
946
850
900
950
1,000
1,050
1,100
1,150
2008 2009 2010 2011 2012 2013F 2014F 2015F
SGD '000
19
38
24
44
20
40
49
100
119
157
181
225
245
286
335
0
50
100
150
200
250
300
350
2008 2009 2010 2011 2012 2013E 2014E 2015E
134
117
101
95
99
102 102
100
0
20
40
60
80
100
120
140
160
2008 2009 2010 2011 2012 2013F 2014F 2015F

January 27, 2014 9

Breadtalk Group


Figure 22: Restaurants sales per outlet p.a. Figure 23: Restaurants - number of outlets



Source: Company, Maybank KE Source: Company, Maybank KE

4) Food courts = 25% of FY13E revenue
The brands in this segment include Food Republic (Singapore and Hong
Kong), Da Shi Dai (China) and Da Zhi (Taiwan). Sales per store have held up
well since 2008 and are now higher by 2%. The majority of the new outlets
during this period were in Singapore and Hong Kong, under the Food
Republic brand.

Figure 24: Food courts sales per store p.a Figure 25: Food courts - number of outlets



Source: Company, Maybank KE Source: Company, Maybank KE


4,596
4,870
3,880
3,275
3,665
3,439
3,137
3,001
0
1,000
2,000
3,000
4,000
5,000
6,000
2008 2009 2010 2011 2012 2013F 2014F 2015F
SGD '000
13
5
4
11
9
12
8 8
21
26
30
41
50
62
-5
5
15
25
35
45
55
65
2008 2009 2010 2011 2012 2013E 2014E 2015E
2,612
2,521
2,723
2,739
2,657
2,712
2,750
2,702
2,400
2,450
2,500
2,550
2,600
2,650
2,700
2,750
2,800
2008 2009 2010 2011 2012 2013F 2014F 2015F
SGD '000
4
5
10
12
11
11
29
33
32
37
47
59
70
81
-5
5
15
25
35
45
55
65
75
85
2008 2009 2010 2011 2012 2013E 2014E 2015E

January 27, 2014 10

Breadtalk Group

Hotel & Spa
36%
Mixed use
12%
Restaurant
42%
Retail
10%
Minor International biding its time?

Thailand-based hospitality and F&B group
Minor International (MINT) was founded in 1978 by American-born Thai
businessman William Heinecke, who is also the groups current chief
executive officer. The business grew rapidly from a single hotel and pizza
restaurant in Thailand. In 2005, MINT embarked on an aggressive expansion
overseas and today, the Thai-listed company has a presence in 26 countries
and is involved in hotels, serviced suites, restaurants and spas.
Figure 26: Minor International today Figure 27: Minor International
- revenue breakdown,9M2013


Source: Company Source: Company

An acquisitive history
As part of its overseas expansion over the past decade, MINT made
numerous acquisitions that included hotels, resorts and F&B companies.
The Coffee Club in Australia (US$20.0m), Thai Express (US$31.3m) in
Singapore and the Riverside (US$36.5m) casual dining chain in China are all
part of its acquisitive history.
Given its vast business empire, it is no surprise that MINT typically holds
50-80% stakes in individual businesses to ensure that management stays on
to drive the business. The exception is BreadTalk, in which it has only an
11% stake. Or is this a precursor to a bigger move on MINTs part?
Two entrepreneurs and two kindred spirits?
By all accounts, Mr Heinecke is a true entrepreneur, having started his
business at the age of 17 with THB25,000 (USD1,200 in 1978) that was
borrowed at 60% interest. This is very similar to BreadTalk founder George
Quek, who started his business empire selling candy in a kiosk with a loan
from his father. In investing into BreadTalk, Mr Heinecke probably
recognizes Mr Queks talent and may appreciate having the latter onboard
his sprawling empire if they can find a way to work together.


Typically buys
a 50-80%
stake.

January 27, 2014 11

Breadtalk Group

Figure 28: Minor International expansion milestones


Source: Company

Complementary business portfolios
In theF&Bspace, MINT mainly operates casual dining restaurants in several
countries under brands like Swensens, Sizzler, Burger King and Thai
Express. BreadTalk, on the other hand, has a bigger presence in bakeries
and food atriums. The company pioneered the artisan bakery concept in
this part of the world, and Mr Quek has been nicknamed the Foodcourt
King. We believe the duo have very complementary business portfolios
and this would be an attractive trait to MINT.

Figure 29: Minor International - restaurant business by brand,
2012
Figure 30: Minor International number of restaurant
outlets



Source: Company Source: Company


The Pizza
Company
27%
Swensen's
14%
Sizzler
16%
Dairy
Queen
10%
Burger King
5%
The Coffee
Club
2%
Thai Express
18%
Others
8%
1,043
1,112
1,147
1,257
1,381
0
400
800
1,200
1,600
2008 2009 2010 2011 2012
MINT: Casual restaurants
and fast food

BreadTalk: Bakeries and
foodcourts

January 27, 2014 12

Breadtalk Group

BreadTalks China presence is enticing
Mr Heinecke has been public about his belief in the potential of China. In a
television interview in 2012, he said: In China, there are cities the size of
Bangkok, where the people have not even experienced fast food.
MINT currently has an estimated 45 F&B outlets in China, under various
brands. This obviously pales in comparison to BreadTalk, which entered the
country 10 years ago and now has more than 300 outlets across 48 cities.
Acquiring BreadTalk would immediately accelerate MINTs progress by five
years, which is invaluable in this age of increasing competition.
Figure 31: Minor International - restaurant portfolio

Source: Company




Buying BreadTalk will
immediately increase MINTs
store count manifold in China.


January 27, 2014 13

Breadtalk Group

Valuing BreadTalk

Replacement cost of retail outlets
BreadTalk has built up a sizeable network of retail outlets across the
region. Although it does not own all the outlets, there is still value in the
fit-out, furniture and kitchen equipment. We believe a potential acquirer
that wants to build up such a network of outlets will consider the
replacement cost of doing this from scratch. This is without taking into
account the time-to-market needed. Based on our conservative estimates,
we believe the total replacement value of BreadTalks self-owned outlets
is at least SGD245m (Figure 32).
Figure 32: BreadTalk replacement value of self-owned outlets
Number of outlets Cost per outlet (SGD m) Total cost (SGD m)
Owned Bakery (Singapore) 114 0.25 28.5
Owned Bakery (outside Singapore) 131 0.06 7.9
Restaurants (Singapore) 30 3.00 90.0
Restaurants (outside Singapore) 11 0.70 7.4
Food atrium (Singapore, HK) 20 4.00 80.0
Food atrium (China) 29 0.80 23.0
Food atrium (Malaysia, Taiwan) 8 1.00 8.0
Total 343 244.7
Source: Company, Maybank KE

Brand value
Brand value is an intangible asset, difficult to quantify but a very real
asset no less for consumer companies. It is generally defined as the
additional profit (both present and future discounted value) a company can
generate from the sale of products/services through the use of a brand
name.
In the case of BreadTalk, it owns multi-brands across different
geographies. The company is the creative pioneer of categories such as the
artisan bread in Singapore and has won various brand accolades in its time.
Brand Finance, an international brand valuation company, ranked
BreadTalk Group as one of Singapores Top 100 Brands in 2012 and valued
the brands at USD61m (SGD77m) as of Apr 2012.
Other real estate investments
Based on BreadTalks business model, the company favours operating
several F&B outlets in one location, using its various brands. For example,
it is not uncommon to find a BreadTalk bakery, Toast Box outlet and Din Tai
Fung restaurant all within the same shopping mall. We believe this model
provides bargaining power with mall owners as well as economies of scale
in terms of managing outlets.
Over the past few years, BreadTalk has also invested in some real estate in
Singapore and China. These may be non-core assets, but we believe there
is a strategic benefit to owning a stake in selective malls. It secures retail
locations, serves as a hedge against rising rental costs and enables
BreadTalk to ride the real estate value uplift which it has helped generate
through its F&B outlets. We estimate the total cost of such investments at
SGD84.1m.

