2011财报分析.pptx

breadtalk group: from local to global breadtalk group: from local to global breadtalk credit risk of overview overview of breadtalk business adjustment converting operating lease into capital lease non-recurring items profitability and credit risk peer companies profitability, activity, solvency and liquidity forecast balance sheet income statement cashflow statement conclusion 1 adjustmentcredit riskforecastconclusion contents c 25 breadtalk founded as an f&b operator in singapore in 2000 and listed on the sgx in 2003, the breadtalk group limited has rapidly expanded to become a distinctive household brand owner that has established its mark on the world stage with its bakery, restaurant and food atrium footprints. its brand portfolio comprises breadtalk, toast box, food republic, din tai fung, the icing room, ramenplay and carls jr in china. with global staff strength of 6,000 employees, the group has a network of over 400 bakery outlets in 16 countries such as singapore, china, hong kong, south korea and the middle east. it also operates more than 10 michelin star din tai fung restaurants in singapore and thailand, as well as over 30 award-winning food republic food atriums in singapore, prc, hong kong and malaysia. of 2 overviewadjustmentcredit riskforecastconclusion 25 breadtalk credit risk steps 1.obtain the sum of operating lease (ol) contracted 2.take the interest expense on capital lease incurred in 2007 divided by the present value of capital lease obligations at the end of 2006 the implicit interest rate can then be calculated 3.project ol payment schedules over the years 4.calculate the pv of the ol payment schedules over the years 5.calculate interest expense in year 1 base on the opening ol obligations in 2007 6.calculate the difference of the lease payments and interest expense to obtain the principal repayment each year of converting operating lease into capital lease 1 3 overviewadjustmentcredit riskforecastconclusion 25 breadtalk credit risk 9. increase current portion of liabilities by 1st year principle payments in balance sheet of 2007 10. increase long term liabilities by 1st year ending lease obligation in balance sheet of 2007 11. reduce rent expense in 2007 income statement by 2006s operating lease payments 12. increase depreciation expense in 2007 income statement 13. interest expense in 2007 income statement 14. remove principal repayment from financing cashflow 15. add principal repayment to operating cashflow 16. recalculate the ratio respectively of 4 converting operating lease into capital lease 1 overviewadjustmentcredit riskforecastconclusion 25 breadtalk credit risk information group inputs20072006 $000$000 no later than 1 year$33,411$22,438 later than 1 year but not later than 5 years$77,496$50,082 later than 5 years$21,471$6,916 $132,378$79,436 finance lease interest expense2521 finance lease obligations, secured (pv)610410 of 5 converting operating lease into capital lease 1 overviewadjustmentcredit riskforecastconclusion 25 breadtalk credit risk calculating assumptions (ignores sublease rental) 20072008200920102011 % of payment 25%25%25%25% payments made over first 5 years $22,438 $12,521$12,521 $12,521 $12,521 number of years after 2013 the existing payment runs0.55 straight line depreciation period6 years output implicit interest rate in capital lease contract6.10% =interest expense on capital lease (2007) / pv of lease obligations at beg 2007 (end 2006) of 6 converting operating lease into capital lease 1 overviewadjustmentcredit riskforecastconclusion 25 breadtalk credit risk results years lease payments implicit discount factor discounted pv interest expense principle payment lease obligation balance depreciation of assets lease asset balance total expense (dep + int) 6.10% 6.10% 2006 $66,797 $66,797 2007$22,4380.94$21,148$4,073$18,365$48,432$11,133$55,665$15,206 2008$12,5210.89$11,123$2,953$9,567$38,865$11,133$44,532$14,086 2009$12,5210.84$10,483$2,370$10,151$28,714$11,133$33,399$13,503 2010$12,5210.79$9,881$1,751$10,770$17,945$11,133$22,266$12,884 2011$12,5210.74$9,313$1,094$11,426$6,519$11,133$11,133$12,227 2012$6,9160.70$4,849$397$6,519$0$11,133$0$11,530 $79,436 $66,797$12,639$79,436$207,273$66,797$0$79,436 of 7 converting operating lease into capital lease 1 overviewadjustmentcredit riskforecastconclusion 25 breadtalk credit risk of gain on sale of property of 4.2 million in 2010 2 adjustment for non-recurring items 8 overviewadjustmentcredit riskforecastconclusion 25 breadtalk credit risk of 1 peer comparison comparison companies not public listed companies: bengawan solo, yakun and crystal jade my bread. mcdonalds (mcd), yum! brands (yum) and sakae sushi (5do) peer companies 9 overviewadjustmentcredit riskforecastconclusion 25 breadtalk credit risk more profitable than the sector except for roe. cfo growth: bt saw a large dip after 2007 global financial crisis, but maintained at approximately 20%, outperforming the sector for the past five years. sales growth: bts more volatile but still did better than the sector. of profitability ratio 2 