28 June 2014

Breadtalk revisited - A RamenPlay?

There was an occasion when I needed to go to Velocity at Novena. I flagged down a cab and promptly fell asleep. Some time later, I woke up and found myself at Vivocity. Not quite where I wanted to be. Need to be careful with places like this. Kind of recalled another time when I was took a cab to Causeway Point at Woodlands. I was nearly sent across the Causeway! Yesterday, I had an errand to run and went to Velocity once again. This time, I took the train instead.

Having just returned from a trip to Japan recently, I had this continued craving for Japanese food. So it was great to discover a RamenPlay outlet there. I decided to give it a go.

I had previously reviewed Breadtalk - A Case of Over-expanded Yeast? and mentioned that I wasn't too impressed with its RamenPlay chain. Boy was I wrong. It was lunch time and the store was crowded. The food wasn't bad either. Yummy. Location was good and clearly attracted the working class from the neighborhood. I wonder if all its stores are doing as well?

I had originally bought some shares in BreadTalk in 2012 at $0.57. And again when it went down to $0.53. Shortly after, in 2013, it went up to $0.805. I decided to sell off the equivalent amount that I had invested and held onto the balance. Amazingly, it continued to trend upwards, and more recently, reached $1.45. Given that its PE ratio had reached 29x, I decided it was time to exercise caution and trimmed my holding. It's now at $1.32.

ROA (%) 7.29 5.94 5.04 4.38 3.91
ROE (%) 19.60 17.44 15.82 14.95 15.41
DPS (SGD) 0.0083 0.0100 0.0100 0.0080 0.0180
EPS (SGD) 0.0394 0.0399 0.0411 0.0425 0.0482
[Source: POEMS, dated 28 Jun 2014]

Breadtalk remains an interesting prospect for me. Although its PE ratio had improved to 27x, it's still too high for my liking. It appears highly leveraged at ~180% of debt. Can it go all the way down to $0.73? I'll maintain watch on this stock. I like Breadtalk. Munch munch.

Disclaimer: This is not a call to buy or sell. Do make your own assessment and decide for yourself. I am not a financial advisor. I have sold down but continue to hold some shares in Breadtalk. 

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