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Breadtalk analysis article

Executive Overview

This kind of reports aims to establish the present issues that BreadTalk Group Limited is facing and how the issues will have a direct effect on their revenue and share values. In our record, a calculation of DuPont ROE Evaluation between BreadTalk, Food Junction and Auric Pacific was examined and it was pointed out that BreadTalk’s ROE is mostly higher than Food Junction and Auric Pacific cycles over the years of the forecast via FY2012 to FY2015. Based on the computations, several presumptions and limits on BreadTalk’s intrinsic benefit of discuss price had been analysed and therefore estimated with four designs.

These versions are Gross Valuation Model, Free Cashflow to Fairness Model, Price/Earnings Ratio Style and the Price/Book Value Model. Through the use of the mentioned models, we will certainly conduct a great in-depth evaluation and examine on the benefits obtained to supply an evaluation of the provider’s current location and the foreseeable future prospects.

Material

Business Summary1

1 . Summary of BreadTalk4

1 . 1Overview4

1 ) 2Company Structure4

installment payments on your Economic Environment6

2 . 1Overview6

2 . 2Macroeconomic6

I. Commodity Price6

II. Gross Household Product (GDP)7

3. Inflation8

IV. Client Price Index (CPI)9

V. Interest Rates10

3. Market Analysis11

3. 1Overview11

a few. 2Market Segmentation11

several. 3SWOT Analysis12

I actually. Strength12

II. Weakness13

3. Opportunities13

IV. Threats14

some. Financial Analysis15

four. 1Recent Monetary Performance15

I. Diluted Earnings per Share (EPS)15

II. Dividends every Share16

III. Payout Ration16

4. 2DuPont Analysis17

I. Returning of Collateral (ROE) Analysis17

II. Profit Margin Analysis19

III. Total Assets Turnover19

4. Financial Leverage20

four. 3Required Rate of Return21

I actually. Beta (β)21

II. Risk Free Rate24

III. Market Risk Premium24

IV. Capital Asset Charges Model (CAPM)25

some. 4Growth Rate25

a few. Valuation Analysis27

5. 1Dividend Discount Model (DDM)27

My spouse and i. Dividend Forecast28

2. Intrinsic Talk about Price28

III. Analysis of DDM29

IV. Sensitivity Analysis29

your five. 2Free Cashflow to Equity Model (FCFE)30

I. FCFE Model31

2. FCFE Style Evaluation31

III. Sensitivity Analysis32

5. 3Price-Earnings Ratio32

I. Price-Earnings Ratio Model32

2. Price-Earnings Rate Model Evaluation33

3. Sensitivity Analysis34

your five. 4Price/Book Value Ratio34

I. P/BV Ratio Comparison34

2. Evaluation of P/BV Model36

III. Sensitivity Analysis36

six. Conclusion37

7. Reference point List38

8. Appendix42

1 . Introduction to BreadTalk

2 . you Overview

Established in July 2k, BreadTalk started off as a bakery outlet at Bugis Junction. Due to increasing popularity of goods, BreadTalk extended their businesses to five other stores and made strategies for franchising operations just before being widely listed in the year 2003. With their proprietary brands getting BreadTalk, Bread toasted Box, Food Republic, RamenPlay and The Topping Room and franchises by USA’s Carl’s Jr and Taiwan’s Michelin Star beneficiary Din Tai Fung. Having such reputation bakery, cafe and foodstuff court, BreadTalk Group Limited became a prominent foodstuff and beverages (F&B) company. Consequently, the Group/BreadTalk grew into a vast network of more than 15 countries, such as Landmass China, Singapore, Indonesia and Hong Kong. An operation of this scale is suffered by 6000 global staff managing over 500 stores (BreadTalk 2012b). 2 . two Company Structure

The BreadTalk Group table of directors consists of five key individuals who are equipped with abundant experience coming from various competence such as research and development, investment, strategic planning and management (BreadTalk 2012a). The detailed structure along with the managing report can be found in (BreadTalk 2011). The directors overseeing the operations of BreadTalk consist of:

Katherine Shelter Lih Leng| Deputy Leader who is responsible for the Group’s research and development, runs new principles and ideas. | Ong Kian Min| Independent Representative. The lead Independent Representative who also chairs the Auditing and Nominating Committees, as well as a member of the Remuneration Committee of BreadTalk Group. | Chan Soo Sen| Independent Director who heads the Remuneration Committee. He could be also a person in the Examine Committee and Nominating Committee of BreadTalk Group. | Dr Bronze Khee Giap| Independent Director. A member from the Audit Committee, Dr Color is also currently the Co-Director of Asia Competitiveness Institute and an AssociateProfessor of Open public Policy on the Lee Kuan Yew University of Community Policy at the National University of Singapore. He likewise chairs the Singapore National Committee for Pacific Economic Cooperation and holds directorships in a few detailed companies in Singapore. |

2 . Economic Environment

three or more. 3 Guide

It extends the overview of the macroeconomic elements that will impact BreadTalk Group. Macroeconomic factors refer to a piece that exists outside the environment of the company where it involves the economy from the two regional and national levels. These factors consist of inflation, labor cost, currency exchange rate and the global economic functionality. BreadTalk might encounter various issues including high labor cost and raw materials rates which may influence their functioning expenses. These kinds of factors may be further analysed using the various macroeconomic concerns mentioned beneath. 3. 5 Macroeconomic

My spouse and i. Commodity Cost

Table one particular: World Cultivation Pricing Brief summary

Data obtained from Budgetary Authority of Singapore.

Desk 2: Cultivation Consumption and Production.

Data obtained from Monetary Power of Singapore.

Wheat prices elevated greatly from the past 6 months but steadily decreasing in a average charge of 0. 87% since 13 September 2012 (MarketWatch 2012b). However , crude oil prices decreased substantially during the initially half of 2012. But by July onwards, it increased at an average of 14% for the next a few months (MarketWatch 2012a). Similarly, the prices of sugar dropped reasonably before growing at an typical rate of 0. 15% as of 13 September 2012 (MarketWatch 2012c). In view of the above mentioned commodities fluctuations, we can realize that these vital raw materials tremendously affects the operating cost for the businesses under the BreadTalk group because they are basic essentials for the input with their daily operations. II. Major Domestic Merchandise (GDP)

A recently available quarterly Review of Professional Forecasters unveiled by Economic Authority of Singapore (MAS) reveal that Singapore’s GDP will be anticipated to expand in a reduced pace this year at 2 . 4% in comparison to a median of 3. 0% estimated 90 days ago (AsiaOne 2012). Singapore’s official monetary growth is anticpated to be 1 . five per cent to 2 . 5% this year with the regarding manufacturing and financial areas adjusted straight down from a few. 0% to 2 . seven percent and 2 . 7% to 1. 1% respectively. At the client end, retail sales reported significant expansion in the starting months of January and February. The meals and refreshment services sector has seen an average increase in their revenue of up to installment payments on your 6% month-on-month, largely contributed by the increase in number of local people and visitors who dined at restaurants and other meals outlets (MAS 2012b). In addition , Singapore’s 2013 outlook around the median outlook of GDP growth is usually reduced coming from 4. five per cent to 3. 9%. Businesses are substantially affected by the economic activities, and BreadTalk is certainly not spared. BreadTalk should take into account of the changing GDP because the increase spending by consumer can be reflected by a rise in GDP. Searching at the predicted GDP pertaining to 2013, BreadTalk can look forward to higher spending by buyers. They can better strategise exactly where they growth plans could be consider during economic increase, or having contingencies plans such as reducing operating costs when GDP growth is slow. 3. Inflation

The slight embrace consumer rates in Q1 of 2012 is predicted through the pass through of price pressures which can be built up more than 2010 and 2011. The overall inflation will stay firm with the subsequent value hikes, and will eventually relieve towards the end of the 12 months. Analysts have forecasted the fact that slight maximize is just short-term and overall inflation will moderate with their historical normal. The home-based food rates are likely to go up moderately throughout the year due to the increasing product prices that have yet to be taken upon by the consumers. For example, the surge in commodity prices because of external shock in 2010 and 2011 provides yet to get fully shown in full prices where suppliers promises to hold house-brand prices stable until the end of Summer. Consumers will probably be affected later on when companies pass these higher operating costs to them. Consequently , food inflation this year can be projected to be 3. 1% (MAS 2012b).

