Breadtalk Analysis Essay

Executive Summary
This reports aims to set up the current issues that BreadTalk Group Limited is confronting and how the issues will hold an impact on their net incomes and portion ratings. In our study. a calculation of DuPont ROE Analysis between BreadTalk. Food Junction and Auric Pacific was examined and it was noticed that BreadTalk’s ROE is preponderantly higher than Food Junction and Auric Pacific over the old ages of our prognosis from FY2012 to FY2015. Based on the computations.

several premises and restrictions on BreadTalk’s intrinsic value of portion monetary value were analysed and accordingly estimated with four theoretical accounts. These theoretical accounts are Dividend Valuation Model. Free Cash Flow to Equity Model. Price/Earnings Ratio Model and the Price/Book Value Model. Through the usage of the mentioned theoretical accounts. we will carry on an in-depth analysis and measure on the consequences obtained to supply an appraisal of the company’s current place and the future chances.

Contentss
Executive Summary1
1. Introduction to BreadTalk4
1. 1Overview4
1. 2Company Structure4
2. Economic Environment6
2. 1Overview6
2. 2Macroeconomic6
I. Commodity Price6
II. Gross Domestic Product ( GDP ) 7
III. Inflation8
IV. Consumer Price Index ( CPI ) 9
V. Interest Rates10
3. Industry Analysis11
3. 1Overview11
3. 2Market Segmentation11
3. 3SWOT Analysis12
I. Strength12
II. Weakness13
III. Opportunities13
IV. Threats14
4. Financial Analysis15
4. 1Recent Financial Performance15
I. Diluted Net incomes per Share ( EPS ) 15
II. Dividends per Share16
III. Payout Ration16
4. 2DuPont Analysis17
I. Return of Equity ( ROE ) Analysis17
II. Net income Margin Analysis19
III. Total Assets Turnover19
IV. Financial Leverage20
4. 3Required Rate of Return21
I. Beta ( ? ) 21
II. Risk Free Rate24
III. Market Risk Premium24
IV. Capital Asset Pricing Model ( CAPM ) 25
4. 4Growth Rate25
5. Evaluation Analysis27
5. 1Dividend Discount Model ( DDM ) 27
I. Dividend Forecast28
II. Intrinsic Share Price28
III. Evaluation of DDM29
IV. Sensitivity Analysis29
5. 2Free Cash Flow to Equity Model ( FCFE ) 30
I. FCFE Model31
II. FCFE Model Evaluation31
III. Sensitivity Analysis32
5. 3Price-Earnings Ratio32
I. Price-Earnings Ratio Model32
II. Price-Earnings Ratio Model Evaluation33
III. Sensitivity Analysis34
5. 4Price/Book Value Ratio34
I. P/BV Ratio Comparison34
II. Evaluation of P/BV Model36
III. Sensitivity Analysis36
6. Conclusion37
7. Mention List38
8. Appendix42

1. Introduction to BreadTalk
2. 1 Overview
Established in July 2000. BreadTalk started out as a bakeshop mercantile establishment at Bugis Junction. Due to increasing popularity of their merchandises. BreadTalk expanded their operations to five other retail mercantile establishments and made programs for franchising operations before being publically listed in 2003. With their proprietary trade names being BreadTalk. Toast Box. Food Republic. RamenPlay and The Icing Room every bit good as franchises from USA’s Carl’s Jr and Taiwan’s Michelin Star receiver Din Tai Fung. Having such accolade bakeshop. eating house and nutrient tribunal. BreadTalk Group Limited became a outstanding nutrient and drinks ( F & A ; B ) trade name. Consequently. the Group/BreadTalk grew into a huge web of more than 15 states. such as Mainland China. Singapore. Indonesia and Hong Kong. An operation of this graduated table is sustained by 6000 planetary employees pull offing over 500 mercantile establishments ( BreadTalk 2012b ) . 2. 2 Company Structure

The BreadTalk Group board of managers consists of 5 cardinal persons who are equipped with rich experience from assorted expertness such as research and development. investing. strategic planning and direction ( BreadTalk 2012a ) . The elaborate construction along with the direction study can be found in ( BreadTalk 2011 ) . The managers supervising the operations of BreadTalk consist of:

Katherine Lee Lih Leng| Deputy Chairman who is responsible for the Group’s research and development. oversees new constructs and thoughts. | Ong Kian Min| Independent Director. The lead Independent Director who besides chairs the Auditing and Nominating Committees. every bit good as a member of the Remuneration Committee of BreadTalk Group. | Chan Soo Sen| Independent Director who heads the Remuneration Committee. He is besides a member of the Audit Committee and Nominating Committee of BreadTalk Group. | Dr Tan Khee Giap| Independent Director. A member of the Audit Committee. Dr Tan is besides presently the Co-Director of Asia Competitiveness Institute and an Associate Professor of Public Policy at the Lee Kuan Yew School of Public Policy at the National University of Singapore. He besides chairs the Singapore National Committee for Pacific Economic Cooperation and holds directorships in a few listed companies in Singapore. |

2. Economic Environment
3. 3 Overview
This subdivision extends the overview of the macroeconomic factors that will impact BreadTalk Group. Macroeconomic factors refer to an facet that resides outside the environment of the company where it involves the economic system from both regional and national degrees. These factors consist of rising prices. labour cost. currency exchange rate and the planetary economic public presentation. BreadTalk may meet assorted issues such as high labour cost and natural stuffs monetary values which may impact their operating disbursals. These factors can be farther analysed utilizing the assorted macroeconomic issues mentioned below. 3. 4 Macroeconomic

I. Commodity Price

Table 1: World Agriculture Pricing Summary
Datas obtained from Monetary Authority of Singapore.

Table 2: Agribusiness Consumption and Production.
Datas obtained from Monetary Authority of Singapore.
Wheat monetary values increased greatly from the past 6 months but bit by bit diminishing at an mean rate of 0. 87 % as of 13 September 2012 ( MarketWatch 2012b ) . However. rough oil monetary values decreased significantly during the first half of 2012. But from July onwards. it rose at an norm of 14 % for the following 3 months ( MarketWatch 2012a ) . Similarly. the monetary values of sugar dropped reasonably before lifting at an mean rate of 0. 15 % as of 13 September 2012 ( MarketWatch 2012c ) . In position of the above trade goods fluctuations. we can understand that these indispensable altogether stuffs greatly affects the operating cost for the concerns under the BreadTalk group as they are basic necessities for the input of their day-to-day operations. II. Gross Domestic Product ( GDP )