SGD77m according to
Brand Finance.
Strategic benefit to
owning real estate.

January 27, 2014 14

Breadtalk Group

Figure 33: BreadTalk real estate investments
Date Investment Stake
Cost
(SGD m) Location
Area
(sqft) Remark
9-Jan-14 TripleOne Somerset 17.5 Singapore 566,000 NLA
15-Apr-13
Phase 2 of Beijing
Tongzhou District 2.9% 14.5
Beijing,
China 4,590,000 GFA
1-Oct-12
Phase 1 of Beijing
Tongzhou District 4.0% 20.1
Beijing,
China 4,327,088 GFA
4-Nov-11 Chijimes 18.0 Singapore 49,794 NLA
18-Nov-09 Katong 112 14.0 Singapore 207,000 NLA

Total

84.1

Source: Company, Maybank KE

Figure 34: BreadTAlk SOTP replacement cost
Replacement cost of stores (SGD m) 244.7
Figure 32
Singapore HQ (SGD m) 67.0
Reported in AR
Real estate investments (SGD m) 84.1
Figure 33
Brand value (SGD m) 77.0
According to Brand Finance
Net debt (SGD m) (70.0)

Total (SGD m) 402.8

Per share (SGD) 1.40


Source: Company, Maybank KE, Brand Finance

EV/EBITDA gives better gauge
We believe EV/EBITDA is a good metric to value BreadTalk, given the
distortion that could arise from the accounting treatment of aggressive
expansions by a retailer, as discussed in the earlier section. This valuation
metric provides a better gauge of the real cash flow generated by the
business in the current state and ignores the accounting sunk-cost bias for
capex. We believe potential acquirers would also be more likely to use
EV/EBITDA as a valuation tool.
BreadTalk currently trades at just 4.5x FY14E EV/EBITDA, which is a
discount to its regional peers despite a comparable net profit CAGR of 26%
(15% EBITDA CAGR) over FY14E-16E. We peg our TP of SGD1.40 to 7X FY14E
EV/EBITDA, representing 50% upside from current levels.








January 27, 2014 15

Breadtalk Group

Figure 35: Peer comparison

Share Target Market PE 3-yr EPS EV/ EBITDA PB ROE Div Yield

Rating price Price cap FY13 FY14 FY15 CAGR FY13 FY13 FY13 FY15 FY14
(lcl curr) (lcl curr) (USD m) (x) (x) (x) (%) (x) (x) (%) (%) (%)
Food Retail ASEAN
BreadTalk NR 0.95 NA 209 20.2 17.6 NA NA NA NA NA NA NA
ABR Holdings NR 0.73 NA 115 NA NA NA NA NA NA NA NA NA
Auric Pacific NR 1.30 NA 128 NA NA NA NA NA NA NA NA NA
Fast Indo NR 2,200.00 NA 361 NA NA NA NA NA NA NA NA NA
Jollibee Foods Buy 167.00 191.00 3,880 35.4 30.8 28.5 18 18.2 7.9 21 22 2.1
President Bakery NR 40.75 NA 558 NA NA NA NA NA NA NA NA NA
Minor Intl Buy 21.70 28.30 2,641 19.9 17.6 16.3 13 14.5 3.8 18 18 1.5
CentelTB Buy 27.50 45.20 1,129 24.1 18.8 16.0 14 15.2 3.5 15 16 1.1
Average

24.9 21.2 20.2 15.0 16.0 5.1 17.6 18.4 1.6
Food Retail North Asia

Ajisen(China) Sell 9.05 5.78 1,271 34.9 31.3 27.0 33 15.1 3.1 9 9 0.9
CAF De CORAL NR 22.90 NA 1,702 21.8 18.9 16.4 14 12.1 3.7 17 18 3.4
Christine NR 0.79 NA 103 NA NA NA NA NA NA NA NA NA
Gourmet Master NR 182.50 NA 852 34.4 22.5 16.5 17 13.5 4.2 12 17 2.1
Xiao Nan Guo NR 1.41 NA 268 24.2 17.3 9.8 8 7.2 1.8 7 10 1.7
Average 26.8 19.6 14.2 12.7 11.0 3.2 12.1 15.0 2.4
Average 26.6 21.8 18.8 16.4 14.0 4.1 14.4 16.0 1.8
Source: Company

Figure 36: Historical P/E band Figure 37: Historical P/BV band



Source: Company Source: Company

Figure 38: Historical EV/EBITDA band

Source: Company

January 27, 2014 16

Breadtalk Group

0
4
8
12
16
20
2003 2005 2007 2009 2011 2013 2015 2017
RMB bn
Artisan Bread Packaged Bread
Industry overview

Bread consumption in China set to rise
China, the worlds second-largest economy, will continue to be a key
market for BreadTalk. Management has set an explicit target to achieve
50% of its group revenue from China (currently 32%) by FY16, with the
bakery business likely making up the bulk of the increase.
We believe there is a strong link between urbanisation and per capita
consumption of bread. This is because bread is a convenient food that
meets the daily dietary demand amid the quickening pace of life. The
average per capita consumption of bread in China is currently 1.3kg a year,
which is low compared with other developed Chinese nations.

Figure 39: China per capita annual consumption of bread set
to pick up on rapid urbanisation
Figure 40: China value of bread market expanding rapidly


Source: Euromonitor, Maybank KE Source: Euromonitor, Maybank KE

Artisan bread likely to remain popular
With rising affluence, the Chinese has more discretionary income to select
products with greater innovation and healthier ingredients. The
proliferation of chained bakeries such as BreadTalk, 85 Caf and Christine
further has introduced a new realm of quality baked products to the
Chinese consumer. According to Euromonitor, demand growth for artisan
bread would be higher than for packaged bread over the next five years,
rising at a CAGR of 10.1%.