Singapore’s primary inflation outlook is currently directed at 2 . 5%, which is 0. 2% less than the forecasted figure of two. 7% 3 months ago. Key inflation excludes accommodation and transport elements that are mainly influenced by simply government procedures. Moreover, inflation is also due to higher goods prices plus the increased salary for low-skilled workers. This is caused by the strict hiring constraint imposed by government upon foreign employees (MAS 2012c). At the same time, overall global item prices stay below the previous year amounts. This helps to hold domestic essential oil and foodstuff inflation controlled in the near future. Therefore, MAS core inflation will certainly continue to range between installment payments on your 5% ” 3. 0% or can be slightly reduced the next couple of months or even the entire year (MAS 2012a). For now, the adjusted discharge for 2013 inflation is placed at three or more. 2%, up by zero. 2% where targeted pumpiing of 3. 0% is to be expected next year (AsiaOne 2012). The increase in inflation will result in the effect of rising prices for both equally products and services available in the market. This will cause companies just like BreadTalk to incur significant costs for their day to day functions. In turn, BreadTalk will be pressurised to increase the values for their goods in order to offset these further costs. Yet , the increase in prices may also jeopardise the sales of BreadTalk while customers may possibly seek additional cheaper alternatives. IV. Buyer Price Index (CPI)

Consumer Price Index (CPI) is definitely an instrument to measure the current consumer value inflation due to price changes in a fixed bag of usage goods and services frequently purchased by the households over the certain period (Singstat 2012c). It includes all consumption expenditure that are widened by citizen households, significantly less other non-consumption expenditures including purchase of securities, property and also other financial assets. Resident households are defined as persons placed by Singapore Citizen or Permanent Homeowner (PR). In order to analyse BreadTalk further, it is vital to determine the CPI for the particular year. While BreadTalk relates to the food and services sector such as cafe and bakery, we can go into the basket of hawker foodstuff (including foodstuff courts), eating places, sugar maintains and confectionery in the CPI basket. In the period of January ” Jun 2011 to Jan ” Jun 2012, the percentage embrace prices of those basket of items are2. 3%, 3. 9% and 2 . 2% correspondingly (Singstat 2012c). Inflationary demands can be believed highest in restaurants. Additional forecast towards the end from the year alerts the overall customer price index rising coming from 4. 2% to 4. 4% depending on a polled by Review of Professional Forecasters made by MAS (Singstat 2012c). BreadTalk, being an worldwide business, can utilise these types of CPI indexes to outlook the consumers’ expenditures of vital countries and accommodate towards the price level of sensitivity of the buyers by gauging the customers’ current and future getting power. I actually.

II.

III.

IV.

V. Interest levels

Prime lending rates remain at standstill at the percentage of your five. 38 with no changes seeing that 2008 (Singstat 2012a). The increase in interest rates will cause an immediate impact on BreadTalk as it must depend on the banks to borrow money. In the businesses perspective, they will incur higher costs for bank loan repayments from your higher curiosity expenses.

1 .

2 .

three or more. Industry Research

a few.

5. 5 Review

Graph one particular: Business Your life Cycle

The sector life circuit indicates that BreadTalk is currently in the speedy accelerating development stage because they are still searching for expansion in the global and local market, because of the increasing requirements from the buyers. The reasons pertaining to such enhance is due to the population growth combined with the growing GDP of producing countries just like China and Indonesia, in which consumers look for higher requirements of living and with better purchasing power to buy or patronise quality items as well as companies offered by BreadTalk. Market saturation in Singapore also advises the reason why BreadTalk is developing plans for his or her global enlargement in order to gainmore market share. 5. 6 Market Segmentation

Market segmentation may be the separation of consumers in the market based on their physical, psychological, behavioural and demographic differences. Due to the different features, we can recognize potential customers of BreadTalk. This is to let formulation of a plan which will be able to mix their affinity for order to increase sales and maximise earnings. 4. several SWOT Examination

I. Power

Exceptional Branding

The unique personalisation as well as the innovative range of products from its bakeries appealed tremendously to the consumer’s interest. Along with the company’s exclusive designs of the outlet that includes a see-through cup window that permits customer to view the bakers at work, this kind of displays a friendly environment intended for the customers as well as portraying a contemporary picture of the company. Products

Due to the dynamic taste and preferences from the consumers, BreadTalk seeks to constantly develop and present new products amounting to as much as 12 items every quarter as an addition to its existing 150 options of pastries, cakes and also breads. By simply revolutionizing the bread tradition, BreadTalk offers successfully obtained awareness of its products through the recognition from several international hobbies due to its exclusive taste and physical charm. Locally, BreadTalk had as well gained reputation from numerous local accolades such as the Singapore Promising Company Award, which usually suggest the popularity of the merchandise. Strategic Places

Majority of BreadTalk outlets are located either in shopping malls or perhaps near to public transport hubs. Strategic positions of BreadTalk outlets for high traffic volume spots attract potential customers. Thus, the positioning of the shops plays a significant element to operate a vehicle high amount of sales. In addition , by putting your BreadTalk outlets near other popular retailers, such as grocery stores and departmental stores, can further catch the attention of more customers. II. Weak point

Pricing

With its products being charged higher in comparison with its competitors, budget conscious consumers will probably be put off to get BreadTalk goods, especially with breads being a item. Selection of Products

Although creating a broad range of products, BreadTalk’s assortment is usually confined to bread and cakes, as opposed to some of its competition that stretches its variety to include pastries and other concoctions. Rising Wages

In Singapore, the version of staff policy by simply government may possibly raise costs of the low skilled employees for employers. For example , business employers are required to enhance their contributions toward employees and levies in the foreign personnel. Workers might also increase their income expectations in future (Lim 2012). III. Chances

Nature of goods

Since bread is recognized as a software program and item in numerous countries, BreadTalk provides potential for global growth since there is regular demand for loaf of bread; an opportunity intended for expanding it is business internationally. Future developments of Searching Centres

Shopping centres in new proper location provides ample possibilities for BreadTalk to broaden its ventures which will play a role in a larger business in its functioning industries. Foreign Markets

BreadTalk ventures into other markets by building partnerships with countries such as China, Indonesia, Philippines and Hong Kong.