A recent quarterly Survey of Professional Forecasters released by Monetary Authority of Singapore ( MAS ) reveal that Singapore’s GDP will be expected to spread out at a slower gait this twelvemonth at 2. 4 % compared to a median of 3. 0 % estimated three months ago ( AsiaOne 2012 ) . Singapore’s official economic growing is set to be 1. 5 % to 2. 5 % this twelvemonth with the growing of fabrication and fiscal sectors adjusted down from 3. 0 % to 2. 7 % and 2. 7 % to 1. 1 % severally. At the consumer terminal. retail gross revenues reported important growing in the first few months of January and February. The nutrient and drink services sector has seen an mean addition in their gross revenues of up to 2. 6 % month-on-month. mostly contributed by the addition in figure of locals and tourers who dined at eating houses and other nutrient mercantile establishments ( MAS 2012b ) . Additionally. Singapore’s 2013 mentality on the average prognosis of GDP growing is besides reduced from 4. 5 % to 3. 9 % . Businesss are well affected by the economic activities. and BreadTalk is non spared. BreadTalk should take into history of the altering GDP as the addition disbursement by consumer can be reflected by a rise in GDP. By looking at the forecasted GDP for 2013. BreadTalk can look frontward to higher disbursement by consumers. They can break strategise where they enlargement programs can be see during economic roar. or holding eventualities programs such as minimising operating costs when GDP growing is slow. III. Inflation

The little addition in consumer monetary values in Q1 of 2012 is expected through the pass-through of cost force per unit areas that are built up over 2010 and 2011. The overall rising prices will stay steadfast with the subsequent monetary value hikings. and will finally ease towards the terminal of the twelvemonth. Analysts have forecasted that the little addition is merely impermanent and overall rising prices will chair to their historical norm. The domestic nutrient monetary values are likely to lift reasonably for the remainder of the twelvemonth due to the increasing trade good monetary values that have yet to be taken upon by the consumers. For case. the spike in trade good monetary values due to external dazes in 2010 and 2011 has yet to be to the full reflected in retail monetary values where providers promises to keep house-brand monetary values stable until the terminal of June. Consumers will be affected subsequently when companies pass these higher operating costs to them. Therefore. nutrient rising prices this twelvemonth is projected to be 3. 1 % ( MAS 2012b ) .

Singapore’s nucleus rising prices mentality is presently targeted at 2. 5 % . which is 0. 2 % lower than the predicted figure of 2. 7 % three months ago. Core rising prices excludes adjustment and conveyance factors that are chiefly influenced by authorities policies. Furthermore. rising prices is besides due to higher trade goods monetary values every bit good as the increased rewards for low-skilled workers. This is caused by the rigorous hiring limitation imposed by the authorities on foreign workers ( MAS 2012c ) . At the same clip. overall planetary trade good monetary values remain below the old twelvemonth degrees. This helps to maintain domestic oil and nutrient rising prices controlled in the close hereafter. Therefore. MAS nucleus rising prices will go on to run between 2. 5 % – 3. 0 % or may be somewhat lower in the following few months or even the whole twelvemonth ( MAS 2012a ) . As for now. the adjusted projection for 2013 rising prices is set at 3. 2 % . up by 0. 2 % where the targeted rising prices of 3. 0 % is to be expected following twelvemonth ( AsiaOne 2012 ) . The addition in rising prices will trip the consequence of lifting monetary values for both merchandises and services in the market. This will do companies like BreadTalk to incur significant costs for their twenty-four hours to twenty-four hours operations. In bend. BreadTalk will be pressurised to increase the monetary values for their merchandises in order to countervail these extra costs. However. the addition in monetary values may besides endanger the gross revenues of BreadTalk as clients may seek other cheaper options. IV. Consumer Price Index ( CPI )

Consumer Price Index ( CPI ) is an instrument to mensurate the current consumer monetary value rising prices due to monetary value alterations in a fixed basket of ingestion goods and services normally purchased by the families over a certain period ( Singstat 2012c ) . It includes all ingestion outgo that are expanded by resident families. less other non-consumption outgos such as purchase of securities. belongings and other fiscal assets. Resident families are defined as individuals held by Singapore Citizen or Permanent Resident ( PR ) . In order to analyze BreadTalk farther. it is of import to estimate the CPI for the peculiar twelvemonth. Whereas BreadTalk trades with the nutrient and services sector such as eating house and bakeshop. we can look into the basket of peddler nutrient ( including nutrient tribunals ) . eating houses. sugar conserves and confectionery in the CPI basket. In the period of Jan – Jun 2011 to Jan – Jun 2012. the per centum addition in monetary values of these basket of points are 2. 3 % . 3. 9 % and 2. 2 % severally ( Singstat 2012c ) . Inflationary force per unit areas can be felt highest in eating houses. Further prognosis towards the terminal of the twelvemonth signals the overall consumer monetary value index lifting from 4. 2 % to 4. 4 % based on a polled by Survey of Professional Forecasters done by MAS ( Singstat 2012c ) . BreadTalk. being an international concern. is able to use these CPI indexes to calculate the consumers’ outgos of relevant states and accommodate to the monetary value sensitiveness of the consumers by estimating the consumers’ current and future buying power. I.

II.
III.
IV.
V. Interest Ratess
Prime loaning rates remain dead at the per centum of 5. 38 without any alterations since 2008 ( Singstat 2012a ) . The addition in involvement rates will do a direct impact on BreadTalk as it has to depend on the Bankss to borrow money. In the concerns perspective. they will incur higher costs for loan refunds from the higher involvement disbursals.

1.
2.
3. Industry Analysis
3.
4. 5 Overview

Graph 1: Business Life Cycle
The industry life rhythm indicates that BreadTalk is presently in the rapid speed uping growing phase as they are still seeking enlargement in the planetary and local market. due to the increasing demands from the consumers. The grounds for such addition is due to the population growing along with the turning GDP of developing states like China and Indonesia. where consumers seek higher criterions of life and with better buying power to purchase or patronize quality merchandises every bit good as services offered by BreadTalk. Market impregnation in Singapore besides suggests the ground why BreadTalk is developing programs for their planetary enlargement in order to derive more market portion. 4. 6 Market Segmentation

Market cleavage is the separation of consumers in the market based on their geographical. psychological. behavioral and demographic differences. Due to the different features. we can place possible consumers of BreadTalk. This is to let preparation of a program that will be able to stir their involvement in order to increase gross revenues and maximise gross. 4. 7 SWOT Analysis

I. Strength
Unique Branding
The alone stigmatization every bit good as its advanced scope of merchandises from its bakeshops appealed greatly to the consumer’s involvement. Coupled with the company’s typical designs of its mercantile establishment consisting of a diaphanous glass window that allows client to see the bakers at work. this displays a friendly environment for the consumers every bit good as portraying a modern-day image of the company. Merchandises