1.3
7.2
6.8
8.1
51
100
91
100
0
20
40
60
80
100
0
2
4
6
8
10
China Hong Kong Japan Singapore
%
kg
Per capita consumption of bread - LHS Urbanisation - RHS

January 27, 2014 17

Breadtalk Group

80.8
86.1
91.2
96.2
101.5
107.0
149.8
157.5
164.0
170.3
176.8
183.7
0
50
100
150
200
250
300
2013 2014 2015 2016 2017 2018
SGD m

Artisan Bread Packaged Bread
Singapore is a mature market
In contrast, Singapore is a mature market for the bakery industry even
though we believe there are still growth opportunities in the artisan bread
category. Overall bread consumption in the island country has reached its
saturation point at about 8.1kg per capita annually. Packaged bread
continues to dominate, with big manufacturers such as Sunshine and
Gardenia enjoying a large market share.
Artisan bread is expected to maintain its share of volume. However, this
market is highly fragmented, with small businesses holding sway. Going
forward, we believe there are opportunities for BreadTalk to grow its
market share at the expense of smaller players.

Figure 41: Singapore expect moderate growth in value of bread market

Source: Euromonitor, Company


January 27, 2014 18

Breadtalk Group

Financials bottom-line growth to accelerate

Revenue to be driven by store count expansion
Management has an explicit target to grow store count to 1,000 by 2014,
from an estimated 800 currently. We believe this is achievable and is likely
to entail additions in all segments, in particular bakery franchises which
are less capex intensive. A second more ambitious target is to achieve
SGD1b in revenue by 2016, though we expect this may be more difficult to
realise. We forecast revenue to grow at 17% CAGR to SGD861m over FY13E-
16E.
Figure 42: Revenue growth Figure 43: Total store count growth



Source: Company, Maybank KE Source: Company, Maybank KE

Store count growth to come from China
In our view, a big part of BreadTalks growth in terms of both revenue
and store expansion is likely to occur outside of Singapore, where the
company already has a dominant presence. In particular, China will remain
a pillar of growth. Management aims to achieve 50% of its revenue from
this enormous market by 2016, up from 32% in FY12.
as well as diversification into non-bakery businesses
Since 2008, BreadTalk has devoted a considerable amount of efforts
towards expanding outside its original bakery business by creating new
brands and opening outlets. We expect part of the store count growth to
come from further diversification into non-bakery businesses, namely,
restaurants and food courts.
Figure 44: Store count growth breakdown
2011 2012 2013E 2014E 2015E 2016E
Owned bakeries 181 225 245 286 335 391
Franchise 290 384 480 600 720 864
Restaurants 26 30 41 50 62 78
Food atriums 37 47 59 70 81 93
Source: Company, Maybank KE


366
447 533
630
731
861
20.8
22.3
19.1
18.2
16.1
17.7
0
5
10
15
20
25
30
0
100
200
300
400
500
600
700
800
900
1000
2011 2012 2013E 2014E 2015E 2016E
% SGD m
Revenue - LHS YoY Growth - RHS
152
138
181
192
228
534
686
824
1,006
1,197
1,426
0
200
400
600
800
1,000
1,200
1,400
1,600
2011 2012 2013E 2014E 2015E 2016E
Management Target 1#:
1,000 outlets by FY14

Management Target 2#:
SGD1b revenue by FY16

Management Target 3#:
2,000 outlets by FY20
Management Target 4#: 50% of
Group revenue from China by FY16

January 27, 2014 19

Breadtalk Group

Expect margins to improve slightly
We expect overall margins to improve as the contributions from food
courts and restaurants increase. These businesses have enjoyed higher
margins in the past and are rebounding off the lows, due in part to asset
write-offs in FY13. Franchise bakeries are expanding fast and the
franchisee fees will be another contributor to higher margins.
While overall sales per store may post a decline, we would say this is the
result of expanding outside Singapore and not necessarily reflective of
lower margins. Moreover, costs are correspondingly lower outside
Singapore. These improvements should help mitigate the impact of
continued store expansion costs.
partly driven by economies of scale
We also expect some economies of scale to be gained following the
establishment of BreadTalks new headquarters in Singapore. A centralised
manufacturing facility and staff training centre should help lower costs.
Continued expansion of store count would also enhance bargaining power
against landlords.
Potential for margin upside surprise
We see potential for margins to surprise on the upside from 2015E
onwards. This may happen if BreadTalk achieves its target of 1,000 stores
in 2014 and subsequently moderates its store count expansion from the
previous breakneck pace. Such a trajectory would result in lower
depreciation costs and higher margins.
Figure 45: Net profit growth expect 26% CAGR over FY14E-

Figure 46: Net profit margin poised to increase



Source: Company, Maybank KE Source: Company, Maybank KE

Net profit to grow at26% CAGR over FY14E-FY16E
With sales growing and margins on the mend, we forecast strong bottom-
line growth of 26% CAGR over FY14-FY16E. EBITDA, too, would likely
continue to trend upwards to SGD91m by FY16E.



11.6
12.0
12.5
15.6
19.1
25.1
2.9
3.5 3.9
25.3
22.5
31.1
0
10
20
30
40
0
4
8
12
16
20
24
28
2011 2012 2013E 2014E 2015E 2016E
% SGD m
3.2
2.7
2.3
2.5
2.6
2.9
2.0
2.2
2.4
2.6
2.8
3.0
3.2
3.4
2011 2012 2013E 2014E 2015E 2016E
%
Lower sales per store is
mainly due to expansion
outside Singapore, where
sales value is lower
Margin may surprise if
store count expansion
moderates more than
expected

January 27, 2014 20

Breadtalk Group

Healthy cash generation to fund capex
BreadTalk has gone from net cash in 2011 to net debt the following year,
with net gearing estimated at 76% as at end-FY13. This situation is largely
the result of its ongoing aggressive store expansion as well as the
substantial investments it made in the past two years: It spent SGD67m on
its new headquarters in Singapore. But this is no cause for alarm as its new
long-term debt is secured against the building.
Operating cash flow remains healthy and should continue to grow from
strength to strength. This would allow the company to continue funding its
store expansion plans. Net of investments, we still expect free cash flow to
stay positive and help pay down debt and dividends. We forecast net
gearing to slowly decline to 27% by FY15E.

Figure 47: Operating cash flow vs capex (SGD m)

Source: Company, Maybank KE

48.9
53.7
70.1
71.3
79.2
90.3
36.9
92.6
107.2
49.7
46.8
48.7
0
20
40
60
80
100
120
2011 2012 2013F 2014F 2015F 2016F
OCF CAPEX
The company has mainly
been self-funding its own
aggressive expansion from
2008

January 27, 2014 21

Breadtalk Group

SWOT analysis





























Food retail is a growing industry in
China

Franchisee model allows it to grow
globally

Artisan bread concept catching on
in ASEAN
Strong brand equity

Multiple formats allow bargaining
power with landlords

Invaluable experience in F&B retail
Dependent on creative drive of
key personnel, George Quek

Constant investments required
to expand its presence

Subject to rental costs
escalations
F&B is a highly competitive
industry, subject to new
entrants