IV. Threats

Product/Brand Concept Replication

The duplication of BreadTalk’s product/brand idea is considered a weak threat in Singapore due to its current market share and presence. However , a greater danger would be the replication by bakeries in areas that have not been embarked into by simply BreadTalk, including the States, Australia and European countries

posing as a obstacle of access for BreadTalk; especially in China and tiawan where duplication is common. Competition

With the embrace emerging bakeries, BreadTalk runs into a tough competition against competitors like Delifrance along with other competitors in the meals court market such as Meals Junctions. Changes of natural material cost

BreadTalk could possibly be affected by changes of the raw materials prices, just like wheat, sweets, crude oil and severe climatic conditions as this will lead to a rise in supply costs. These are a lot of external elements which are beyond the power over the company.

some. Financial Examination

your five. 8 Recent Financial Performance

Talking about Appendix IV, BreadTalk experienced positive expansion in terms of revenue from 3 years ago to 2011. However , there were a decrease in revenue progress in 2009 and 2011, amounting a total of $246, 493, 000 and $365, 904, 000 correspondingly. The cause in this slow progress is due to the numerous increase in expenditures from droit and administrative expenses for both years. Despite the slower growth in revenues and the rise in bills, BreadTalk continues to be making total profit as the Earnings. Before Interest and Tax (EBIT) are displaying a positive percentage annually. While EBIT does not take into account in the different exterior factors including the taxation plans and the financial interest, it may accurately determine the overall success of the firm as well as centering on the company’s potential for profit generation based on its product sales. In the case of BreadTalk, the EBIT margins indicated positive percentage annually but experienced a decrease in 2011. Due to elements such as rising flour rates during the drought in Chinese suppliers, there were speculations that China and tiawan may be required to import wheat (Coonan 2011). Another element was the lower profit era from the Singapore and China bakery shops which are paid by the home disposal in China, which amounts to $4. 2 million (BreadTalk 2012b). My spouse and i. Diluted Revenue per Talk about (EPS)

Diluted Earnings Per Share (EPS) is a way of measuring of the quality of a provider’s earnings in the event all the firm convertible investments were worked out (Reuters 2012). These securities will result in an increase in the total spectacular shares. The earnings will be divided by all the company investments. Year| FY2008| FY2009| FY2010| FY2011|

Diluted EPS (cents)| 2 . 76| 3. 94| 3. 99| 4. 10|

Increase (%)| -| 42. 75%| 1 . 27%| 2 . 76%|

Stand 3: Diluted EPS Table: From 2008 To 2011

The diluted EPS increment of 42. 73% from FY2008 to FY2009 is due to the adjustment as BreadTalk released bonus share in 2010 (BreadTalk 2011). Nevertheless , there is a constant increment by 2010 onwards. II. Returns per Discuss

Dividends per share (DPS) measures the latest dividend paid out over amount of stocks and shares held by the company (Investopedia 2012). This actually establishes how much the shareholders obtain by way of dividends and may become used to estimate the gross yield. This could be computed by formula under:

D ” Dividends paid to collateral shareholders for the period (including interim dividends)

SECURE DIGITAL ” Special Dividends, returns that are released once

S ” Total number of outstanding released equity stocks

The overall number of ordinary shares may be calculated using the weighted typical over the reporting period.

Year| FY 2008| FY 2009| FY 2010| FY2011|

DPS (cents)| 0. 55| 1| 1| 1|

Table 5: DPS desk: From FY 2008 To FY 2011

As shown in table several, dividends per share provides slightly elevated by $0. 0045 from 2008 to 2009 and remained in constant rate of $0. 01 each year from FY2009 to FY2011. III. Payout Ration

Payout percentage is value to illustrate how companies in proportion their earnings. For instance, a high payout proportion indicates which the company is definitely giving outmore of the company’s earnings to their investors. Although a lower payout ratio shows that the company retain more of their income for upcoming investments. It also acts as a great indicator to how well the company’s earnings can support the dividend pay-out odds. It is simpler to disburse payouts of a less than a larger sum. As a result, it shows the security of purchasing a show to a smaller pay out ratio. The payout percentage is computed as follows:

DPS ” Returns per Reveal

EPS ” Income per Share

Year| FY 2008| FY 2009| FY 2010| FY 2011|

Earnings Per Share (cents)| 2 . 76| 3. 95| 4. 01| 4. 12|

DPS (cents)| 0. 55| 1| 1| 1|

Pay out Ratio| 0. 199275| zero. 2531646| 0. 2493766| 0. 2427184| Desk 5: Previous Payout Rate from Yr 2008 to 2011.

Data obtained from BreadTalk Twelve-monthly Report 08 to 2011

Bottom on earlier dividends pay-out odds from 2008 to 2009, there was a strong increase in the payout ratio from 19% to 25% due to increment in both EPS and DPS that was given out as mentioned previously. As coming from FY2009 to FY2011, the payout percentage remains stagnant at an normal of 24%. 5. 9 DuPont Research

I. Come back of Value (ROE) Evaluation

Need for ROE

The Go back on Equity (ROE) refers to the rate of return the fact that management earned with the capital invested by the stockholders, after deducting the payments for all other capital suppliers. The calculated percentage is deemed important to the company as it to be used as an indicator to get the company’s success, as well as for comparison with other competitors in the same industry.

DuPont Analysis

The breakdown of ROE will allow us to see the several factors which could influence you’re able to send performance. The analysis identified 3 elements thatwill affect ROE. They are known as Working Efficiency, Asset-use Efficiency and Financial Power.

Chart you: Comparison of ROE. Refer to Appendix III.

The DuPont Analysis indicates that BreadTalk is out performing its competition like Auric Pacific Limited as well as Food Junction. Judging from Graph 1, the reason behind the decrease in ROE coming from BreadTalk is mainly due to the increase in operating expenses of 54. 42% coming from $117, 952, 000 in FY2009 to $182, 146, 000 in FY2011. In the period of 3 financial years, BreadTalk experienced a rather regular ROE using their ROE decreased by a few. 41% via 2009 to 2011. The constant ROE that BreadTalk encounter is relatively typical in comparison with other companies in the same industry. Yet , due to higher cost of goods and expenses of Auric which exceeded the generated revenue, there is a adverse impact on the computed ROE. II. Income Margin Examination

The profit perimeter is defined as the extent from the company’s capability to manage the generation of revenues coming from cost control. This includes the considerations of the company’s functioning efficiency which in turn constitutes element of their approach (Fairfield & Yohn 2001).

Chart 2: Comparison of Income Margin. Label Appendix 3. BreadTalk had a lower earnings margin as compared with Foodstuff Junction in FY2009 and FY2010. Both are decreasing from FY2009 to FY2011. Nevertheless , the decrease of BreadTalk revenue margin is considered to be moderate as compared with the major drop of Food Verse profit margin. From the data above, BreadTalk remains in a strong placement in comparison with their competitors in FY2011. III. Total Possessions Turnover

The Asset Turnover is the dimension of the company’s effectiveness to create revenues from their assets. This will likely reflect the company’s asset utilization.

Chart a few: Comparison of Total Assets Yield. Refer to Appendix III. BreadTalk had the best productivity in comparison with Meals Junction and Auric Pacific cycles. We can detect a slight loss of 0. 23%, from 1 . 48% inFY2010 to 1. 25% in FY2011 while the percentage movement intended for Food Junction and Auric Pacific continues to be insignificant. This implies that Food Junction and Auric Pacific is more effective in creating stable assets turnover. Information concerning the future success of BreadTalk can also be observed from the change in asset yield (Fairfield & Yohn 2001). IV. Economic Leverage

Economical Leverage Evaluation is the analyze of the level whereby the organization leverage on the common equity in order to take out a loan to acquire possessions. A company which has a low leverage ratio will be perceived as significantly less risky when ever compare with one other company which has a higher influence ratio (Guo, Wang & Wu 2011).

