- April 2013
- May 2013
- June 2013
- July 2013
- August 2013
- September 2013
- October 2013
- November 2013
- December 2013
- January 2014
- February 2014
- March 2014
- April 2014
- May 2014
- June 2014
- July 2014
- August 2014
- September 2014
- October 2014
- November 2014
- December 2014
- January 2015
- February 2015
- March 2015
- April 2015
- May 2015
- June 2015
- July 2015
- August 2015
- September 2015
- October 2015
- November 2015
- December 2015
- January 2016
- February 2016
- March 2016
- February 2016
- March 2016
- April 2016
- China Everbright Water has fallen 62% since hitting a high of $1.27 on 30 May 2014. What gives? (24 Mar 16)
- May 2016
- June 2016
- July 2016
- August 2016
- September 2016
- October 2016
- The 3 Biggest Mistakes Investors make when it comes to selling their stocks and a simple three step solution
- November 2016
- December 2016
- January 2017
- February 2017
10 Quick Things I Learned From BreadTalk’s AGM 2015
Photo credit: Judgefloro
This time last month, BreadTalk launched a new bun called 李不开你 (Can’t Leave You) to commemorate the founding father of modern Singapore, Lee Kuan Yew, upon his passing. Within an hour, the campaign sparked outrage among Singaporeans even though its sales proceeds were being donated to charity.
Whose idea was it? And more importantly, did it have any long-term negative impact on the company’s brand and sales?
When this issue was raised at BreadTalk’s most recent annual general meeting yesterday at the company’s international headquarters, Chairman George Quek addressed the question in Mandarin:
“I grew up here in Singapore and I’m just an ordinary guy from a poor family. Mr Lee gave all of us, including me, a good opportunity to live and prosper in Singapore where he devoted his whole life to building up the nation.”
For a while, he paused… The room was in a complete silence for fifteen seconds after George Quek spoke about Mr Lee’s past contributions. George Quek lift up a glass of water and took a sip. His mouth was trembling when he mumbled softly ‘对不起’ (excuse me) to all the shareholders in the meeting room.
It was the first time at an AGM where I witnessed such intense emotion from a chairman. I could see how sad he was and as I was sitting right in front I could see tears welling up in his eyes. A moment later, his wife Katherine Quek, deputy chairman of BreadTalk, took over the spotlight and commented: “Mr Lee was actually his idol.”
When Mr Quek calmed himself down, he carried on addressing shareholders’ questions. According to him, BreadTalk has been doing their part in the community and have always been lending a helping hand to those in need (i.e. Indonesian tsunami, Sichuan earthquake, etc.)
With the passing of Mr Lee, George Quek thought BreadTalk should also play its part and the idea was simple – to organize a campaign to raise money for donations to charity. As the timeline to launch the campaign was tight, the bun ‘李不开你’ was created and a hidden message behind the bun was to remind all of us to stay united after the passing of Lee Kuan Yew. Unfortunately, the campaign which started with good intentions went sour among the public. Amid nationwide criticism, BreadTalk quickly withdrew the product off the shelves and apologized to the public.
With regards to this matter, there was no significant impact on the company’s performance after the incident. However, Quek admittedly said that the greatest impact was on him personally. He didn’t expect the campaign to turn out so badly.
So besides the topic on BreadTalk’s Mr Lee faux pas, here are…
10 Key Points from BreadTalk’s AGM 2015:
- Over the years, BreadTalk has built a highly successful brand among consumers where now every mall owner favors having BreadTalk among its key tenants. BreadTalk is the first Singaporean company to win an award at the prestigious World Retail Awards in Paris in 2014. Being a brand leader, there is an unwritten rule where competitors hope for BreadTalk to raise prices first so they can follow suit.
- Every retailer faces the ongoing challenge of rising rental and labor costs in Singapore. To mitigate this, BreadTalk with its group of well-known brands (Food Republic, Toast Box, BreadTalk, Ding Tai Fung, etc.) allows the company to negotiate better rental rates with landlords and charge higher prices among customers.
- Thailand is going to be the next key market for BreadTalk after Singapore and China. BreadTalk took nine years to build 19 BreadTalk and Toast Box stores in Bangkok. With the new joint venture with Minor Group who own over 2,000 F&B outlets in Thailand, the management plans to open ten new stores in 2015 and is confident of having 60-100 stores in the country eventually.