Due to the dynamic gustatory sensation and penchants from the consumers. BreadTalk seeks to constantly develop and present new merchandises amounting to every bit much as 10 points every one-fourth as an add-on to its bing 150 choices of pastries. bars every bit good as staff of lifes. By revolutionising the bread civilization. BreadTalk has successfully gained consciousness of its merchandises through the acknowledgment from assorted international involvements due to its alone gustatory sensation and physical entreaty. Locally. BreadTalk had besides gained acknowledgment from assorted local awards such as the Singapore Promising Brand Award. which suggest the popularity of the merchandises. Strategic Locations

Majority of BreadTalk mercantile establishments are located either in shopping promenades or near to public conveyance hubs. Strategic arrangements of BreadTalk mercantile establishments at high traffic volume topographic points attract possible clients. Therefore. the location of the mercantile establishments plays an of import component to drive high volume of gross revenues. In add-on. by puting the BreadTalk mercantile establishments near other popular retail shops. such as supermarkets and departmental shops. will further pull more possible clients. II. Failing

Pricing
With its merchandises being priced higher as compared to its rivals. budget witting consumers will be put off to buy BreadTalk merchandises. particularly with bread being a trade good. Selection of Merchandises

Although holding a wide mixture of merchandises. BreadTalk’s mixture is confined to bread and bars. as opposed to some of its rivals that extends its choice to include pastries and other mixtures. Rising Wagess

In Singapore. the alteration of employee policy by authorities might raise costs of the low skilled workers for employers. For illustration. employers are required to increase their parts towards employees and levies of the foreign workers. Workers might besides increase their pay outlooks in future ( Lim 2012 ) . III. Opportunities

Nature of Merchandises
Since staff of life is considered a basic and trade good in legion states. BreadTalk has potency for planetary growing as there is continual demand for staff of life ; an chance for spread outing its concern internationally. Future developments of Shopping Centres

Shoping Centres in new strategic location provides ample chances for BreadTalk to spread out its ventures which will lend to a larger market portion in its operating industries. International Markets

BreadTalk ventures into other markets by organizing partnerships with states such as China. Indonesia. Philippines and Hong Kong.

IV. Menaces
Product/Brand Concept Replication
The reproduction of BreadTalk’s product/brand construct is considered a weak menace in Singapore due to its current market portion and presence. However. a greater menace would be the reproduction by bakeshops in parts that have non been ventured into by BreadTalk. such as the States. Australia and Europe.
presenting as a barrier of entry for BreadTalk ; particularly in China where reproduction is common. Competition

With the addition in emerging bakeshops. BreadTalk encounters a tough competition against rivals like Delifrance along with other rivals in the nutrient tribunal industry such as Food Junctions. Fluctuations of natural stuff monetary value

BreadTalk may be affected by fluctuations of the natural stuffs monetary values. such as wheat. sugar. rough oil and terrible climatic conditions as this will take to an addition in supply costs. These are some external factors which are beyond the control of the company.

4. Fiscal Analysis
5. 8 Recent Financial Performance
Mentioning to Appendix IV. BreadTalk experienced positive growing in footings of gross from 2007 to 2011. However. there was a lessening in gross growing in 2009 and 2011. amounting a sum of $ 246. 493. 000 and $ 365. 904. 000 severally. The cause for this slow growing is due to the important addition in outgos from distributions and administrative disbursals for both old ages. Despite the slower growing in grosss and the rise in disbursals. BreadTalk is still doing overall net income as the Earnings. Before Interest and Tax ( EBIT ) are exposing a positive per centum yearly. As EBIT does non take into history of the different external factors such as the revenue enhancement policies and the fiscal involvement. it can accurately cipher the overall profitableness of the company every bit good as concentrating on the company’s ability for net income coevals based on its gross revenues. In the instance of BreadTalk. the EBIT borders indicated positive per centum yearly but experienced a lessening in 2011. Due to factors such as lifting flour monetary values during the drouth in China. there were guesss that China may be required to import wheat ( Coonan 2011 ) . Another factor was the lower net income coevals from the Singapore and China bakery mercantile establishments which are compensated by the belongings disposal in China. which amounts to $ 4. 2 million ( BreadTalk 2012b ) . I. Diluted Net incomes per Share ( EPS )

Diluted Net incomes Per Share ( EPS ) is a measuring of the quality of a company’s net incomes if all the company exchangeable securities were exercised ( Reuters 2012 ) . These securities will ensue in an addition in the entire outstanding portions. The net incomes will be divided by all the company securities. Year| FY2008| FY2009| FY2010| FY2011|

Diluted EPS ( cents ) | 2. 76| 3. 94| 3. 99| 4. 10|
Increment ( % ) | -| 42. 75 % | 1. 27 % | 2. 76 % |
Table 3: Diluted EPS Table: From 2008 To 2011
The diluted EPS increase of 42. 75 % from FY2008 to FY2009 is due to the accommodation as BreadTalk issued fillips portion in 2010 ( BreadTalk 2011 ) . However. there is a steady increase from 2010 onwards. II. Dividends per Share

Dividends per portion ( DPS ) measures the most recent dividend paid over entire figure of portions held by the company ( Investopedia 2012 ) . It really determines how much the stockholders receive by manner of dividends and may besides be used to cipher the dividend output. This can be computed by the expression below:

D – Dividends paid to equity stockholders for a period ( including interim dividends )
SD – Special Dividends. dividends that are issued one time
S – Total figure of outstanding issued equity portions
The entire figure of ordinary portions can be calculated utilizing the leaden norm over the coverage period.

Year| FY 2008| FY 2009| FY 2010| FY2011|
DPS ( cents ) | 0. 55| 1| 1| 1|
Table 4: Displaced person tabular array: From FY 2008 To FY 2011
As shown in table 3. dividends per portion has somewhat increased by $ 0. 0045 from 2008 to 2009 and remained at changeless rate of $ 0. 01 per twelvemonth from FY2009 to FY2011. III. Payout Ration
Payout ratio is use to exemplify how companies proportionate their net incomes. For case. a high payout ratio indicates that the company is giving out more of the company’s net incomes to their investors. Whereas a lower payout ratio indicates that the company retain more of their net incomes for future investings. It besides acts as an index to how good the company’s net incomes can back up the dividend payouts. It is easier to pay out dividends of a smaller sum than a larger amount. Therefore. it demonstrates the security of buying a portion with a smaller payout ratio. The payout ratio is calculated as follows:

DPS – Dividends per Share
EPS – Net incomes per Share

Year| FY 2008| FY 2009| FY 2010| FY 2011|
Net incomes Per Share ( cents ) | 2. 76| 3. 95| 4. 01| 4. 12|
DPS ( cents ) | 0. 55| 1| 1| 1|
Payout Ratio| 0. 199275| 0. 2531646| 0. 2493766| 0. 2427184| Table 5: Past Payout Ratio from Year 2008 to 2011.
Datas obtained from BreadTalk Annual Report 2008 to 2011
Base on past dividends payouts from 2008 to 2009. there was a significant addition in the payout ratio from 19 % to 25 % due to increment in both EPS and DPS that was given out as mentioned before. As from FY2009 to FY2011. the payout ratio remains dead at an norm of 24 % . 5. 9 DuPont Analysis

I. Return of Equity ( ROE ) Analysis
Importance of ROE
The Return on Equity ( ROE ) refers to the rate of return that the direction earned with the capital invested by the shareholders. after subtracting the payments to all other capital providers. The deliberate ratio is deemed of import to the company as it will be used as an index for the company’s profitableness. every bit good as for comparing with other rivals in the same industry.