Chart four: Comparison of Financial Leverage. Refer to Appendix III. The BreadTalk high leverage ratio shows a higher risk over their opponents. During the growth period, the high leveraging is beneficial mainly because it permits the corporation to achieve greater earnings. In comparison, the company is going to encounter income problems throughout the recession times, as the business might not be capable of pay off the interest repayments while using sales income. 5. 12 Required Rate of Come back

I. Beta (β)

Beta is defined as having a linear relationship corresponding to the charge of returning of an expense as well as the market index. Beta basically steps the degree of an asset’s movements to the marketplace or the movements of the pay for to the benchmark. Stocks with beta larger than 1 are viewed as aggressive stocks and options and staying more risky than the industry index when beta with less than one particular are considered since defensive stocks and shares that are fewer volatile than the market index (Tofallis 2008).

Graph two: Beta Calculation. Refer to Appendix I.

The method to obtain the Beta using the attribute line is definitely:

RBreadTalk = a & bBreadTalk (RSTI) + at the

whereby:

RBreadTalk| = realized comes back of BreadTalk|

RSTI| = noticed returns of STI Index 1|

a| = intercept come back independent of the market|

b| = slope of the feature line|

e| = unsystematic risk (averages to zero)|

The assumption would be that the returns with the STI Index are to be used as a serwery proxy for industry portfolio. If the above formula is rewritten and utilized in related terms with the CAPM method, the Beta of BreadTalk is: βBreadTalk= Covarance (RBreadTalk. RSTICovariance of RSTI

BreadTalk Raw Beta is computed using the regression analysis based on market portfolio of STI and BreadTalk’s monthly recognized returns pertaining to the period of September 2011 to Aug 2012. Based on the data collected, the concept of Keeping Period Deliver (HPY) is usually applied based upon annualized computation in order to find away how much produce can obtain coming from an investment within a same period. This HPY figures computed are then further used to plot the regression graph in order to produce a best fit feature line to examine the relationship between the results. The slope/gradient of the regression curve will then indicate the Raw Beta of BreadTalk. As demonstrated in the above chart, the scattered chart shows a linear romance between the HPY of STI and BreadTalk. The Natural Beta in the gradient reaches 1 . 0047 where the correlation coefficient is deemed 0. 7149 (refer to Appendix I). However , this raw beta might not be appropriate as other factors such as industry proxy and time period may impact the beta substantially. Therefore , it is necessary to adjust the raw beta. Using the altered beta formulation:

Adjusted beta = (2/3) (raw beta) + (1/3) (1. 0)

Therefore , the forecasted beta of BreadTalk is:

(2/3) (1. 0047) & (1/3) (1. 0) = 1 . 00313

It is assumed that the historical Beta is an accurate expression of the risk in a share. This shows that any inventory returns that is out of line with the

marketplace returns will be adjusted into line with all the market. II. Table [ 6th ]: Produce for Singapore Government Securities (Reference from IMF) Risk-free Rate

We are using the a decade government you possess yield since the market risk free rate to behave as a normal of way of measuring for all economical sectors, because it is simpler to manage countries that do not concern Treasury charges in a steady manner. The danger free charge based on seventeen Sep 2012 will be 1 ) 55. 3. Market Risk Premium

Industry risk premium determines the amount of compensation that risk-averse entrepreneur can expect to get from purchasing a volatile marketplace by deducting the expected returns coming from prevailing risk free rate (Han 2011)). This deals with elements that include market systematic risk and marketplace volatility. Therefore , it is essential to consider the risk premium that is link with volatility risk to be able to examine the relationship between industry risk and returns. Risk Premium= Rm- Rf

Rm=Market Return

Rf=Risk Free Rate

Since our forecast is founded on share value of a community stock shown on STI, we chosen to use the 10-years securities issued by the Singapore government in order to align with market with consistency. Foundation on this presumption, the 10-years securities can be used in processing the geometric risk return. We received 0. 0735 to be used for our market return pertaining to risk high quality calculation (refer to Appendix V). Consequently , the risk premium is determined to be 0. 058 based on the market go back and safe rate. 4. Capital Property Pricing Model (CAPM)

Capital asset charges model (CAPM) is utilization in evaluating risky stocks or portfolios of stocks and also elaborating the relationship between the predicted return and systematic risk in the market (Chen, Lin & Yu 2012). Rf=0. 0155|

Rm=0. 058|

(Rm- Rf)=0. 058|

β=1. 00313|

CAPM FORMULA

By making use of the CAPM equation over, we are able to decide the required level of go back on the shares for BreadTalk to be six. 37%. five. 11 Progress RateAccording to the industry research, BreadTalk is still in the enlargement phase together with the aim of multitude of outlets over the following 2 to 3 years, from 2012 onwards. BreadTalk went into a joint venture, with Japanese Ajinomoto Bakery Company. Ltd, that has been opened on January 2012 in Shanghai. We foresee that this joint venture as well as the a thousand outlets mission will cause a supernormal growth in the future DPS of 25% in FY2012 and 33% to get FY2013 to FY2014. We might expect the supernormal development to strengthen and eventually decrease to a continuous rate of three. 4%. The derivation of three. 4% expansion rate will be based upon the following assumption. The predicted Singapore GDP for 2015 is several. 7% and would expect the constant growth charge to be lower than the predicted GDP plus the required price of return of 7. 37% (IMF 2012). Phase 1: Low to Moderate Expansion Stage2012| Stage 2: Large Growth Rate2013-2014| Phase 3: Constant Development Rate2015 onwards| Forecasted development rate of 25%. Joint ventures with Japanese Ajinomoto Bakery Company. LtdIncrease of outlet by 144, coming from 534 to 678 (refer to Appendix II )| Forecasted expansion rate of 33%. Venturing into fresh market just like Taiwan. Further increase of outlet to 1000 simply by 2014. | Forecasted development rate of 3. 4%. Secure economy. Achieving the stage of maturity, stable income stream, reduced capital required/| Table 7: Forecasted growth price

5. Valuation Analysis

6. 12 Dividend Low cost Model (DDM)

All of the present ideals of the anticipated future shareholders dividend payment by the organization is being based on the DDM model. The proper discount price being employed is definitely the cost of value. For instance, the stock will probably be considered overvalued if the value obtained from the DDM is lower than the current stock value. This model will never work if the company would not payout returns. It is very good to note not all companies issue dividends even if that they experience increasing growth price as these profits may be used to reinvest back in the company (Brown 2009). Even though DDM is beneficial to get evaluating mature companies, that is not apply to BreadTalk because they just do not belong to the mature stage of their life cycle. The dividends are certainly not expected to increase at a continuing rate as shown inside the equation below:

In fact , possessing a constant expansion rate is actually unrealistic. Within a firm’s business tactics or encountering situations will cause the leads of the firm to be adjusted. Taking this into consideration, the multi-levelled gross growth price model retains the likelihood of different levels gross growth. As shown by the equation beneath.

