Breadtalk Analysis
Executive Summary
This reports aims to establish the current issues that BreadTalk Group Limited is facing and how the issues will have an impact on their earnings and share valuations. In our report, a computation of DuPont ROE Analysis between BreadTalk, Food Junction and Auric Pacific was examined and it was noticed that BreadTalk’s ROE is predominantly higher than Food Junction and Auric Pacific over the years of our forecast from FY2012 to FY2015. Based on the calculations, several assumptions and limitations on BreadTalk’s intrinsic value of share price were analysed and consequently estimated with four models. These models are Dividend Valuation Model, Free Cash Flow to Equity Model, Price/Earnings Ratio Model and the Price/Book Value Model.
Through the use of the mentioned models, we will conduct an in-depth analysis and evaluate on the results obtained to provide an assessment of the company’s current position and the future prospects.
Contents
Executive Summary 1 1. Introduction to BreadTalk 4 1.1 Overview 4 1.2 Company Structure 4 2. Economic Environment 6 2.1 Overview 6 2.2 Macroeconomic 6
I. Commodity Price 6
II. Gross Domestic Product (GDP) 7
III. Inflation 8
IV. Consumer Price Index (CPI) 9
V. Interest Rates 10 3. Industry Analysis 11 3.1 Overview 11 3.2 Market Segmentation 11 3.3 SWOT Analysis 12
I. Strength 12
II. Weakness 13
III. Opportunities 13
IV. Threats 14 4. Financial Analysis 15 4.1 Recent Financial Performance 15
I. Diluted Earnings per Share (EPS) 15
II. Dividends per Share 16
III. Payout Ration 16 4.2 DuPont Analysis 17
I. Return of Equity (ROE) Analysis 17
II. Profit Margin Analysis 19
III. Total Assets Turnover 19
IV. Financial Leverage 20 4.3 Required Rate of Return 21
I. Beta (β) 21
II. Risk Free Rate 24
III. Market Risk Premium 24
IV. Capital Asset Pricing Model (CAPM) 25 4.4 Growth Rate 25 5. Valuation Analysis 27 5.1 Dividend Discount Model (DDM) 27
I.
This reports aims to establish the current issues that BreadTalk Group Limited is facing and how the issues will have an impact on their earnings and share valuations. In our report, a computation of DuPont ROE Analysis between BreadTalk, Food Junction and Auric Pacific was examined and it was noticed that BreadTalk’s ROE is predominantly higher than Food Junction and Auric Pacific over the years of our forecast from FY2012 to FY2015. Based on the calculations, several assumptions and limitations on BreadTalk’s intrinsic value of share price were analysed and consequently estimated with four models. These models are Dividend Valuation Model, Free Cash Flow to Equity Model, Price/Earnings Ratio Model and the Price/Book Value Model.
Through the use of the mentioned models, we will conduct an in-depth analysis and evaluate on the results obtained to provide an assessment of the company’s current position and the future prospects.
Contents
Executive Summary 1 1. Introduction to BreadTalk 4 1.1 Overview 4 1.2 Company Structure 4 2. Economic Environment 6 2.1 Overview 6 2.2 Macroeconomic 6
I. Commodity Price 6
II. Gross Domestic Product (GDP) 7
III. Inflation 8
IV. Consumer Price Index (CPI) 9
V. Interest Rates 10 3. Industry Analysis 11 3.1 Overview 11 3.2 Market Segmentation 11 3.3 SWOT Analysis 12
I. Strength 12
II. Weakness 13
III. Opportunities 13
IV. Threats 14 4. Financial Analysis 15 4.1 Recent Financial Performance 15
I. Diluted Earnings per Share (EPS) 15
II. Dividends per Share 16
III. Payout Ration 16 4.2 DuPont Analysis 17
I. Return of Equity (ROE) Analysis 17
II. Profit Margin Analysis 19
III. Total Assets Turnover 19
IV. Financial Leverage 20 4.3 Required Rate of Return 21
I. Beta (β) 21
II. Risk Free Rate 24
III. Market Risk Premium 24
IV. Capital Asset Pricing Model (CAPM) 25 4.4 Growth Rate 25 5. Valuation Analysis 27 5.1 Dividend Discount Model (DDM) 27
I.