- Besides overseas expansion, there is also room for growth in its homegrown market in Singapore. The management thinks that it would not be difficult to open 100 Toast Box outlets here from the 60 outlets currently. Moreover, other than growing existing brands, there is always room to start a launch new brand concepts like 1933 which is debuting at the new mall Capitol Piazza in June.
- RamenPlay has underperformed and the management has closed down a few outlets. On the other hand, the company launched two Sanpoutei Ramen restaurants (in Holland Village and Shaw House) and their performance has been very encouraging so far. Sanpoutei could be the next key growth driver for BreadTalk’s Japanese ramen segment should the brand prove to be popular and management decides to scale down its investment in RamenPlay.
- BreadTalk never hesitates to strengthen its competitive advantage. The company took the opportunity to integrate with their real estate investments in Katong Mall, CHIJMES and 111 Somerset and secure key retails spaces to prominently showcase their brands.
- There is no plan to convert three existing junior bonds amounting to $37 million into an equity stake. In other words, BreadTalk would earn an annual income of 3-8% from these bonds till 2018.
- The financing cost for BreadTalk is extremely low. The management didn’t specifically disclose how low it was, however my own research tells me that BreadTalk’s interest rates was less than 2% in 2014! With the low interest rate, the management is reluctant to swap its floating-rate loans to fixed rates citing it would cost an additional of 3-4%. No one knows which way interest rates may go but CEO Oh Eng Lock reiterated there are various financing options available for the company due to its strong cash flow generation ability.
- There is a delay in BreadTalk’s loyalty card programme. According to the CEO, the card is likely to come with a payment function (like Starbucks) rather than simply a card to chalk up stamps for free items like so many other loyalty cards in your wallet.
- Lastly, George and Catherine Quek collectively own a 52.5% stake in BreadTalk. Despite numerous buy-out offers in the past few years, these two key founders have not sold any of their stakes away. This is a good sign for shareholders that these two key insiders are here to stay for the long haul.
Do you want to receive stable, passive income from your investments year after year like clockwork? Then discover the *8* steps to create your own 'Dividend Machines' and build multiple streams of passive income from dividend stocks and REITs. Build your own dividend machines now
Are you looking for a formula that can consistently pick out the best companies to invest in and make you a LOT of money in the stock market? If you are, then this might finally be the answer you've been looking for. Because this is the same exact formula we used to create 7-figure results in a single stock portfolio - and we did it in just two years. Find out what this formula is right here.
Do you think that it's nearly impossible to double or triple your investment in blue-chip stocks? If you want the stability and security of a blue-chip company but are looking for the supercharged returns of smaller, high-growth stocks, then we want to tell you that it is possible. In fact, we want to show you how we uncovered one company that's a market leader in its industry... but was still growing its revenues by up to 20.4% a year and its net profits by up to 39.8% a year. Click here to find out which company and download a FREE report that shows you how we made 243.5% returns in this "super" investment.
If you enjoyed this article, get email updates (it's free).
This is not a recommendation to purchase or sell any of the securities mentioned on this site. The information contained herein are the opinions and ideas of the authors and is strictly for educational purposes only. This information should not be construed as and does not constitute financial, investment or any form of advice. Any investment involves substantial risks, including complete loss of capital. Every investor has different strategies, risk tolerances and time frames. You are advised to perform your own independent research or to contact a licensed professional before making any investment decisions. There are no warranties, expressed or implied, as to the accuracy, completeness, or results obtained from any information set forth herein. Fifth Person Pte. Ltd., its related and affiliate companies and/or their employees shall in no event be held liable to any party for any direct, indirect, punitive, special, incidental, or consequential damages arising directly or indirectly from the use of any of this material.
Rusmin Ang is an equity investor and the co-founder of the online investment magazine The Fifth Person. He is also the co-creator of The Investment Quadrant, an online multimedia stock investment course where students can learn how to invest profitably in the stock market. Rusmin has been featured multiple times on 938LIVE as a guest expert on MoneyWise and is on the speaking circuit for CIMB Securities (Malaysia) and has spoken at events in Penang, Sibu and Kuala Lumpur. Rusmin is also the co-author of Value Investing in Growth Companies which is internationally published by Wiley, Inc. The book can be found in all major book stores worldwide and on Amazon.com,Amazon.co.uk, Barnes & Noble and Apple's iBooks. If you're interested to learn more about stock investing, you can join The Fifth Person Newsletter and receive free weekly insights on how you can generate higher returns and dividend income from the stock market.