New retail concepts may
change customer preferences

Food safety issues may harm
reputation

January 27, 2014 22

Breadtalk Group

Key risks

Keen competition in F&B space
The F&B industry is intensely competitive and barriers to entry are low for
new entrants. Customer preferences can shift quickly and sometimes be
seasonal in nature. Failure to innovate and understand demand
preferences would result in brand loyalty diminishing quickly. In turn,
revenue and profit would decline.
Rising costs could curtail margins
Food retailers are constantly grappling with rising costs, including rental,
labour and price of raw materials. Given the competitive nature of the
industry, companies may not be able to immediately pass on price
increases to end consumers. For example, in Singapore, profits in FY13
were substantially impacted by the rising cost of rental and labour.
Cost is also an issue when renovations and fit-outs are required, given that
depreciation forms a big part of BreadTalks cost. An inability to manage
costs well will result in profit falling short of expectations.
Food safety scandals
Like other food companies, BreadTalk faces the risk of food safety
scandals. Such scandals can originate from a variety of sources and a small
oversight may have significant repercussions on the groups brand equity
and reputation. For example, in Dec 2013, there were reports that
elevated levels of aluminium were found in the raisin muffins in Hong Kong
due to a higher stipulated amount of baking powder used.
In serious cases, the company may have to pay fines and/or compensation
to victims, which would adversely affect its bottom line.
Overly aggressive expansion could stretch balance sheet
BreadTalks current net gearing is estimated to be 76%. We expect this to
trend downwards as the company continues to generate healthy operating
cash flow. But if it should turn more aggressive than expected in new store
opening, this could stretch its balance sheet. It would also mean higher
depreciation charges dealing a blow to bottom-line profit.


January 27, 2014 23

Breadtalk Group

Key management

George Quek Meng Tong, Chairman
Mr Quek is the founder of BreadTalk Group and continues to drive the
groups strategic direction and development. He started his food and
beverage business in Taiwan in 1982 and returned to Singapore in 1992. In
2000, he started the bakery business and listed it on the Singapore
Exchange in 2003. Among other awards, he was named the Ernst & Young
Entrepreneur of the Year 2006.
Katherine Lee Lih Leng, Deputy Chairman
Ms Lee oversees the groups research and development, as well as pioneers
new ideas and concepts. She also formulates product training and
technical skill upgrade programmes to ensure proper transfer of knowledge
and skills to the franchisees. In addition, she spearheads product
costing.Ms Lee has more than 15 years of experience in the industry.
Oh Eng Lock, Group Chief Executive Officer
Mr Oh was appointed Group CEO on 1 Jan 2011. He oversees the groups
global operations, focusing on strategic planning and business
development. He joined BreadTalk in 2010 as group managing director.
Prior to this, he was regional managing director with Merrill Lynch in Hong
Kong, overseeing its North Asia business.
Lawrence Yeo, Group Chief Financial Officer
Mr Yeo was appointed Group CEO on 10 Oct 2011. He oversees the groups
global financial matters including corporate finance, treasury, capital
management, investments, risk management and investor relations. He has
extensive experience and capacities including former Group CEO of two
other SGX-listed companies. Mr Yeo holds an MBA from the University of
Strathclyde and a Bachelor of Accountancy degree from the National
University of Singapore.



January 27, 2014 24

Breadtalk Group






FYE 31 Dec (SGD m) FY12A FY13A FY14E FY15E FY16E
Key Metrics
P/E (reported) (x) 21.9 21.1 16.8 13.7 13.7
Core P/E (x) 21.9 21.1 16.8 13.7 13.7
Core FD P/E (x) 22.0 21.2 16.9 13.8 13.8
P/BV (x) 3.2 2.9 2.6 2.3 nm
P/NTA (x) 3.2 2.8 2.5 2.2 2.2
Net dividend yield (%) 1.4 1.5 1.8 2.2 2.2
FCF yield (%) nm nm 8.2 12.3 0.0
EV/EBITDA (x) 4.7 5.5 4.7 3.9 3.0
EV/EBIT (x) 12.4 16.2 13.0 10.1 7.3
Income Statement
Revenue 447.3 532.7 629.8 731.4 860.6
Gross profit 241.4 285.0 336.9 391.3 460.4
EBITDA 49.6 60.6 70.4 79.6 91.0
Depreciation (30.4) (39.5) (44.4) (48.4) (52.4)
Amortisation (0.6) (0.6) (0.7) (0.7) (0.8)
EBIT 18.6 20.5 25.3 30.5 37.8
Net interest income /(exp) 0.3 (0.9) (1.4) (1.4) (0.3)
Associates & JV 0.5 1.3 1.5 1.8 2.0
Exceptionals 0.0 0.0 0.0 0.0 0.0
Other pretax income 0.0 0.0 0.0 0.0 0.0
Pretax profit 19.4 20.8 25.4 30.9 39.6
Income tax (5.8) (6.7) (8.0) (9.7) (12.5)
Minorities (1.6) (1.7) (1.8) (2.0) (2.0)
Reported net profit 12.0 12.5 15.6 19.1 25.1
Core net profit 12.0 12.5 15.6 19.1 25.1
Balance Sheet
Cash & Short Term Investments 64.2 68.0 72.5 69.2 67.2
Property, Plant & Equip (net) 157.4 225.1 230.4 228.8 225.0
Intangible assets 8.5 8.4 8.7 9.0 9.2
Investment in Associates & JVs 4.0 10.3 11.8 13.6 15.6
Other assets 122.2 121.8 132.9 144.3 159.3
Total assets 356.4 433.6 456.3 464.8 476.3
ST interest bearing debt 45.8 27.6 27.6 10.0 10.0
LT interest bearing debt 50.6 110.0 100.0 90.0 55.0
Other liabilities 169.0 194.7 214.6 235.3 262.0
Total Liabilities 265.4 332.3 342.2 335.3 327.0
Shareholders Equity 82.6 91.2 102.1 115.6 133.4
Minority Interest 8.5 10.2 12.0 14.0 16.0
Total shareholders equity 91.0 101.4 114.1 129.5 149.3
Cash Flow
Pretax profit 19.4 20.8 25.4 30.9 39.6
Depreciation & amortisation 31.0 40.2 45.1 49.2 53.2
Adj net interest (income)/exp 0.0 0.0 0.0 0.0 0.0
Change in working capital 7.4 16.2 8.9 9.3 11.7
Cash taxes paid (5.4) (6.7) (8.0) (9.7) (12.5)
Other operating cash flow 1.3 (0.3) (0.1) (0.4) (1.7)
Cash flow from operations 53.7 70.1 71.3 79.2 90.3
Capex (92.6) (107.2) (49.7) (46.8) (48.7)
Free cash flow (38.9) (37.1) 21.6 32.4 41.6
Dividends paid (5.6) (3.8) (4.7) (5.7) (7.3)
Equity raised / (purchased) (0.1) 0.0 0.0 0.0 0.0
Change in Debt 57.7 41.2 (10.0) (27.6) (35.0)
OTH investing/financing cash flow (35.9) 3.5 (2.4) (2.4) (1.3)
Effect of exch rate changes 0.0 0.0 0.0 0.0 0.0
Net cash flow (22.8) 3.8 4.5 (3.3) (2.0)

