Breadtalk Quantitative Summary

 

Growth:

Consistent growth revenue margin of >50% 

Net Income around 3-5% in the recent years

Selling, general and adminstrative is high, it will be good if the company can improve on this aspect and thus indirectly improve its net income

Profitability:

ROE is generally consistent although it become lower in recent years

ROA a bit low at around 5%

Retained earning is consistently improving over the years

The company produce postive net cash flow operation, postive FCF. The company is consistently putting money into CAPEX and little on dividend. Personally I think this is desirable.

Financial Health:

Gearing: around 4% consistently

debt to equity: quite low 0.12

current ratio: 0.9 although not greater than 1 but the company should be able to finance the debt in times of trouble. 

The company also has no problem in paying off its debt in less than 1 year if it uses all of its net income. 

Overall debt is low and manageable.

Valuation:

Trailing PE: 15.8

Earning Yield: 6.33%

Cash Return: 8.34%
If use discount rate of 10.5% with 35% marign of safety, it seems like the company is a bit expensive. However, this DCF method is very subjective and hence might not be reliable in my opinion. In term of valuation, I would prefer the 3 ratios above, DCF only serve as a reference.

Conclusion:
Good FCF, low debt, good gross revenue margin.
It would be good buy if it can increase its net income margin to at least 10% and reduce its SGA which is unlikely as breadtalk is still expanding its outlets. 
Based on valuation, it is not expensive and yet not cheap. Given the current market condition, I might buy on dip but not at the current price of 0.63.