10 overviewadjustmentcredit riskforecastconclusion 25 breadtalk credit risk gross margin: bts constant at approximately 55% operating margin: mixed, sector better in 2009 and 2010escalating operating expenses and the sales may be growing at a rate lower than that of expenses. net profit margin: dropped in 2009 and 2010. bts profitability has been relatively consistent for the past four years signaling sustainable cash flows from operations and the exceptional ability to maintain profit margins. of profitability ratio 2 11 overviewadjustmentcredit riskforecastconclusion 25 breadtalk credit risk moderate operating activities. ratio of inventory growth over sales growth : relatively constant 1.01.6inventory management kept up with its sales growth. as for asset turnover, the group largely underperformed the sector by 50%. this can be attributed to its low profit margin where the group did not outperform the sector by much and even underperformed during the period 2009-2010. of activity ratio 3 12 overviewadjustmentcredit riskforecastconclusion 25 breadtalk credit risk debt to equity ratio: bts on the rise for the past years climbing from 3.0x in 2007 to 4.5x in 2010, with an average of approximately 2x over the sectors average debt to equity ratiobt is probably taking on too much debt, and this raises a question as to whether net profit for the company will be further reduced due to the need to service its escalating debt through interest payments. of solvency ratio 3 13 overviewadjustmentcredit riskforecastconclusion 25 breadtalk credit risk of balance sheet forecast total receivables projected as a proportion of sales (5%) inventory based on inventory turnover ratio (28) total long term debt excluding leases forecasted based on the a constant long term debt to assets (5%) operating leases and gross ppe increase accordingly with sales retained earnings increased while common stock remains constant cash used to balance projected assets and the sum total of projected equity and liabilities 14 1 overviewadjustmentcredit riskforecastconclusion 25 breadtalk credit risk of income statement forecast growth rate was projected to be 8.55% for breadtalk historical weighted average growth rate of singapore (6.60%) and china (10.49%) md&a accrues 52% of sales from singapore and 48% of sales from china & hong kong cagr of breadtalk revenue has been 25.12% mean reversion to occur and growth rate to drop 0.5*6.6%+0.5*10.49%=8.55% 15 2 overviewadjustmentcredit riskforecastconclusion 25 breadtalk credit risk of income statement forecast projected items based on sales revenue would grow at 8.55% per annum cogst projected based as a percentage*revenuet sg&at projected based as a percentage*revenuet percentage = average of proportion of item of revenue for the past 5 years depreciation adjustment for lease, operating lease expense adjustment and capital lease interest expense adjustment projected as a proportion of revenue positive relationship between leases and revenue 16 2 overviewadjustmentcredit riskforecastconclusion 25 breadtalk credit risk of income statement forecast projected items not based on sales depreciation and amortization projected as a proportion of projected ppe from the balance sheet ending ppe = beginning ppe accumulated depreciation ending accumulated depreciation = beginning accumulated depreciation + depreciation expense interest expense projected as a proportion of projected total debt total debt = current debt + non-current debt proportion is derived as the historical average of interest expense over total debt 17 2 overviewadjustmentcredit riskforecastconclusion 25 breadtalk credit risk of income statement forecast assumptions no r&d were projected interest and investment income were projected to be a constant figure for the next 5 years at $0.24 million every year effective tax rate calculated as 30% was used to calculate projected taxes 18 2 overviewadjustmentcredit riskforecastconclusion 25 breadtalk credit risk of cashflow statement forecast the forecasted cashflow statements are derived from the income and balance statements. the 3 main sections: cashflow of operation cashflow of investing cashflow of financing 2519 3 overviewadjustmentcredit riskforecastconclusion breadtalk credit risk 20112012201320142015 net income13.3514.5215.7917.1618.66 depreciation, total34.5737.5340.7444.2248.0 other op. activities10.8811.8112.8213.9115.10 change in ar-2.3-0.64-0.70-0.76-0.82 change in inv1.59-2.501.51-2.591.42 change in ap1.111.641.781.942.10 change in other net op. assets 2.533.774.094.444.82 cfo61.7366.1276.0378.3289.28 of cashflow statement forecast cashflow of operations (cfo) indirect method cfo = net income + non-cash expense + adjustments in working capital 2520 3 overviewadjustmentcredit riskforecastconclusion breadtalk credit risk of cashflow statement forecast 20112012201320142015 capital expenditur e -11.91-12.67-13.76-14.93-16.21 cfi-11.91-12.67-13.76-14.93-16.21 2521 3 cashflow of investing (cfi) overviewadjustmentcredit riskforecastconclusion breadtalk credit risk of cashflow statement fore