January 27, 2014 25

Breadtalk Group







Leverage & Expense Analysis
Asset/Liability (x) 1.3 1.3 1.3 1.4 1.5
Net debt/equity (%) 39.0 76.3 53.9 26.7 net cash
Net interest cover (x) na 22.4 18.4 21.4 nm
Debt/EBITDA (x) 1.9 2.3 1.8 1.3 0.7
Capex/revenue (%) 20.7 20.1 7.9 6.4 5.7
Net debt/ (net cash) 32.2 69.6 55.1 30.8 (2.2)
Liquidity & Efficiency
Cash conversion cycle na nm nm nm nm
Days receivable outstanding 36.4 32.2 32.3 32.6 32.4
Days inventory outstanding na nm nm nm nm
Days payables outstanding na nm nm nm nm
Dividend cover (x) 3.3 3.3 3.3 3.4 3.4
Current ratio (x) 0.6 0.7 0.7 0.7 0.6
DuPont analysis
Net profit margin (%) 2.7 2.3 2.5 2.6 2.9
Revenue/Assets (x) 1.3 1.2 1.4 1.6 1.8
Assets/Equity (x) 4.3 4.8 4.5 4.0 3.6
ROAE (%) 13.6 13.0 14.5 15.7 18.0
ROAA (%) 3.9 3.2 3.5 4.2 5.3
FYE 31 Dec (SGD m) FY12A FY13A FY14E FY15E FY16E
Key Ratios
Growth ratios (%)
Revenue growth 22.3 19.1 18.2 16.1 17.7
EBITDA growth 20.0 22.2 16.1 13.1 14.3
EBIT growth 9.6 10.1 23.5 20.5 24.0
Pretax growth 13.1 7.5 22.1 21.4 28.2
Reported net profit growth 3.5 3.9 25.3 22.5 31.1
Core net profit growth 3.5 3.9 25.3 22.5 31.1
Profitability ratios (%)
EBITDA margin 11.1 11.4 11.2 10.9 10.6
EBIT margin 4.2 3.8 4.0 4.2 4.4
Pretax profit margin 4.3 3.9 4.0 4.2 4.6
Payout ratio 30.4 30.6 30.1 29.8 29.8

January 27, 2014 26

Breadtalk Group

Research Offices


REGIONAL
WONG Chew Hann, CA
Regional Head of Institutional Research
(603) 2297 8686 wchewh@maybank-ib.com
ONG Seng Yeow
Regional Head of Retail Research
(65) 6432 1453
ongsengyeow@maybank-ke.com.sg
Alexander GARTHOFF
Institutional Product Manager
(852) 2268 0638
alexgarthoff@kimeng.com.hk
ECONOMICS
Suhaimi ILIAS
Chief Economist
Singapore | Malaysia
(603) 2297 8682
suhaimi_ilias@maybank-ib.com
Luz LORENZO
Philippines
(63) 2 849 8836
luz_lorenzo@maybank-atrke.com
Tim LEELAHAPHAN
Thailand
(662) 658 1420 tim.l@maybank-ke.co.th
JUNIMAN
Chief Economist, BII
Indonesia
(62) 21 29228888 ext 29682
Juniman@bankbii.com
Josua PARDEDE
Economist / Industry Analyst, BII
Indonesia
(62) 21 29228888 ext 29695
JPardede@bankbii.com
MALAYSIA
WONG Chew Hann, CA Head of Research
(603) 2297 8686 wchewh@maybank-ib.com
Strategy Construction & Infrastructure
Desmond CHNG, ACA
(603) 2297 8680
desmond.chng@maybank-ib.com
Banking & Finance
LIAW Thong Jung
(603) 2297 8688 tjliaw@maybank-ib.com
Oil & Gas - Regional Shipping
ONG Chee Ting, CA
(603) 2297 8678 ct.ong@maybank-ib.com
Plantations - Regional
Mohshin AZIZ
(603) 2297 8692 mohshin.aziz@maybank-ib.com
Aviation - Regional Petrochem
YIN Shao Yang, CPA
(603) 2297 8916 samuel.y@maybank-ib.com
Gaming Regional Media
TAN Chi Wei, CFA
(603) 2297 8690 chiwei.t@maybank-ib.com
Power Telcos
WONG Wei Sum, CFA
(603) 2297 8679 weisum@maybank-ib.com
Property & REITs
LEE Yen Ling
(603) 2297 8691 lee.yl@maybank-ib.com
Building Materials Glove Producers
CHAI Li Shin
(603) 2297 8684 lishin.c@maybank-ib.com
Plantation Construction & Infrastructure
KANG Chun Ee
(603) 2297 8675 chunee@maybank-ib.com
Consumer
Ivan YAP
(603) 2297 8612 ivan.yap@maybank-ib.com
Automotive
LEE Cheng HooiRegional Chartist
(603) 2297 8694
chenghooi.lee@maybank-ib.com
Tee Sze ChiahHead of Retail Research
(603) 2297 6858 szechiah.t@maybank-ib.com
HONG KONG / CHINA
Howard WONGHead of Research
(852) 2268 0648
howardwong@kimeng.com.hk
Oil & Gas - Regional
Alexander LATZER
(852) 2268 0647
alexanderlatzer@kimeng.com.hk
Metals & Mining - Regional
Alison FOK
(852) 2268 0630 alisonfok@kimeng.com.hk
Consumer
Jacqueline KO, CFA
(852) 2268 0633 jacquelineko@kimeng.com.hk
Consumer
Karen KWAN
(852) 2268 0640 karenkwan@kimeng.com.hk
Property & REITs
Osbert TANG, CFA
(86) 21 5096 8370
osberttang@kimeng.com.hk
Transport & Industrials
Philip TSE, CFA FRM
(852) 2268 0643 philiptse@kimeng.com.hk
Property & REITs
Ricky WK NG, CFA
(852) 2268 0689 rickyng@kimeng.com.hk
Utilities & Renewable Energy
Simon QIAN, CFA
(852) 2268 0634
simonqian@kimeng.com.hk
Telecom & Internet
Steven ST CHAN
(852) 2268 0645 stevenchan@kimeng.com.hk
Banking & Financials
Warren LAU
(852) 2268 0644
warrenlau@kimeng.com.hk
Technology Regional
William YANG
(852) 2268 0675
williamyang@kimeng.com.hk
Technology Regional
INDIA
Jigar SHAH Head of Research
(91) 22 6623 2601
jigar@maybank-ke.co.in
Oil & Gas Automobile Cement
Anubhav GUPTA
(91) 22 6623 2605
anubhav@maybank-ke.co.in
Metal & Mining Capital Goods Property
Urmil SHAH
(91) 22 6623 2606 urmil@maybank-ke.co.in
Technology Media
SINGAPORE
NG Wee SiangHead of Research
(65) 6432 1467 ngweesiang@maybank-ke.com.sg
Banking & Finance
Gregory YAP
(65) 6432 1450 gyap@maybank-ke.com.sg
SMID Caps Regional
Technology & Manufacturing Telcos
Wilson LIEW
(65) 6432 1454 wilsonliew@maybank-ke.com.sg
Property Developers
ONG Kian Lin
(65) 6432 1470 ongkianlin@maybank-ke.com.sg
S-REITs
James KOH
(65) 6432 1431 jameskoh@maybank-ke.com.sg
Consumer - Regional
YEAK Chee Keong, CFA
(65) 6432 1460
yeakcheekeong@maybank-ke.com.sg
Offshore & Marine
Derrick HENG
(65) 6432 1446 derrickheng@maybank-ke.com.sg
Transport (Land, Shipping & Aviation)
WEI Bin
(65) 6432 1455 weibin@maybank-ke.com.sg
Commodity Logistics S-chips
John CHEONG
(65) 6432 1461 johncheong@maybank-ke.com.sg
Small &Mid Caps Healthcare
INDONESIA
WiliantoIEHead of Research
(62) 21 2557 1125
wilianto.ie@maybank-ke.co.id
Strategy
RahmiMARINA
(62) 21 2557 1128
rahmi.marina@maybank-ke.co.id
Banking & Finance
AurelliaSETIABUDI
(62) 21 2953 0785
aurellia.setiabudi@maybank-ke.co.id
Property
Anthony YUNUS
(62) 21 2557 1136
anthony.yunus@maybank-ke.co.id
Consumer Poultry
IsnaputraISKANDAR
(62) 21 2557 1129
isnaputra.iskandar@maybank-ke.co.id
Metals & Mining Cement
PanduANUGRAH
(62) 21 2557 1137
pandu.anugrah@maybank-ke.co.id
Infrastructure Construction Transport
JanniASMAN
(62) 21 2953 0784
janni.asman@maybank-ke.co.id
Cigarette Healthcare Retail
Lucky ARIESANDI,CFA
(62) 21 2557 1127
lucky.ariesandi@maybank-ke.co.id
Telcos Media
PHILIPPINES
Luz LORENZOHead of Research
(63) 2 849 8836
luz_lorenzo@maybank-atrke.com
Strategy
Laura DY-LIACCO
(63) 2 849 8840
laura_dyliacco@maybank-atrke.com
Utilities Conglomerates Telcos
Lovell SARREAL
(63) 2 849 8841
lovell_sarreal@maybank-atrke.com
Consumer Media Cement
Rommel RODRIGO
(63) 2 849 8839
rommel_rodrigo@maybank-atrke.com
Conglomerates Property Gaming
Ports/ Logistics
Katherine TAN
(63) 2 849 8843
kat_tan@maybank-atrke.com
Banks Construction
Ramon ADVIENTO
(63) 2 849 8845
ramon_adviento@maybank-atrke.com
Mining
THAILAND
Maria LAPIZ Head of Institutional Research
Dir (66) 2257 0250 | (66) 2658 6300 ext 1399
Maria.L@maybank-ke.co.th
Consumer / Materials
JesadaTECHAHUSDIN, CFA
(66) 2658 6300 ext 1394
Jesada.T@maybank-ke.co.th
Financial Services
KittisornPRUITIPAT, CFA, FRM
(66) 2658 6300 ext 1395
Kittisorn.P@maybank-ke.co.th
Real Estate
SittichaiDUANGRATTANACHAYA
(66) 2658 6300 ext 1393
Sittichai.D@maybank-ke.co.th
Services Sector
SukitUDOMSIRIKUL Head of Retail Research
(66) 2658 6300 ext 5090
Sukit.u@maybank-ke.co.th
MayureeCHOWVIKRAN
(66) 2658 6300 ext 1440
mayuree.c@maybank-ke.co.th
Strategy
PadonVANNARAT
(66) 2658 6300 ext 1450
Padon.v@maybank-ke.co.th
Strategy
Surachai PRAMUALCHAROENKIT
(66) 2658 6300 ext 1470
Surachai.p@maybank-ke.co.th
Auto Conmat Contractor Steel
SuttatipPEERASUB
(66) 2658 6300 ext 1430
suttatip.p@maybank-ke.co.th
Media Commerce
SutthichaiKUMWORACHAI
(66) 2658 6300 ext 1400
sutthichai.k@maybank-ke.co.th
Energy Petrochem
TermpornTANTIVIVAT
(66) 2658 6300 ext 1520
termporn.t@maybank-ke.co.th
Property
WoraphonWIROONSRI
(66) 2658 6300 ext 1560
woraphon.w@maybank-ke.co.th
Banking & Finance
JaroonpanWATTANAWONG
(66) 2658 6300 ext 1404
jaroonpan.w@maybank-ke.co.th
Transportation Small cap
Chatchai JINDARAT
(66) 2658 6300 ext 1401
chatchai.j@maybank-ke.co.th
Electronics