I. Gross Forecast

We will certainly forecast the dividend every share this january to 2015 based on the assumption for the future growth price as mentioned in expansion rate below section 4 of the survey. | FY2011A| FY2012F| FY2013F| FY2014F| FY2015F|

Dividend Growth Rate (DGR)| -| 25%| 33%| 33%| 3%|

DPS ($)| 0. 0100| 0. 0125| 0. 0166| 0. 0221| 0. 0229|

Table 8: Predicted Dividends this january to 2015

Provided the expected dividend by 2012 to 2015 along with the expected continuous growth level of 3. 4% and essential rate of return of 7. 37%, we are able to prediction the reveal price of BreadTalk depending on the method below. 2. Intrinsic Share Price

Presented the forecasted dividend from 2012 to 2015 together with the expected regular growth rate of 3. 4% and essential rate of return of 7. 37%, we will be able to outlook the discuss price of BreadTalk based upon the method below.

III. Evaluation of DDM

In comparison to BreadTalk share value of $0. 55 upon 18th September 2012, the computed talk about price of $0. 50919 suggests that BreadTalk share cost is slightly OVERVALUED (SGX 2012). Therefore , the DDM indicates a OFFER decision.

IV. Awareness Analysis

Because the required level of go back calculation will be based upon past overall performance with some foretelling of and the growth rate is dependent on assumption, it will have chances that actual functionality will not match the desired final result. Thus, we will be using awareness analysis to predict the performance in the event that the situation did not turn out to be since predicted depending on 1% for necessary rate of return plus the growth charge.

Table being unfaithful: Computed Data for DDM’s Sensitivity Version

From your comparison of Stand 7, we can understand that bigger growth rate will result in bigger share prices whereas the larger required charge of come back will result in a lesser share prices. Required level of come back can be affected by the risk aspect (β). Therefore, if the needed return to get BreadTalk raises by 1%, there will be a notable drop of talk about price offered a constant growth rate. six. 13 Cost-free Cash Flow to Equity Style (FCFE)

To be able to evaluate the talk about price of BreadTalk utilizing the Free Cashflow Equity (FCFE) model, we now have forecasted the income transactions of BreadTalk from 2012 to 2015 (refer to Appendix MIRE & VII). We need to think about a few presumptions when forecasting. Assumption to get Revenue

The corporate aim of BreadTalk is to get a strong manufacturer internationally and locally having its rapid enlargement plans to accomplish its focus on of a thousand outlets within the next three years (BreadTalk 2011). In the global outlay, the number of bakeries found in 43 cities in mainland Chinese suppliers has increased simply by 5 shops over the past year. With the view for Mainland China outstanding positive, BreadTalk has capitalised on their lucrative prospects. For instance in January 2012, BreadTalk provides entered into a collaborative opportunity with leading player in bakery cash products, Japanese people Ajinomoto Bakery Co. Ltd, to invest in a chilly dough stock in Shanghai in china (BreadTalk 2011). BreadTalk has additionally added an overall total of 3 famous Din Tai Fung retailers that includes the opening of any 7, two hundred sq ft outlet by Central World Mall in Bangkok, a duplex restaurant at 112 Katong purchasing centre and Marina Bay Sands in Singapore (BreadTalk 2011). Assumptions for operating expenses

Which has a larger size of BreadTalk operations internationally and regionally, we are assuming that there will be a greater in costs and costs from items, labour income and house rentals. This consists of the expenses from the distributions and selling expenses as well as other business administrative expenditures. In addition , taxes may also be affected by all of the changes in the federal government policies in the respective countries. The FCFE model may be referred to as the cash flow designed for repaying the firm’s common stockholder after deducting capital expenditure and debt repayments (Brown & Reilly 2009). II. FCFE Model

Like the DDM model, the reduced FCFE style is used to gauge the innate value of the company’s discuss price. It really is appropriate to use this model in case of where the organization does not spend a continuous stream of payouts or in worst circumstance, no payouts pay out in any way. Hence, this can be to measure the company’s present values from the expected FCFE available to investors in the future. The formula since represented:

Using the formula, the FCFE was computed to get:

FY2012F: 0. 00042

FY2013F: 0. 00327

FY2014F: 0. 00227

FY2015F: 0. 03362

(Refer to Appendix VIII)

3. FCFE Unit Evaluation

Using the FCFE with the expansion rate of 3. 4% and 7. 37% required rate of go back, the inbuilt value intended for BreadTalk talk about is computed to be $0. 68922. Contrasting with the the true market value of $0. 55 based on 18 September 2012, it might be seen that BreadTalk share price is UNDERVALUED. This will lead to higher demand for BreadTalk Talk about, which will ultimately reduce the necessary rate of return and bringing the actual share value back to calculated equilibrium, $0. 68922. Hence, the position on this would be to PURCHASE. IV. Level of sensitivity Analysis

However , similar to DDM, we will be using 1% for necessary rate of return and the growth charge for the sensitivity evaluation.

Table 12: Computed Info for FCFE’s Sensitivity Model

Based on the table, we are able to notice the trend of higher expansion rate or perhaps reduced needed of return for BreadTalk lead to the rise of innate price exponentially. Therefore , mistakenly forecasted of risk elements which can impact the required price of returning will result in wrong decision. Presented 3. 4% growth level, using several. 37% required rate of return will certainly suggest a buy decision given the share price of $0. 55. But an increase of 1% essential rate of return might state that the stock is usually overvalued. six. 14 Price-Earnings Ratio

My spouse and i. Price-Earnings Proportion Model

Price Profits Ratio procedures how much a real estate investor is willing to offer to get per buck of reported profits (Brown & Reilly 2009). It might be simply put because the number of instances the investors are willing to purchase the stock, multiplied by the forecasted income for the following year. For example, a high PRICE TO EARNINGS ratio would indicate that investors will be expecting higher growth of revenue in comparison with a reduced P/E ratio. Consequently, it is an added benefits for an investor to compare the different ratios among two corporations within the same industries, industry or even a unique historical price earnings information. Therefore , the P/E ratio would not be useful for traders if they are comparing companies of various industries because prospects vary from each industrial sectors. The formulation as displayed below:

Desk 11: Selling price Earnings Percentage Computation and Comparisons.

The P/E value of BreadTalk news can be determined using the method as of below:

V2012 = P/E 2012F x EPS 2013F

V2012 = 11. 33086115 X 0. 06188

= 0. 7012

Value of BreadTalk for 2012 was calculated being S$0. 75

2. Price-Earnings Percentage Model Analysis

The P/E ratio of BreadTalk is higher in comparison to their competitors. The importance of BreadTalk calculated using the Price/Earnings Ratio can be higher than the latest share value. We believe it truly is due the strong expected earnings as well as the assumption which the number of stocks remained a similar. For example , if perhaps BreadTalk decided to increase the range of shares to fund for their foreseeable future expansion, the computed worth of BreadTalk’s share would decrease. Thus, this would trigger the overall revenue per reveal to decrease. Our computed PRICE TO EARNINGS ratio of 11. 33 suggests that investors are willing to spend $11. 33 for every $1 of profits that the company generates. Furthermore, the P/E ratio can be decreasing signifies BreadTalk stocks and options are experiencing superior risk-adjusted results in accordance with the market overall performance. The share price of $0. seventy justifies this assumption that BreadTalk’s development potential will be UNDERVALUED. Consequently , this is a great indicator to obtain.

III. Tenderness Analysis

Sensitivity evaluation allows us to decide the tenderness of discuss price benefit to within P/E percentage and EPS. For this tenderness analysis, the EPS and the P/E rate are varied at 1 pertaining to observation in the trends in the share price.