DuPont Analysis
The dislocation of ROE will let us to see the assorted factors which can act upon the company’s public presentation. The analysis identified 3 factors that will act upon ROE. These are known as Operating Efficiency. Asset-use Efficiency and Financial Leverage.

Chart 1: Comparison of ROE. Refer to Appendix III.
The DuPont Analysis indicates that BreadTalk is surpassing its rivals like Auric Pacific Ltd every bit good as Food Junction. Judging from Chart 1. the ground for the lessening in ROE from BreadTalk is chiefly due to the addition in operating disbursals of 54. 42 % from $ 117. 952. 000 in FY2009 to $ 182. 146. 000 in FY2011. Over the period of 3 fiscal old ages. BreadTalk experienced a instead changeless ROE with their ROE decreased by 3. 41 % from 2009 to 2011. The changeless ROE that BreadTalk experience is comparatively normal in comparing with other companies in the same industry. However. due to higher cost of goods and disbursals of Auric which exceeded the generated gross. there is a negative impact on the computed ROE. II. Net income Margin Analysis

The net income border is defined as the extent of the company’s ability to pull off the coevals of grosss from cost control. This includes the considerations of the company’s operating efficiency which constitutes portion of their scheme ( Fairfield & A ; Yohn 2001 ) .

Chart 2: Comparison of Profit Margin. Refer to Appendix III. BreadTalk had a lower net income border as compared with Food Junction in FY2009 and FY2010. Both are diminishing from FY2009 to FY2011. However. the lessening of BreadTalk net income border is considered to be moderate as compared with the drastic bead of Food Junction net income border. From the chart above. BreadTalk remains in a strong place in comparing with their rivals in FY2011. III. Total Assets Turnover

The Asset Turnover is the measuring of the company’s effectivity to bring forth grosss from their assets. This will reflect the company’s plus use.

Chart 3: Comparison of Total Assets Turnover. Refer to Appendix III. BreadTalk had the highest productiveness as compared with Food Junction and Auric Pacific. We can detect a little lessening of 0. 23 % . from 1. 48 % in FY2010 to 1. 25 % in FY2011 while the per centum motion for Food Junction and Auric Pacific remains undistinguished. This implies that Food Junction and Auric Pacific is more efficient in bring forthing stable assets turnover. Information on the future profitableness of BreadTalk can besides be observed from the alteration in plus turnover ( Fairfield & A ; Yohn 2001 ) . IV. Financial Leverage

Fiscal Leverage Analysis is the survey of the grade whereby the company purchase on the common equity in order to borrow money to get assets. A company with a low purchase ratio will be perceived as less hazardous when comparison with another company with a higher purchase ratio ( Guo. Wang & A ; Wu 2011 ) .

Chart 4: Comparison of Financial Leverage. Refer to Appendix III. The BreadTalk high purchase ratio indicates a higher hazard over their rivals. During the roar period. the high purchase is good as it permits the company to accomplish greater net incomes. In contrast. the company will meet hard currency flow jobs during the recession periods. as the company might non be able to pay off the involvement refunds with the gross revenues gross. 5. 10 Needed Rate of Return

I. Beta ( ? )
Beta is defined as holding a additive relationship matching to the rate of return of an investing every bit good as the market index. Beta fundamentally measures the grade of an asset’s volatility to the market or the volatility of the fund to the benchmark. Stockss with beta larger than 1 are considered aggressive stocks and being more volatile than the market index while beta with less than 1 are considered as defensive stocks that are less volatile than the market index ( Tofallis 2008 ) .

Graph 2: Beta Computation. Refer to Appendix I.
The expression to deduce the Beta utilizing the characteristic line is:

RBreadTalk = a + bBreadTalk ( RSTI ) + vitamin E

whereby:
RBreadTalk| = realized returns of BreadTalk|
RSTI| = realized returns of STI Index 1|
a| = intercept return independent of the market|
b| = incline of the characteristic line|
e| = unsystematic hazard ( norms to zero ) |

The premise is that the returns of the STI Index are to be used as a placeholder for the market portfolio. When the above expression is rewritten and applied in similar footings with the CAPM expression. the Beta of BreadTalk is: ?BreadTalk= Covarance ( RBreadTalk. RSTICovariance of RSTI

BreadTalk Raw Beta is computed utilizing the arrested development analysis based on market portfolio of STI and BreadTalk’s monthly realized returns for the period of September 2011 to August 2012. Based on the information collected. the construct of Holding Period Yield ( HPY ) is applied based on annualized computation in order to happen out how much output can obtain from an investing in a same period. This HPY figures calculated are so farther used to plot the arrested development graph in order to develop a best fit characteristic line to analyze the correlativity between the returns. The slope/gradient of the arrested development curve will so bespeak the Raw Beta of BreadTalk. As shown in the above chart. the scattered graph shows a additive relationship between the HPY of STI and BreadTalk. The Raw Beta from the gradient is at 1. 0047 where the correlativity coefficient is found to be 0. 7149 ( mention to Appendix I ) . However. this natural beta might non be accurate as other factors such as market placeholder and clip interval may impact the beta significantly. Therefore. it is necessary to set the natural beta. Using the adjusted beta expression:

Adjusted beta = ( 2/3 ) ( natural 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 contemplation of the hazard in a stock. This shows that any stock returns that is out of line with the
market returns will be adjusted into line with the market. II. Table [ 6 ] : Output for Singapore Government Securities ( Reference from IMF ) Risk Free Rate

We will be utilizing the 10 old ages authorities bonds yield as the market hazard free rate to move as a criterion of measuring for all fiscal sectors. because it is simpler to manage states that do non publish Treasury measures in a consistent mode. The hazard free rate based on 17 Sep 2012 will be 1. 55. III. Market Risk Premium

Market hazard premium determines the degree of compensation that risk-averse investor can anticipate to have from puting in a volatile market by subtracting the expected returns from predominating hazard free rate ( Han 2011 ) ) . It deals with factors that include market systematic hazard and market volatility. Therefore. it is indispensable to take into history the hazard premium that is link with volatility hazard in order to analyze the relationship between market hazard and returns. Risk Premium= Rm- Rf