VIETNAM
LE Hong Lien, ACCA
Head of Institutional Research
(84) 844 55 58 88 x 8181
lien.le@maybank-kimeng.com.vn
Strategy Consumer Diversified Utilities
THAI QuangTrung, CFA, Deputy Manager,
Institutional Research
(84) 844 55 58 88 x 8180 trung.thai@maybank-
kimeng.com.vn
Real Estate Construction Materials
TRUONG Thanh Hang
(84) 844 55 58 88 x 8085 hang.truong@maybank-
kimeng.com.vn
Consumer
Le Nguyen NhatChuyen
(84) 844 55 58 88 x 8082 chuyen.le@maybank-
kimeng.com.vn
Oil & Gas

NGUYEN ThiNganTuyen, Head of Retail Research
(84) 8 44 555 888 x 8081
tuyen.nguyen@maybank-kimeng.com.vn
Food & Beverage Oil&Gas Banking
NGUYEN TrungHoa, Dy Head of Retail Research
(84) 8 44 555 888 x 8088
hoa.nguyen@maybank-kimeng.com.vn
Macro Steel Real estate
TRINH Thi Ngoc Diep
(84) 4 44 555 888 x 8208
diep.trinh@maybank-kimeng.com.vn
Technology Utilities Construction
TRUONG QuangBinh
(84) 4 44 555 888 x 8087
binh.truong@maybank-kimeng.com.vn
Rubber plantation Tyres and Tubes Oil&Gas
PHAM NhatBich
(84) 8 44 555 888 x 8083
bich.pham@maybank-kimeng.com.vn
Consumer Manufacturing Fishery
NGUYEN Thi Sony TraMi
(84) 8 44 555 888 x 8084
mi.nguyen@maybank-kimeng.com.vn
Port operation Pharmaceutical
Food & Beverage