Table doze: Computed Info for PRICE TO EARNINGS Ratio’s Tenderness Model

Looking at the trend from the number, we can infer that EPS has a substantial bearing for the intrinsic benefit of BreadTalk shares. Put simply, a larger embrace the inbuilt value with the share is caused by the increase in EPS. Therefore , the EPS forecasted influences the precision of the value of the PRICE TO EARNINGS ratio. 6. 15 Price/Book Value Percentage

I. P/BV Ratio Evaluation

The Price/Book (P/B) value proportion is being employed for the a comparison of the company’s stock exchange value to its book value. Though a low P/B ratio may possibly indicates the stock can be undervalued which may attract traders, it can also reflect that the company is facing certain primary problems such as the company assets earning poor or even adverse return (Brown & Reilly 2009). The Price/Book value ratio could be calculated by using the formula beneath: Book Benefit: Total Advantage ” Intangible

Advantage ” Total Liability

Book Value every Share = Book worth / no . of excellent shares

Price/Book Value Rate 2011 = Market Value as well as Book Value

We can consequently value the share cost of BreadTalk for the financial season (FY) using the formula: Worth = P/BVFY2012 x NAVFY2013

Presumptions:

1 . Market Share selling price remains constant at $0. 55

2 . Number of Excellent Shares remains to be the same at 281, 197, 676 a few. Income Declaration amount happen to be forecasted from the year 2012 to 2015 4. The expansion rate can be assumed to be zero.

Value of BreadTalk this january was computed to be around S$0. 60. II. Analysis of P/BV Model

From the stand above, we could clearly see that the ideals of BreadTalk computed making use of the Price/Book Worth Ratio is definitely slightly higher than the current selling price and is elevating at a moderate level. We examined that this arrives our solid forecasted profits statement activities as well as the assumption of the spectacular number of stocks and shares and market prices staying constant. Consequently , the P/BV ratio shows the decision to BUY. III. Level of sensitivity Analysis

The sensitivity analysis is used to analyse the partnership between the P/BV ratios to varied values of the NAV. With this sensitivity research, the P/BV ratio plus the NAV happen to be varied in 1 for declaration of the trends.

Table 13: Computed Info for P/BV Ratio’s Awareness Model

Taking a look at the trend in the figure, we can determine which the P/BV percentage has a confident relationship while using NAV. This can be evident if the value of the P/BV ratio increases, the significance of NAV boosts as well. The key objective is to compute the sensitivity and accuracy in the P/BV percentage to the several NAV. A precise NAV forecast will result in the accurate examination of the P/BV ratio. Consequently, in order to effectively predict P/BV

percentage, accurate NAV forecast is important.

6. Conclusion

Models| Forecasted Cost (SGD)| Real Price (As of 18 September 2012)| Evaluation| Decision| Dividend Low cost Model (DDM)| $0. 51| $0. 55| Overvalued| SELL| Free Cashflow to Value (FCFE)| $0. 69| $0. 55| Undervalued| BUY| Value / Income Ratio (P/E)| $0. 70| $0. 55| Undervalued| BUY| Price / Book Benefit Ratio (P/BV)| $060| $0. 55| Undervalued| BUY| Table 14: Comparisons and Described Data several Models. Based on our studies from the some valuations types and research, our group recommends an overall BUY decision for BreadTalk’s stocks. Through our in depth analysis around the forecasted results, we concluded that the value should not be used independently since assumptions are also taken into consideration once computing the results. Therefore , it may not certainly be a true expression of the actuality. Lastly, we believe that BreadTalk’s share cost will surge within the next number of years. However , as a result of uncertainties in the future, we would recommend investors to try to get a positive approach through BreadTalk’s economical performance on a regular basis.

4.

5.

6.

7. Reference List

1 . AsiaOne 2012, Economists slice Singapore 2012, 2013 GDP outlook ” MAS poll, AsiaOne Business, Singapore, seen 18 Sept. 2010 2012, .

installment payments on your BreadTalk 2011, Annual report 2011, BreadTalk Group Limited, Singapore, seen 18 September 2012, .

a few. BreadTalk 2012a, Board of directors, BreadTalk Group Limited, Singapore, viewed 18 Sept 2012, .

5. BreadTalk 2012b, Business guide, BreadTalk Group Limited, Singapore, viewed 17 September 2012, .

5. Dark brown, KC & Reilly, FK 2009, Examination of purchases and administration of portfolios, South-Western Cengage Learning, ninth edn, Canada.

6. Chen, C, Lin, S & Yu, G 2012, ‘Smooth transition quantile capital advantage pricing types with heteroscedasticity’, Computational Economics, vol. 45, no . one particular, pp. 19-48, viewed of sixteen September 2012, EBSCOhost Repository.

7. Coonan, C 2011, Drought risk to Chinese suppliers wheat harvest, TheNational, UAE, viewed 19 September 2012, .

8. Fairfield, P, & Yohn, To 2001, ‘Using asset turnover and revenue margin to forecast changes in profitability’, Review of Accounting Research, vol. six, no . four, pp. 371-385, viewed 16 September 2012, EBSCOhost Repository.

9. Guo, W, Wang, F & Wu, They would 2011, ‘Financial leverage and market unpredictability with different beliefs’, Economical Theory, volume. 47, number 2-3, pp. 337-364, viewed 16 Sept 2012, EBSCOhost Database.

twelve. Han, Con 2011, ‘On the relation between the industry risk premium and industry volatility’, Used Financial Economics, vol. 21, no . twenty two, pp. 1711-1723, viewed of sixteen September 2012, EBSCOhost Databases.

11. IMF 2012, Singapore 2012 content iv assessment, International Economic Fund, Singapore, viewed 18 September 2012, .

12. Investopedia 2012, Dividends per reveal ” DPS, Investopedia US, USA, looked at 14 Sept 2012

.

13. Jiang, X & Shelter, B june 2006, ‘An empirical test from the accountingbased revenue model and the traditional dividend discount model’, The Log of Business, vol. 78, no . 4, pp. 1465-1504, viewed sixteen September 2012, EBSCOhost Data source.

14. Kotler, P, Armstrong, G, Ang, S They would, Leong, S i9000 M, Color, C Big t & Yau, H M O 2009, Principles of promoting; a global perspective, 12th edn, Pearson Education South Asia, Singapore.

15. Lim, L 2012, Beefing up the job act, AsiaOne, Singapore, viewed 17 September 2012, .

sixteen. MarketWatch 2012a, Crude oil-electronic, MarketWatch, USA, viewed 13 September 2012, .

17. MarketWatch 2012b, Wheat-electronic, MarketWatch, USA, viewed 13 September 2012, .

18. MarketWatch 2012c, Sweets no . 10 world, MarketWatch, USA, looked at 14 September 2012, .

nineteen. MAS 2012a, Consumer price development in July 2012, Monetary Authority of Singapore, Singapore, seen 18 Sept 2012, .

20. MAS 2012b, Macroeconomic review, Monetary Authority of Singapore, Singapore, viewed 18 Sept 2012, .

twenty-one. MAS 2012c, MAS Annual Report 2011/12, Monetary Power of Singapore, Singapore, seen 17 Sept 2012, .

twenty-two. Reuters 2012, Diluted profits per reveal, Reuters, UNITED STATES, viewed 13 September 2012, .

23. SGX 2012, Company disclosure, Singapore exchange, Singapore, viewed 18 September 2012, .

24. Singstat 2012a, Rates of interest (at the conclusion of period), Statistics Singapore, Singapore, viewed 18 Sept. 2010 2012, .

twenty-five. Singstat 2012b, 2012 Singapore consumer price index, Figures Singapore, Singapore, viewed 18 September 2012, .