Rm=Market Return
Rf=Risk Free Rate
Since our prognosis is based on portion monetary value of a local stock listed on STI. we decided to utilize the 10-years securities issued by the Singapore authorities in order to aline with market with consistence. Base on this premise. the 10-years securities is used in calculating the geometric hazard return. We obtained 0. 0735 to be used for our market return for hazard premium computation ( mention to Appendix V ) . Therefore. the hazard premium is calculated to be 0. 058 based on the market return and hazard free rate. IV. Capital Asset Pricing Model ( CAPM )

Capital plus pricing theoretical account ( CAPM ) is use in measuring hazardous stocks or portfolios of stocks every bit good as lucubrating the relationship between the expected return and systematic hazard in the market ( Chen. Lin & A ; Yu 2012 ) . Rf=0. 0155|

Rm=0. 058|
( Rm- Rf ) =0. 058|
?=1. 00313|

CAPM FORMULA

Through the usage of the CAPM equation above. we are able to find the needed rate of return on the stocks for BreadTalk to be 7. 37 % . 5. 11 Growth Rate Harmonizing to our industry analysis. BreadTalk is still in the enlargement stage with the purpose of 1000 mercantile establishments within the following 2 to 3 old ages. from 2012 onwards. BreadTalk went into a joint venture. with Nipponese Ajinomoto Bakery Co. Ltd. which was opened on January 2012 in Shanghai. We foresee that this joint venture every bit good as the 1000 mercantile establishments mission will take to a supranormal growing in the future DPS of 25 % in FY2012 and 33 % for FY2013 to FY2014. We would anticipate the supranormal growing to stabilise and finally cut down to a changeless rate of 3. 4 % . The derivation of 3. 4 % growing rate is based on the undermentioned premise. The forecasted Singapore GDP for 2015 is 3. 7 % and we would anticipate the changeless growing rate to be lower than the forecasted GDP every bit good as the needed rate of return of 7. 37 % ( IMF 2012 ) . Phase 1: Low to Moderate Growth Stage2012| Phase 2: High Growth Rate2013-2014| Phase 3: Changeless Growth Rate2015 onwards| Forecasted growing rate of 25 % . Joint ventures with Nipponese Ajinomoto Bakery Co. LtdIncrease of mercantile establishment by 144. from 534 to 678 ( refer to Appendix II ) | Forecasted growing rate of 33 % . Venturing into new market such as Taiwan. Further addition of mercantile establishment to 1000 by 2014. | Forecasted growing rate of 3. 4 % . Stable economic system. Reaching the phase of adulthood. stable income watercourse. reduced capital required/| Table 7: Forecasted growing rate

5. Evaluation Analysis
6. 12 Dividend Discount Model ( DDM )
All the present values of the expected future stockholders dividend payout by the company is being determined by the DDM theoretical account. The appropriate price reduction rate being employed is the cost of equity. For case. the stock will be considered overvalued if the value obtained from the DDM is lower than the current stock value. This theoretical account will non work if the company does non pay out dividends. It is good to observe that non all companies issue dividends even if they experience increasing growing rate as these net incomes may be used to reinvest back in the company ( Brown 2009 ) . Even though DDM is good for measuring mature companies. this does non use to BreadTalk because they do non belong to the mature stage of their life rhythm. The dividends are non expected to turn at a changeless rate as shown in the equation below:

In fact. holding a changeless growing rate is comparatively unrealistic. Changes in a firm’s concern schemes or sing state of affairss will do the chances of the house to be adjusted. Taking this into consideration. the multi-levelled dividend growing rate theoretical account maintains the likeliness of different degrees dividend growing. As shown by the equation below.

I. Dividend Prognosis
We will calculate the dividend per portion for 2012 to 2015 based on the premise of the future growing rate as discussed in growing rate under subdivision 4 of the study. | 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: Forecasted Dividends for 2012 to 2015
Given the forecasted dividend from 2012 to 2015 along with the expected changeless growing rate of 3. 4 % and needed rate of return of 7. 37 % . we will be able to calculate the portion monetary value of BreadTalk based on the expression below. II. Intrinsic Share Price

Given the forecasted dividend from 2012 to 2015 along with the expected changeless growing rate of 3. 4 % and needed rate of return of 7. 37 % . we will be able to calculate the portion monetary value of BreadTalk based on the expression below.

III. Evaluation of DDM
In comparing to BreadTalk portion monetary value of $ 0. 55 on 18th September 2012. the computed portion monetary value of $ 0. 50919 suggests that BreadTalk portion monetary value is somewhat OVERVALUED ( SGX 2012 ) . Therefore. the DDM implies a SELL determination.
IV. Sensitivity Analysis

As the needed rate of return computation is based on past public presentation with some prediction and the growing rate is based on premise. there will be opportunities that existent public presentation will non fit the coveted result. Therefore. we will be utilizing sensitivity analysis to foretell the public presentation in instance the state of affairs did non turn out to be as predicted based on ± 1 % for needed rate of return and the growing rate.

Table 9: Computed Data for DDM’s Sensitivity Model
From the comparing of Table 7. we can understand that higher growing rate will ensue in higher portion monetary values whereas the higher needed rate of return will ensue in a lower portion monetary values. Required rate of return can be affected by the hazard factor ( ? ) . Therefore. if the needed return for BreadTalk additions by 1 % . there will be a noteworthy bead of portion monetary value given a changeless growing rate. 6. 13 Free Cash Flow to Equity Model ( FCFE )

In order to measure the portion monetary value of BreadTalk by utilizing the Free Cash Flow Equity ( FCFE ) theoretical account. we have forecasted the income statements of BreadTalk from 2012 to 2015 ( mention to Appendix VI & A ; VII ) . We need to see a few premises when prediction. Premise for Gross

The corporate purpose of BreadTalk is to go a strong trade name internationally and locally with its rapid enlargement programs to accomplish its mark of 1000 mercantile establishments within the following three old ages ( BreadTalk 2011 ) . In the planetary spending. the figure of bakeshops found in 43 metropoliss in mainland China has increased by 5 mercantile establishments over the past twelvemonth. With the mentality for Mainland China staying positive. BreadTalk has capitalised on its moneymaking chances. For case in January 2012. BreadTalk has entered into a collaborative venture with taking participant in bakeshop dough merchandises. Nipponese Ajinomoto Bakery Co. Ltd. to put in a frozen dough mill in Shanghai ( BreadTalk 2011 ) . BreadTalk has besides added a sum of 3 iconic Din Tai Fung outlets that includes the gap of a 7. 200 sq ft mercantile establishment at Central World Mall in Bangkok. a duplex eating house at 112 Katong shopping Centre and Marina Bay Sands in Singapore ( BreadTalk 2011 ) . Premises for operating disbursals