January 27, 2014 27

Breadtalk Group



APPENDIX I: TERMS FOR PROVISION OF REPORT, DISCLAIMERS AND DISCLOSURES

DISCLAIMERS
This research report is prepared for general circulation and for information purposes only and under no circumstances should it be considered or intended as
an offer to sell or a solicitation of an offer to buy the securities referred to herein. Investors should note that values of such securities, if any, may fluctuate
and that each securitys price or value may rise or fall. Opinions or recommendations contained herein are in form of technical ratings and fundamental
ratings. Technical ratings may differ from fundamental ratings as technical valuations apply different methodologies and are purely based on price and
volume-related information extracted from the relevant jurisdictions stock exchange in the equity analysis. Accordingly, investors returns may be less than
the original sum invested. Past performance is not necessarily a guide to future performance. This report is not intended to provide personal investment
advice and does not take into account the specific investment objectives, the financial situation and the particular needs of persons who may receive or read
this report. Investors should therefore seek financial, legal and other advice regarding the appropriateness of investing in any securities or the investment
strategies discussed or recommended in this report.
The information contained herein has been obtained from sources believed to be reliable but such sources have not been independently verified by Maybank
Investment Bank Berhad, its subsidiary and affiliates (collectively, MKE) and consequently no representation is made as to the accuracy or completeness of
this report by MKE and it should not be relied upon as such. Accordingly, MKE and its officers, directors, associates, connected parties and/or employees
(collectively, Representatives) shall not be liable for any direct, indirect or consequential losses or damages that may arise from the use or reliance of this
report. Any information, opinions or recommendations contained herein are subject to change at any time, without prior notice.
This report may contain forward looking statements which are often but not always identified by the use of words such as anticipate, believe, estimate,
intend, plan, expect, forecast, predict and project and statements that an event or result may, will, can, should, could or might
occur or be achieved and other similar expressions. Such forward looking statements are based on assumptions made and information currently available to us
and are subject to certain risks and uncertainties that could cause the actual results to differ materially from those expressed in any forward looking
statements. Readers are cautioned not to place undue relevance on these forward-looking statements. MKE expressly disclaims any obligation to update or
revise any such forward looking statements to reflect new information, events or circumstances after the date of this publication or to reflect the occurrence
of unanticipated events.
MKE and its officers, directors and employees, including persons involved in the preparation or issuance of this report, may, to the extent permitted by law,
from time to time participate or invest in financing transactions with the issuer(s) of the securities mentioned in this report, perform services for or solicit
business from such issuers, and/or have a position or holding, or other material interest, or effect transactions, in such securities or options thereon, or other
investments related thereto. In addition, it may make markets in the securities mentioned in the material presented in this report. MKE may, to the extent
permitted by law, act upon or use the information presented herein, or the research or analysis on which they are based, before the material is published.
One or more directors, officers and/or employees of MKE may be a director of the issuers of the securities mentioned in this report.
This report is prepared for the use of MKEs clients and may not be reproduced, altered in any way, transmitted to, copied or distributed to any other party in
whole or in part in any form or manner without the prior express written consent of MKE and MKE and its Representatives accepts no liability whatsoever for
the actions of third parties in this respect.
This report is not directed to or intended for distribution to or use by any person or entity who is a citizen or resident of or located in any locality, state,
country or other jurisdiction where such distribution, publication, availability or use would be contrary to law or regulation. This report is for distribution only
under such circumstances as may be permitted by applicable law. The securities described herein may not be eligible for sale in all jurisdictions or to certain
categories of investors. Without prejudice to the foregoing, the reader is to note that additional disclaimers, warnings or qualifications may apply based on
geographical location of the person or entity receiving this report.
Malaysia
Opinions or recommendations contained herein are in the form of technical ratings and fundamental ratings. Technical ratings may differ from fundamental
ratings as technical valuations apply different methodologies and are purely based on price and volume-related information extracted from Bursa Malaysia
Securities Berhad in the equity analysis.
Singapore
This report has been produced as of the date hereof and the information herein may be subject to change. Maybank Kim Eng Research Pte. Ltd. (Maybank
KERPL) in Singapore has no obligation to update such information for any recipient. For distribution in Singapore, recipients of this report are to contact
Maybank KERPL in Singapore in respect of any matters arising from, or in connection with, this report. If the recipient of this report is not an accredited
investor, expert investor or institutional investor (as defined under Section 4A of the Singapore Securities and Futures Act), Maybank KERPL shall be legally
liable for the contents of this report, with such liability being limited to the extent (if any) as permitted by law.
Thailand
The disclosure of the survey result of the Thai Institute of Directors Association (IOD) regarding corporate governance is made pursuant to the policy of the
Office of the Securities and Exchange Commission. The survey of the IOD is based on the information of a company listed on the Stock Exchange of Thailand
and the market for Alternative Investment disclosed to the public and able to be accessed by a general public investor. The result, therefore, is from the
perspective of a third party. It is not an evaluation of operation and is not based on inside information. The survey result is as of the date appearing in the
Corporate Governance Report of Thai Listed Companies. As a result, the survey may be changed after that date. Maybank Kim Eng Securities (Thailand) Public
Company Limited (MBKET) does not confirm nor certify the accuracy of such survey result.
Except as specifically permitted, no part of this presentation may be reproduced or distributed in any manner without the prior written permission of MBKET.
MBKET accepts no liability whatsoever for the actions of third parties in this respect.
US
This research report prepared by MKE is distributed in the United States (US) to Major US Institutional Investors (as defined in Rule 15a-6 under the
Securities Exchange Act of 1934, as amended) only by Maybank Kim Eng Securities USA Inc (Maybank KESUSA), a broker-dealer registered in the US
(registered under Section 15 of the Securities Exchange Act of 1934, as amended). All responsibility for the distribution of this report by Maybank KESUSA in
the US shall be borne by Maybank KESUSA. All resulting transactions by a US person or entity should be effected through a registered broker-dealer in the US.
This report is not directed at you if MKE is prohibited or restricted by any legislation or regulation in any jurisdiction from making it available to you. You
should satisfy yourself before reading it that Maybank KESUSA is permitted to provide research material concerning investments to you under relevant
legislation and regulations.
UK
This document is being distributed by Maybank Kim Eng Securities (London) Ltd (Maybank KESL) which is authorized and regulated, by the Financial Services
Authority and is for Informational Purposes only. This document is not intended for distribution to anyone defined as a Retail Client under the Financial
Services and Markets Act 2000 within the UK. Any inclusion of a third party link is for the recipients convenience only, and that the firm does not take any
responsibility for its comments or accuracy, and that access to such links is at the individuals own risk. Nothing in this report should be considered as
constituting legal, accounting or tax advice, and that for accurate guidance recipients should consult with their own independent tax advisers.

January 27, 2014 28

Breadtalk Group


Disclosure of Interest
Malaysia: MKE and its Representatives may from time to time have positions or be materially interested in the securities referred to herein and may further
act as market maker or may have assumed an underwriting commitment or deal with such securities and may also perform or seek to perform investment
banking services, advisory and other services for or relating to those companies.

Singapore: As of 27 January 2014, Maybank KERPL and the covering analyst do not have any interest in any companies recommended in this research report.
Thailand: MBKET may have a business relationship with or may possibly be an issuer of derivative warrants on the securities /companies mentioned in the
research report. Therefore, Investors should exercise their own judgment before making any investment decisions. MBKET, its associates, directors, connected
parties and/or employees may from time to time have interests and/or underwriting commitments in the securities mentioned in this report.

Hong Kong: KESHK may have financial interests in relation to an issuer or a new listing applicant referred to as defined by the requirements under Paragraph
16.5(a) of the Hong Kong Code of Conduct for Persons Licensed by or Registered with the Securities and Futures Commission.

As of 27 January 2014, KESHK and the authoring analyst do not have any interest in any companies recommended in this research report.