26. Tofallis, C 2008, ‘Investment unpredictability: a evaluate of normal beta evaluation and a simple way forward’, Western Journal of Operational Research, vol. 187, no . several, pp. 1358-1367, viewed 12-15 September 2012, EBSCOhost Database.

8. Appendix

Appendix I

| BreadTalk| STI|

Period| Return| HPY| Return| HPY|

Aug-11| zero. 5500| -| 2885. 26| -|

Sep-11| zero. 4750| -0. 13636| 2675. 16| -0. 07282|

Oct-11| zero. 5150| zero. 08421| 2855. 77| zero. 06751|

Nov-11| 0. 5500| 0. 06796| 2702. 46| -0. 05368|

Dec-11| zero. 5400| -0. 01818| 2646. 35| -0. 02076|

Jan-12| 0. 5600| 0. 03704| 2906. 69| zero. 09838|

Feb-12| zero. 5650| zero. 00893| 2994. 06| zero. 03006|

Mar-12| zero. 5800| 0. 02655| 3010. 46| zero. 00548|

Apr-12| 0. 5550| -0. 04310| 2978. 57| -0. 01059|

May-12| zero. 4750| -0. 14414| 2772. 45| -0. 06920|

Jun-12| 0. 5000| 0. 05263| 2878. 45| 0. 03823|

Jul-12| zero. 5400| 0. 08000| 3036. 40| 0. 05487|

Aug-12| 0. 5500| zero. 01852| 3025. 46| -0. 00360|

| σ =| zero. 07351| σ =| 0. 05231|

| Correl: | zero. 714929| | |

| Beta: | 1 ) 004727| | |

Appendix II

| 2007| 2008| 2009| 2010| 2011| 2012 2Q| 2012F| 2013F| 2014F| Bakeries| 170| 241| 301| 395| 471| 530| 603| 757| 899| Foodstuff Court| 24| 29| 33| 32| 37| 41| 42| 49| 56|

Restaurant| 6| 8| 8| 21| 26| 28| 33| 39| 45|

Total| 200| 278| 342| 448| 534| 599| 678| 845| 1, 000|

Appendix III

| Net Income| Net Sales| Total Assets| Common Equity| Profit Margin| Total Property Turnover| Economical Leverage| Returning on Fairness (ROE)| Market Average ROE | FY 2011|

BreadTalk| $11, 592| $365, 904| $292, 305| $77, 970| 0. 03168 | 1 . 25179 | a few. 74894 | 0. 14867 | 0. 07131 | Food Junction| $828| $56, 986| $51, 450|

$30, 404| 0. 01453 | 1 ) 10760 | 1 . 69221 | 0. 02723 | | Auric Pacific| $8, 566| $383, 415| $368, 978| $225, 193| 0. 02234 | 1 . 03913 | 1 . 63850 | 0. 03804 | | FY 2010|

BreadTalk| $11, 266| $302, 888| $204, 197| $68, 562| zero. 03720 | 1 . 48331 | 2 . 97828 | 0. 16432 | 0. 09252 | Food Junction| $2, 645| $48, 226| $50, 181| $31, 169| 0. 05485 | zero. 96104 | 1 . 60997 | 0. 08486 | | Auric Pacific| $6, 302| $381, 814| $374, 478| $221, 960| 0. 01651 | 1 . 01959 | 1 ) 68714 | 0. 02839 | | FY 2009|

BreadTalk| $11, 092| $246, 493| $172, 085| $60, 662| zero. 04500 | 1 . 43239 | installment payments on your 83678 | 0. 18285 | 0. 09207 | Food Junction| $3, 248| $48, 788| $44, 963| $29, 800| 0. 06657 | 1 . 08507 | 1 . 50883 | 0. 10899 | | Auric Pacific| -$3, 405| $405, 964| $362, 793| $217, 952| (0. 00839)| 1 . 11900 | 1 . 66455 | (0. 01562)| |

| BreadTalk| Food Junction| Auric Pacific|

| 2009| 2010| 2011| 2009| 2010| 2011| 2009| 2010| 2011| Revenue| $246, 493 | $302, 888 | $365, 904 | $47, 274 | $47, 362 | $55, 712 | $405, 964 | $381, 814 | $383, a hundred and five | % change| -| 22. 88%| 20. 81%| -| 0. 19%| seventeen. 63%| -| -5. 95%| 0. 34%| | | | | | | | | | |

Cost of Sales| ($112, 334)| ($137, 646)| ($165, 846)| ($8, 538)| ($7, 930)| ($9, 294)| ($252, 970)| ($225, 249)| ($225, 128)| | | | | | | | | | |

Low Profit| $134, 159 | $165, 242 | two-hundred dollar, 058 | $266 | $39, 432 | $46, 418 | $152, 994 | $156, 565 | $157, 977 | | | | | | | | | | |

Gross Revenue Margin (%)| 54. 43%| 54. 56%| 54. 67%| 0. 56%| 83. 26%| 83. 32%| 37. 69%| 41. 01%| 41. 24%| | | | | | | | | | |

Working Expenses & other income| ($117, 952)| ($147, 919)| ($182, 146)| ($36, 402)| ($36, 967)| ($45, 706)| ($154, 672)| ($146, 964)| ($147, 191)| | | | | | | | | | |

EBIT | $16, 207 | $17, 323 | $17, 912 | ($36, 136)| $2, 465 | $712 |

($1, 678)| $9, 601 | $12, 786 | | | | | | | | | | |

Operating Profit Perimeter (%)| six. 58%| five. 72%| four. 90%| -76. 44%| five. 20%| 1 . 28%| -0. 41%| 2 . 51%| 2 . 82%| Appendix IV

Appendix V

Period| STI index| HPR|

30/8/2002| 1488. 5| -|

29/8/2003| 1599. 25| 1 ) 074404|

31/8/2004| 1918. 34| 1 . 199525|

31/8/2005| 2275. 43| 1 . 186145|

31/8/2006| 2482. 39| 1 . 090954|

31/8/2007| 3392. 91| 1 . 366792|

29/8/2008| 2739. 95| 0. 807552|

31/8/2009| 2592. 9| 0. 946331|

31/8/2010| 2950. 33| 1 . 13785|

31/8/2011| 2885. 26| zero. 977945|

31/8/2012| 3025. 46| 1 . 048592|

Geometric Mean| 0. 0735| |

Appendix VI

Income Statements| | | | | |

| | | | | | |

| 2011A| 2012F| 2013F| 2014F| 2015F| |

| $’000| $’000| $’000| $’000| $’000| |

Revenue| 365, 904 | 428, 108 | 539, 416 | 690, 452 | 716, 903 | | Cost of sales| (165, 846)| (197, 221)| (254, 416)| (330, 740)| (350, 154)| | Gross profit| 200, 058 | 230, 887 | 285, 1000 | 359, 712 | 366, 749 | | | | | | | | |

Additional items of income| | | | | | |

Fascination income| 824 | 764 | 756 | 862 | 983 | |

Different income| several, 875 | 8, 943 | twelve, 016 | 10, 718 | twelve, 910 | | Reveal of results of joint ventures| 93 | 633 | 753 | 979 | you, 003 | | | | | | | | |