With a larger graduated table of BreadTalk operations globally and locally. we are presuming that there will be a rise in outgos and costs from trade goods. labour rewards and belongings leases. This includes the disbursals from the distributions and merchandising disbursals along with other concern administrative outgos. Additionally. revenue enhancements may besides be affected by the alterations in the authorities policies in the several states. The FCFE theoretical account can be referred to as the hard currency flow available for refunding the firm’s common shareholder after subtracting capital outgo and debt payments ( Brown & A ; Reilly 2009 ) . II. FCFE Model

Similar to the DDM theoretical account. the discounted FCFE theoretical account is used to measure the intrinsic value of a company’s portion monetary value. It is appropriate to utilize this theoretical account in state of affairss where the company does non pay a uninterrupted flow of dividends or in worst instance. no dividends pay out at all. Hence. this is to mensurate the company’s present values of the expected FCFE available to stockholders in the hereafter. The expression as represented:

Using the expression. the FCFE was computed to be:
FY2012F: 0. 00042
FY2013F: 0. 00327
FY2014F: 0. 00227
FY2015F: 0. 03362
( Mention to Appendix VIII )

III. FCFE Model Evaluation
Using the FCFE with the growing rate of 3. 4 % and 7. 37 % needed rate of return. the intrinsic value for BreadTalk portion is computed to be $ 0. 68922. Comparing with the market value of $ 0. 55 based on 18 September 2012. it can be seen that BreadTalk portion monetary value is UNDERVALUED. This will take to higher demand for BreadTalk Share. which will finally cut down the needed rate of return and conveying the existent portion monetary value back to computed equilibrium. $ 0. 68922. Therefore. the place of this would be to BUY. IV. Sensitivity Analysis

However. similar to DDM. we will be utilizing ± 1 % for needed rate of return and the growing rate for the sensitiveness analysis.

Table 10: Computed Data for FCFE’s Sensitivity Model

Based on the tabular array. we can detect the tendency of higher growing rate or reduced required of return for BreadTalk lead to the addition of intrinsic monetary value exponentially. Therefore. wrongly forecasted of hazard factors which can impact the needed rate of return will ensue in incorrect determination. Given 3. 4 % growing rate. utilizing 7. 37 % needed rate of return will propose a bargain determination given the portion monetary value of $ 0. 55. But an addition of 1 % needed rate of return would province that the stock is overvalued. 6. 14 Price-Earnings Ratio

I. Price-Earnings Ratio Model
Price Net incomes Ratio measures how much an investor is willing to offer for per dollar of reported net incomes ( Brown & A ; Reilly 2009 ) . It can be merely put as the figure of times the investors are willing to pay for the stock. multiplied by the forecasted net incomes for the undermentioned twelvemonth. For case. a high P/E ratio would bespeak that investors will be anticipating higher growing of net incomes in comparing with a lower P/E ratio. Consequently. it is an added advantage for an investor to compare the assorted ratios between two companies within the same industries. market or even its ain historical monetary value net incomes records. Therefore. the P/E ratio would non be utile for investors if they are comparing companies of different industries as chances differ from each industries. The expression as shown below:

Table 11: Price Net incomes Ratio Computation and Comparisons.
The P/E value of BreadTalk in 2012 can be calculated utilizing the expression as of below:
V2012 = P/E 2012F x EPS 2013F
V2012 = 11. 33086115 Ten 0. 06188
= 0. 7012
Value of BreadTalk for 2012 was calculated to be S $ 0. 70
II. Price-Earnings Ratio Model Evaluation
The P/E ratio of BreadTalk is higher in comparing to its rivals. The value of BreadTalk computed utilizing the Price/Earnings Ratio is higher than the current portion monetary value. We believe it is due our strong forecasted net incomes and the premise that the figure of portions remained the same. For illustration. if BreadTalk decided to increase the figure of portions to fund for their future enlargement. the computed value of BreadTalk’s portion would diminish. Therefore. this would do the overall net incomes per portion to diminish. Our computed P/E ratio of 11. 33 suggests that investors are willing to pay $ 11. 33 for every $ 1 of net incomes that the company generates. Furthermore. the P/E ratio is diminishing which indicates BreadTalk stocks are sing superior risk-adjusted consequences comparative to the market public presentation. The portion monetary value of $ 0. 70 justifies this premise that BreadTalk’s growing potency is being UNDERVALUED. Therefore. this is an index to BUY.

III. Sensitivity Analysis
Sensitivity analysis allows us to find the sensitiveness of portion monetary value value to alterations in P/E ratio and EPS. For this sensitiveness analysis. the EPS and the P/E ratio are varied at ± 1 for observation of the tendencies in the portion monetary value.

Table 12: Computed Data for P/E Ratio’s Sensitivity Model
Looking at the tendency from the figure. we can deduce that EPS has a significant bearing on the intrinsic value of BreadTalk portions. In other words. a larger addition in the intrinsic value of the portion is due to the addition in EPS. Therefore. the EPS forecasted affects the truth of the rating of the P/E ratio. 6. 15 Price/Book Value Ratio

I. P/BV Ratio Comparison
The Price/Book ( P/B ) value ratio is being used for the comparing of the company’s stock market value to its book value. Even though a low P/B ratio may perchance bespeak that the stock is undervalued which may pull investors. it can besides reflect that the company is confronting certain cardinal jobs such as the company assets gaining hapless or even negative return ( Brown & A ; Reilly 2009 ) . The Price/Book value ratio can be calculated by utilizing the expression below: Book Value: Entire Asset – Intangible
Asset – Total Liability

Book Value per Share = Book value / no. of outstanding portions

Price/Book Value Ratio 2011 = Market Value / Book Value

We can therefore value the portion monetary value of BreadTalk for the fiscal twelvemonth ( FY ) utilizing the expression: Value = P/BVFY2012 x NAVFY2013
Premises:
1. Market Share monetary value remains changeless at $ 0. 55
2. No. of Outstanding Shares remains the same at 281. 197. 676 3. Income Statement sum are forecasted from the twelvemonth 2012 to 2015 4. The growing rate is assumed to be zero.
Value of BreadTalk for 2012 was computed to be around S $ 0. 60. II. Evaluation of P/BV Model
From the tabular array above. we can clearly see that the values of BreadTalk computed utilizing the Price/Book Value Ratio is somewhat higher than the current market monetary value and is increasing at a moderate rate. We evaluated that this is due our strong forecasted income statement public presentations every bit good as the premise of the outstanding figure of portions and market monetary values staying changeless. Therefore. the P/BV ratio indicates the determination to BUY. III. Sensitivity Analysis

The sensitiveness analysis is used to analyze the relationship between the P/BV ratios to assorted values of the NAV. For this sensitiveness analysis. the P/BV ratio and the NAV are varied at ± 1 for observation of the tendencies.