MKE may have, within the last three years, served as manager or co-manager of a public offering of securities for, or currently may make a primary market in
issues of, any or all of the entities mentioned in this report or may be providing, or have provided within the previous 12 months, significant advice or
investment services in relation to the investment concerned or a related investment and may receive compensation for the services provided from the
companies covered in this report.

OTHERS
Analyst Certification of Independence
The views expressed in this research report accurately reflect the analysts personal views about any and all of the subject securities or issuers; and no part of
the research analysts compensation was, is or will be, directly or indirectly, related to the specific recommendations or views expressed in the report.

Reminder
Structured securities are complex instruments, typically involve a high degree of risk and are intended for sale only to sophisticated investors who are capable
of understanding and assuming the risks involved. The market value of any structured security may be affected by changes in economic, financial and political
factors (including, but not limited to, spot and forward interest and exchange rates), time to maturity, market conditions and volatility and the credit quality
of any issuer or reference issuer. Any investor interested in purchasing a structured product should conduct its own analysis of the product and consult with its
own professional advisers as to the risks involved in making such a purchase.

No part of this material may be copied, photocopied or duplicated in any form by any means or redistributed without the prior consent of MKE.


Ong Seng Yeow | Executive Director, Maybank Kim Eng Research


Definition of Ratings
Maybank Kim Eng Research uses the following rating system
BUY Return is expected to be above 10% in the next 12 months (excluding dividends)
HOLD Return is expected to be between - 10% to +10% in the next 12 months (excluding dividends)
SELL Return is expected to be below -10% in the next 12 months (excluding dividends)
Applicability of Ratings
The respective analyst maintains a coverage universe of stocks, the list of which may be adjusted according to needs. Investment ratings are only
applicable to the stocks which form part of the coverage universe. Reports on companies which are not part of the coverage do not carry investment
ratings as we do not actively follow developments in these companies.


DISCLOSURES
Legal Entities Disclosures
Malaysia: This report is issued and distributed in Malaysia by Maybank Investment Bank Berhad (15938-H) which is a Participating Organization of Bursa
Malaysia Berhad and a holder of Capital Markets and Services License issued by the Securities Commission in Malaysia. Singapore: This material is issued and
distributed in Singapore by Maybank KERPL (Co. Reg No 197201256N) which is regulated by the Monetary Authority of Singapore. Indonesia: PT Kim Eng
Securities (PTKES) (Reg. No. KEP-251/PM/1992) is a member of the Indonesia Stock Exchange and is regulated by the BAPEPAM LK. Thailand: MBKET (Reg.
No.0107545000314) is a member of the Stock Exchange of Thailand and is regulated by the Ministry of Finance and the Securities and Exchange Commission.
Philippines:Maybank ATRKES (Reg. No.01-2004-00019) is a member of the Philippines Stock Exchange and is regulated by the Securities and Exchange
Commission. Vietnam: Maybank Kim Eng Securities JSC (License Number: 71/UBCK-GP) is licensed under the State Securities Commission of Vietnam.Hong
Kong: KESHK (Central Entity No AAD284) is regulated by the Securities and Futures Commission. India: Kim Eng Securities India Private Limited (KESI) is a
participant of the National Stock Exchange of India Limited (Reg No: INF/INB 231452435) and the Bombay Stock Exchange (Reg. No. INF/INB 011452431) and is
regulated by Securities and Exchange Board of India. KESI is also registered with SEBI as Category 1 Merchant Banker (Reg. No. INM 000011708) US: Maybank
KESUSA is a member of/ and is authorized and regulated by the FINRA Broker ID 27861. UK: Maybank KESL (Reg No 2377538) is authorized and regulated by
the Financial Services Authority.

January 27, 2014 29

Breadtalk Group





Malaysia
Maybank Investment Bank Berhad
(A Participating Organisation of
Bursa Malaysia Securities Berhad)
33rd Floor, MenaraMaybank,
100 JalanTun Perak,
50050 Kuala Lumpur
Tel: (603) 2059 1888;
Fax: (603) 2078 4194

Singapore
Maybank Kim Eng Securities Pte Ltd
Maybank Kim Eng Research Pte Ltd
9 Temasek Boulevard
#39-00 Suntec Tower 2
Singapore 038989

Tel: (65) 6336 9090
Fax: (65) 6339 6003


London
Maybank Kim Eng Securities
(London) Ltd
6/F, 20 St. Dunstans Hill
London EC3R 8HY, UK

Tel: (44) 20 7621 9298
Dealers Tel: (44) 20 7626 2828
Fax: (44) 20 7283 6674


New York
Maybank Kim Eng Securities USA
Inc
777 Third Avenue, 21st Floor
New York, NY 10017, U.S.A.

Tel: (212) 688 8886
Fax: (212) 688 3500


Stockbroking Business:
Level 8, Tower C, DataranMaybank,
No.1, JalanMaarof
59000 Kuala Lumpur
Tel: (603) 2297 8888
Fax: (603) 2282 5136


Hong Kong
Kim Eng Securities (HK) Ltd
Level 30,
Three Pacific Place,
1 Queens Road East,
Hong Kong

Tel: (852) 2268 0800
Fax: (852) 2877 0104


Indonesia
PT Maybank Kim Eng Securities
Plaza Bapindo
Citibank Tower 17
th
Floor
JlJend. SudirmanKav. 54-55
Jakarta 12190, Indonesia

Tel: (62) 21 2557 1188
Fax: (62) 21 2557 1189


India
Kim Eng Securities India Pvt Ltd
2nd Floor, The International 16,
Maharishi Karve Road,
Churchgate Station,
Mumbai City - 400 020, India

Tel: (91).22.6623.2600
Fax: (91).22.6623.2604


Philippines
Maybank ATR Kim Eng Securities Inc.
17/F, Tower One & Exchange Plaza
Ayala Triangle, Ayala Avenue
Makati City, Philippines 1200

Tel: (63) 2 849 8888
Fax: (63) 2 848 5738


Thailand
Maybank Kim Eng Securities
(Thailand) Public Company Limited
999/9 The Offices at Central World,
20
th
- 21
st
Floor,
Rama 1 Road Pathumwan,
Bangkok 10330, Thailand

Tel: (66) 2 658 6817 (sales)
Tel: (66) 2 658 6801 (research)


Vietnam
Maybank Kim Eng Securities Limited
4A-15+16 Floor VincomCenter Dong
Khoi, 72 Le Thanh Ton St. District 1
Ho Chi Minh City, Vietnam

Tel : (84) 844 555 888
Fax : (84) 8 38 271 030


Saudi Arabia
In association with
Anfaal Capital
Villa 47, Tujjar Jeddah
Prince Mohammed bin Abdulaziz
Street P.O. Box 126575
Jeddah 21352

Tel: (966) 2 6068686
Fax: (966) 26068787



South Asia Sales Trading
Kevin FOY
kevinfoy@maybank-ke.com.sg
Tel: (65) 6336-5157
US Toll Free: 1-866-406-7447

North Asia Sales Trading
Alex TSUN
alextsun@kimeng.com.hk
Tel: (852) 2268 0228
US Toll Free: 1 877 837 7635




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