Various other items of expense| | | | | | |

Marketing and distribution expenses| (145, 900)| (162, 114)| (194, 536)| (237, 334)| (240, 869)| | Administrative expenses| (45, 038)| (57, 656)| (73, 799)| (95, 496)| (98, 651)| | Profit just before interest and tax| 17, 912 | 21, 457 | twenty eight, 190 | 39, 441 | 45, 125 | | Fascination expenses| (785)| (959)| (873)| (1, 039)| (1, 221)| | Earnings before tax| 17, 127 | twenty, 498 | 27, 317 | 37, 402 | 38, 904 | | Income tax expense| (5, 370)| (6, 641)| (9, 560)| (12, 672)| (12, 835)| | Income after tax| 11, 757 | 13, 857 | 17, 757 | twenty-five, 730 | 26, 069 | | | | | | | | |

Due to: | | | | | | |

Shareholders of the Company| 10, 592 | 13, 648 | seventeen, 401 | 25, 293 | 25, 603 | | Non-controlling interests| one hundred sixty five | 209 | 356 | 437 | 466 | | Profit Following Tax| 10, 757 | 13, 857 | 18, 757 | 25, 730 | 21, 069 | | | | | | | | |

No . of shares| two-hundred eighty-one, 197, 676 | two-hundred eighty-one, 197, 676 | two-hundred eighty-one, 197, 676 | two-hundred eighty-one, 197, 676 | two-hundred eighty-one, 197, 676 | | EPS| zero. 04122 | 0. 04854 | zero. 06188 | 0. 08995 | zero. 09105 | | Dividend Per Share| 0. 0100 | zero. 0125 | 0. 0166 | zero. 0221 | 0. 0229 | | | | | | | | |

Appendix VII

Balance Sheet| | | | | | |

| 2011A| 2012F| 2013F| 2014F| 2015F| |

| $’000| $’000| $’000| $’000| $’000| |

Assets| | | | | | |

| | | | | | |

noncurrent asset| | | | | | |

Property, grow and equipment| 88, 898 | 120, 381 | 145, 542 | 201, 398 | 233, 812 | | Intangible assets| 9, 214 | being unfaithful, 841 | 12, 912 | 12, 331 | 14, 629 | | Investment in associates and joint ventures| 12, 091 | 13, 109 | 19, 001 | 18, 712 | 19, 982 | | Other receivables| 1, 389 | five, 336 | 8, 901 | almost eight, 172 | 9, 181 | | Deferred tax assets| a couple of, 120 | 3, 441 | 3, 562 | 3, 781 | 3, 776 | | Total noncurrent Asset| 113, 712 | 152, 108 | 189, 918 | 244, 394 | 281, 380 | | | | | | | | |

Current assets| | | | | | |

Inventories| six, 397 | 13, 881 | 17, 920 | 17, 092 | twenty-five, 082 | | Operate receivables| several, 792 | 9, 018 | 9, 382 | 10, 981 | 12, 019 | | Other receivables| 39, 008 | 43, 483 | twenty four, 019 | 49, 682 | 60, 918 | | Prepayments| 5, 389 | six, 582 | 7, 098 | almost eight, 910 | 10, 920 | | Tax recoverable| 230 | 291 | 367 | 554 | 608 | |

Sum due| one particular, 717 | 1, 841 | you, 990 | 2, 181 | two, 894 | | Cash and cash equivalents| 87, 060 | 72, 810 | 75, 091 | 63, 719 | 53, 361 | | Total Current Assets| 148, 593 | 147, 906 | 154, 867 | 153, 119 | 155, 802 | | | | | | | | |

Total assets| 262, 305 | 300, 014 | 344, 785 | 397, 513 | 437, 182 | | | | | | | | |

Equity and liabilities| | | | | | |

| | | | | | |

Current liabilities| | | | | | |

Trade payables| 22, 896 | 25, 091 | 32, 091 | 34, 481 | 35, 772 | | Other payables| 51, a hundred and seventy-eight | 52, 091 | 55, 049 | 53, 627 | 52, 511 | | Other liabilities| 41, 124 | forty two, 141 | 40, 901 | 43, 298 | 40, 729 | | Provision| five, 871 | 6, 591 | 7, 801 | 7, 762 | 6th, 859 | | Sum due| 395 | 1, 987 | 2, 593 | two, 273 | 2, 674 | | Finance lease obligations, secured| 37 | 14 | 26 | 48 | 56 | | Financial loans and borrowings| 24, fish hunter 360 | 3, 019 | 20, 091 | twenty, 038 | 20, 928 | | Tax payable| 5, 623 | 6, 891 | 7, 670 | being unfaithful, 018 | 10, 943 | | Total Current Liabilities| 151, 484 | 157, 825 | 166, 222 | 170, 545 | 168, 472 | | | | | | | | |

Non-current liabilities| | | | | | |

Loans and borrowings| 16, 038 | 45, 869 | 68, 912 | 95, 283 | 105, 912 | | Deferred taxes liabilities| two, 276 | 2, 760 | two, 891 | 3, 172 | 3, 091 | | Various other payables and liabilities| six, 039 | 9, 291 | 10, 928 | 11, 729 | 13, 981 | | Total noncurrent Liabilities| 25, 353 | 52, 920 | 83, 731 | 115, 184 | 122, 984 | | | | | | | | |

Total liabilities| 176, 837 | 210, 745 | 249, 953 | 285, 729 | 293, 456 |

| | | | | | | |

Net assets| 85, 468 | 89, 269 | 94, 832 | 111, 784 | 143, 726 | | | | | | | | |

Equity owing to owners in the company| | | | | | | Discuss capital| thirty-three, 303 | 33, 303 | 33, 303 | 33, 303 | thirty-three, 303 | | Treasury shares| (609)| (781)| (819)| (981)| (1, 029)| | Accumulated profits| 41, 558 | 45, 695 | 51, 409 | 67, 962 | 98, 301 | | Other reserves| 3, 178 | three or more, 391 | 3, 041 | three or more, 281 | 3, 232 | | | seventy seven, 970 | 81, 608 | eighty six, 934 | 103, 565 | 133, 807 | | | | | | | | |

Non-controlling interests| 7, 498 | six, 661 | 7, 898 | eight, 183 | 9, 919 | | Total equity| 85, 468 | 89, 269 | 94, 832 | 111, 748 | 143, 726 | | Total fairness and liabilities| 262, 305 | three hundred, 014 | 344, 785 | 397, 477 | 437, 182 | | | | | | | | |

Appendix VIII

FREE CASHFLOW TO EQUITY| | | | |

| 2011A| 2012F| 2013F| 2014F| 2015F|

| | | | | |

Net gain / EPS| 11, 757 | 13, 857 | 17, 757 | 25, 730 | 26, 069 | Downgrading expense| twenty-three, 920| 27, 657 | 30, 987 | 37, 870 | 39, 882 | ” Capital expenditures| | 32, 396 | 37, 810 | 54, 476 | 36, 986 | ” Change in operating capital| | (7, 028)| (1, 436)| (6, 071)| 2, 756 | ” Principal debts repayments| 13, 532| 15, 029| 10, 452| 18, 556| sixteen, 753| Fresh debt issues| -| -| -| -| -|

| | | | | |

FCFE| thirty-five, 677 | 117 | 918 | 639 | 9, 456 |

No . of shares| 281, 197, 676 | two-hundred eighty-one, 197, 676 | 281, 197, 676 | two-hundred eighty-one, 197, 676 | two-hundred eighty-one, 197, 676 | FCFE per shares| -| 0. 00042| zero. 00327| zero. 00227| zero. 03362|

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