Table 13: Computed Data for P/BV Ratio’s Sensitivity Model

Looking at the tendency from the figure. we can find that the P/BV ratio has a positive relationship with the NAV. This is apparent when the value of the P/BV ratio additions. the value of NAV additions every bit good. The chief aim is to calculate the sensitiveness and truth of the P/BV ratio to the assorted NAV. An accurate NAV prognosis will ensue in the accurate analysis of the P/BV ratio. Hence. in order to accurately foretell P/BV
ratio. accurate NAV prognosis is important.

6. Decision
Models| Forecasted Price ( SGD ) | Actual Price ( As of 18 September 2012 ) | Evaluation| Decision| Dividend Discount Model ( DDM ) | $ 0. 51| $ 0. 55| Overvalued| SELL| Free Cash Flow to Equity ( FCFE ) | $ 0. 69| $ 0. 55| Undervalued| BUY| Price / Earnings Ratio ( P/E ) | $ 0. 70| $ 0. 55| Undervalued| BUY| Price / Book Value Ratio ( P/BV ) | $ 060| $ 0. 55| Undervalued| BUY| Table 14: Comparisons and Summarized Data for Different Models. Based on our findings from the 4 ratings theoretical accounts and analysis. our group recommends an overall BUY determination for BreadTalk’s stocks. Through our elaborate analysis on the forecasted consequences. we concluded that the ratings should non be used independently as premises are besides taken into consideration when calculating the consequences. Therefore. it may non be a true contemplation of the world. Last. we believe that BreadTalk’s portion monetary value will lift within the following few old ages. However. due to uncertainnesss in the hereafter. we would rede investors to take on a proactive attack by following BreadTalk’s fiscal public presentation on a regular basis.

4.
5.
6.
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21. MAS 2012c. MAS Annual Report 2011/12. Monetary Authority of Singapore. Singapore. viewed 17 September 2012. & lt ; hypertext transfer protocol: //www. mom. gov. sg/Home/News % 20and % 20Publications/Monetary % 20Policy % 20Statements % 20and % 20Speeches/2012/MAS % 20Annual % 20Report % 202011 % 202012. aspx & gt ; .

22. Reuters 2012. Diluted net incomes per portion. Reuters. USA. viewed 14 September 2012. & lt ; hypertext transfer protocol: //glossary. reuters. com/index. php/Diluted_Earnings_Per_Share & gt ; .

23. SGX 2012. Company revelation. Singapore exchange. Singapore. viewed 18 September 2012. & lt ; hypertext transfer protocol: //www. sgx. com/wps/portal/sgxweb/home/company_disclosure/all_in_one/company/ ! ut/p/c5/04_SB8K8xLLM9MSSzPy8xBz9CP0os3gjR0cTDwNnA0sDC3cLA0_XsDBfFzcPQ4tAA6B8JJK8f6ihuYFnqFOgiVNYqKG3owkB3V76Uek5-UlAe_w88nNT9QtyIyodHRUVAecCjPA! /dl3/d3/L0lDU0lKSmdrS0NsRUpJQSEvb01vZ0FFSVFoakVLSVFBQkdjWndqSlFRQVFnIS80QzFiOVdfTnIwZ0RFU1pJSlJDSWtmZyEvN18yQUE0SDBDMDlPVTE3MElVQlE0QlZVMUNCNy82ekNLUTM4NjIwMDE0L2libS5pbnYvMjA5MjUwNjcxODA5/ ? CompanyCombons_7_2AA4H0C09OU170IUBQ4BVU1CB7_= & A ; CO_ALLONE_SELECTED_INDEX=86 & A ; CO_AllONE_CHART_RET_CODE=BREADTK & A ; CO_AllONE_STOCK_NAME=BREADTALK+GROUP+LIMITED & A ; CO_AllONE_IBM_CODE=1O02 & A ; CO_AllONE_HP_CODE=5DA & A ; CO_AllONE_MASTER_CODE=18668 & gt ; .

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8. Appendix
Appendix I
| BreadTalk| STI|
Period| Return| HPY| Return| HPY|
Aug-11| 0. 5500| -| 2885. 26| -|
Sep-11| 0. 4750| -0. 13636| 2675. 16| -0. 07282|
Oct-11| 0. 5150| 0. 08421| 2855. 77| 0. 06751|
Nov-11| 0. 5500| 0. 06796| 2702. 46| -0. 05368|
Dec-11| 0. 5400| -0. 01818| 2646. 35| -0. 02076|
Jan-12| 0. 5600| 0. 03704| 2906. 69| 0. 09838|
Feb-12| 0. 5650| 0. 00893| 2994. 06| 0. 03006|
Mar-12| 0. 5800| 0. 02655| 3010. 46| 0. 00548|
Apr-12| 0. 5550| -0. 04310| 2978. 57| -0. 01059|
May-12| 0. 4750| -0. 14414| 2772. 45| -0. 06920|
Jun-12| 0. 5000| 0. 05263| 2878. 45| 0. 03823|
Jul-12| 0. 5400| 0. 08000| 3036. 40| 0. 05487|
Aug-12| 0. 5500| 0. 01852| 3025. 46| -0. 00360|
| ? =| 0. 07351| ? =| 0. 05231|
| Correl: | 0. 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| Food 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 Assets Turnover| Financial Leverage| Return on Equity ( ROE ) | Industry Average ROE | FY 2011|
BreadTalk| $ 11. 592| $ 365. 904| $ 292. 305| $ 77. 970| 0. 03168 | 1. 25179 | 3. 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| 0. 03720 | 1. 48331 | 2. 97828 | 0. 16432 | 0. 09252 | Food Junction| $ 2. 645| $ 48. 226| $ 50. 181| $ 31. 169| 0. 05485 | 0. 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| 0. 04500 | 1. 43239 | 2. 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. 105 | % change| -| 22. 88 % | 20. 81 % | -| 0. 19 % | 17. 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 ) | | | | | | | | | | |
Gross Profit| $ 134. 159 | $ 165. 242 | $ 200. 058 | $ 266 | $ 39. 432 | $ 46. 418 | $ 152. 994 | $ 156. 565 | $ 157. 977 | | | | | | | | | | |
Gross Profit Margin ( % ) | 54. 43 % | 54. 56 % | 54. 67 % | 0. 56 % | 83. 26 % | 83. 32 % | 37. 69 % | 41. 01 % | 41. 24 % | | | | | | | | | | |
Operating Expenses & A ; 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 | $ 10. 786 | | | | | | | | | | |
Operating Net income Margin ( % ) | 6. 58 % | 5. 72 % | 4. 90 % | -76. 44 % | 5. 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| 0. 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. 000 | 359. 712 | 366. 749 | | | | | | | | |

