BreadTalk

BreadTalk > Neutral

RHB, May 4

Target price: S$1.86

May 4 close: S$1.74

REVISE to "neutral" from "take profit", with lower target price of S$1.86, compared to S$2, suggesting a 2 per cent upside.

First-quarter 2018 results came in below expectations. Excluding real estate earnings and headquarter costs, core food and beverage earnings before interest, tax, depreciation and amortisation declined marginally year-on-year. The bakery and food atrium segments were the key culprits, dragging down stellar growth at the restaurant division.

We cut our forecast for FY2018-2020 earnings by 4-7 per cent, as we expect near term costs to run up as the group invests for the medium to longer term.

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