Other points of income| | | | | | |
Interest income| 824 | 764 | 756 | 862 | 983 | |
Other income| 7. 875 | 8. 943 | 10. 016 | 10. 718 | 10. 910 | | Share of consequences of joint ventures| 93 | 633 | 753 | 979 | 1. 003 | | | | | | | | |
Other points of expense| | | | | | |
Selling 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 ) | | Net income before involvement and tax| 17. 912 | 21. 457 | 28. 190 | 39. 441 | 40. 125 | | Interest expenses| ( 785 ) | ( 959 ) | ( 873 ) | ( 1. 039 ) | ( 1. 221 ) | | Net income before tax| 17. 127 | 20. 498 | 27. 317 | 38. 402 | 38. 904 | | Income revenue enhancement expense| ( 5. 370 ) | ( 6. 641 ) | ( 9. 560 ) | ( 12. 672 ) | ( 12. 835 ) | | Net income after tax| 11. 757 | 13. 857 | 17. 757 | 25. 730 | 26. 069 | | | | | | | | |

Attributable to: | | | | | | |
Stockholders of the Company| 11. 592 | 13. 648 | 17. 401 | 25. 293 | 25. 603 | | Non-controlling interests| 165 | 209 | 356 | 437 | 466 | | Net income After Tax| 11. 757 | 13. 857 | 17. 757 | 25. 730 | 26. 069 | | | | | | | | |

No. of shares| 281. 197. 676 | 281. 197. 676 | 281. 197. 676 | 281. 197. 676 | 281. 197. 676 | | EPS| 0. 04122 | 0. 04854 | 0. 06188 | 0. 08995 | 0. 09105 | | Dividend Per Share| 0. 0100 | 0. 0125 | 0. 0166 | 0. 0221 | 0. 0229 | | | | | | | | |

Appendix VII
Balance Sheet| | | | | | |
| 2011A| 2012F| 2013F| 2014F| 2015F| |
| $ ’000| $ ’000| $ ’000| $ ’000| $ ’000| |
Assets| | | | | | |
| | | | | | |
Non-current asset| | | | | | |
Property. works and equipment| 88. 898 | 120. 381 | 145. 542 | 201. 398 | 233. 812 | | Intangible assets| 9. 214 | 9. 841 | 12. 912 | 12. 331 | 14. 629 | | Investing in associates and joint ventures| 12. 091 | 13. 109 | 19. 001 | 18. 712 | 19. 982 | | Other receivables| 1. 389 | 5. 336 | 8. 901 | 8. 172 | 9. 181 | | Deferred revenue enhancement assets| 2. 120 | 3. 441 | 3. 562 | 3. 781 | 3. 776 | | Entire Non-Current Asset| 113. 712 | 152. 108 | 189. 918 | 244. 394 | 281. 380 | | | | | | | | |

Current assets| | | | | | |
Inventories| 7. 397 | 13. 881 | 17. 920 | 17. 092 | 25. 082 | | Trade receivables| 7. 792 | 9. 018 | 9. 382 | 10. 981 | 12. 019 | | Other receivables| 39. 008 | 43. 483 | 48. 019 | 49. 682 | 50. 918 | | Prepayments| 5. 389 | 6. 582 | 7. 098 | 8. 910 | 10. 920 | | Tax recoverable| 230 | 291 | 367 | 554 | 608 | |

Amount due| 1. 717 | 1. 841 | 1. 990 | 2. 181 | 2. 894 | | Cash and hard currency equivalents| 87. 060 | 72. 810 | 70. 091 | 63. 719 | 53. 361 | | Total Current Assets| 148. 593 | 147. 906 | 154. 867 | 153. 119 | 155. 802 | | | | | | | | |

Entire 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. 178 | 52. 091 | 55. 049 | 53. 627 | 52. 511 | | Other liabilities| 41. 124 | 42. 141 | 40. 901 | 43. 298 | 40. 729 | | Provision| 5. 871 | 6. 591 | 7. 801 | 7. 762 | 6. 859 | | Amount due| 395 | 1. 987 | 2. 593 | 2. 273 | 2. 674 | | Finance rental duties. secured| 37 | 14 | 26 | 48 | 56 | | Loans and borrowings| 24. 360 | 23. 019 | 20. 091 | 20. 038 | 20. 928 | | Tax payable| 5. 623 | 6. 891 | 7. 670 | 9. 018 | 10. 943 | | Total Current Liabilities| 151. 484 | 157. 825 | 166. 222 | 170. 545 | 170. 472 | | | | | | | | |

Non-current liabilities| | | | | | |
Loans and borrowings| 16. 038 | 40. 869 | 68. 912 | 100. 283 | 105. 912 | | Deferred revenue enhancement liabilities| 2. 276 | 2. 760 | 2. 891 | 3. 172 | 3. 091 | | Other payables and liabilities| 7. 039 | 9. 291 | 11. 928 | 11. 729 | 13. 981 | | Entire Non-Current Liabilities| 25. 353 | 52. 920 | 83. 731 | 115. 184 | 122. 984 | | | | | | | | |

Entire liabilities| 176. 837 | 210. 745 | 249. 953 | 285. 729 | 293. 456 |
| | | | | | | |
Net assets| 85. 468 | 89. 269 | 94. 832 | 111. 784 | 143. 726 | | | | | | | | |
Equity attributable to proprietors of the company| | | | | | | Share capital| 33. 303 | 33. 303 | 33. 303 | 33. 303 | 33. 303 | | Treasury shares| ( 609 ) | ( 781 ) | ( 819 ) | ( 981 ) | ( 1. 029 ) | | Accumulated pro?ts| 41. 558 | 45. 695 | 51. 409 | 67. 962 | 98. 301 | | Other reserves| 3. 178 | 3. 391 | 3. 041 | 3. 281 | 3. 232 | | | 77. 970 | 81. 608 | 86. 934 | 103. 565 | 133. 807 | | | | | | | | |

Non-controlling interests| 7. 498 | 7. 661 | 7. 898 | 8. 183 | 9. 919 | | Total equity| 85. 468 | 89. 269 | 94. 832 | 111. 748 | 143. 726 | | Total equity and liabilities| 262. 305 | 300. 014 | 344. 785 | 397. 477 | 437. 182 | | | | | | | | |

Appendix VIII
Free CASH FLOW TO EQUITY| | | | |
| 2011A| 2012F| 2013F| 2014F| 2015F|
| | | | | |
Net income / EPS| 11. 757 | 13. 857 | 17. 757 | 25. 730 | 26. 069 | Depreciation expense| 23. 920| 27. 657 | 30. 987 | 37. 870 | 39. 882 | – Capital expenditures| | 38. 396 | 37. 810 | 54. 476 | 36. 986 | – Change in working capital| | (