BREADTALK GROUP (5DA.

SG) INCOME STATEMENT

In Millions of USD except Per Share FY 2013 FY 2014 FY 2015 FY 2016
12 Months Ending 12/31/2013 12/31/2014 12/31/2015 12/31/2016
Revenue 537.0 590.0 624.0 614.0
Sales & Services Revenue 0.0 0.0 0.0 0.0
Other Revenue 0.0 0.0 0.0 0.0
Cost of Revenue 252.0 279.0 294.0 277.5
Cost of Goods & Services 0.0 1.0 2.0 3.0
Gross Profit 285.0 311.0 330.0 227.0
Other Operating Income 0.0 0.0 0.0 0.0
Operating Expenses 0.0 0.0 0.0 0.0
Selling, General & Admin 274.0 304.0 319.0 329.0
Selling & Marketing 0.0 0.0 0.0 0.0
Research & Development 0.0 0.0 0.0 0.0
Depreciation & Amortization 0.0 0.0 0.0 0.0
Other Operating Expense 0.0 -2.0 0.0 0.0
Operating Income (Loss) 11.0 9.0 12.0 6.0
Non-Operating (Income) Loss 0.0 1.0 2.0 3.0
Interest Expense, Net 3.0 4.0 5.0 6.0
Interest Expense 0.0 1.0 2.0 3.0
Interest Income 14.0 18.0 19.0 33.0
Foreign Exch (Gain) Loss 0.0 1.0 2.0 3.0
(Income) Loss from Affiliates — — — —
Other Non-Op (Income) Loss 0.0 1.0 2.0 3.0
Pretax Income 22.0 23.0 25.0 33.0
Income Tax Expense (Benefit) 0.0 1.0 2.0 3.0
Current Income Tax 6.0 7.0 11.0 12.0
Deferred Income Tax 0.0 0.0 0.0 0.0
Tax Allowance/Credit 0.0 0.0 0.0 0.0
(Income) Loss from Affiliates 0.0 0.0 0.0 0.0
Income (Loss) from Cont Ops 16.0 16.0 15.0 17.0
Net Extraordinary Losses (Gains) 0.0 0.0 0.0 0.0
Discontinued Operations 0.0 0.0 0.0 0.0
XO & Accounting Changes 0.0 0.0 0.0 0.0
Income (Loss) Incl. MI 16.0 16.0 15.0 17.0
Minority Interest 5.0 6.0 7.0 8.0
Net Income, GAAP 11.0 10.0 8.0 9.0
Preferred Dividends 0.0 0.0 0.0 0.0
Other Adjustments 0.0 0.0 0.0 0.0
Net Income Avail to Common, GAAP 11.0 10.0 8.0 9.0

Net Income Avail to Common, Adj 11.0 10.0 8.0 9.0

Net Abnormal Losses (Gains) 0.0 0.0 0.0 0.0
 Net Extraordinary Losses (Gains) 0.0 0.0 0.0 0.0

Basic Weighted Avg Shares 281.0 282.0 282.0 281.0

Basic EPS, GAAP 0.05 0.05 0.05 0.05
Basic EPS from Cont Ops 0.05 0.05 0.05 0.05
Basic EPS from Cont Ops, Adjusted 0.05 0.05 0.05 0.05

Diluted Weighted Avg Shares 282.0 282.0 282.0 282.0

Diluted EPS, GAAP 0.05 0.05 0.05 0.05
Diluted EPS from Cont Ops 0.05 0.05 0.05 0.05
Diluted EPS from Cont Ops, Adjusted 0.05 0.05 0.05 0.05

Source: Morningstar & Official Website

Tax Rate 27% 30% 44% 36%

Average Tax Rate 35%
BREADTALK GROUP (5DA.SG) BALANCE SHEET
In Millions of USD except Per Share FY 2013 FY 2014 FY 2015 FY 2016
12 Months Ending 12/31/2013 12/31/2014 12/31/2015 12/31/2016
Total Assets
Cash, Cash Equivalents & STI 79.0 95.0 102.0 127.0
Cash & Cash Equivalents 79.0 95.0 95.0 120.0
ST Investments 0.0 0.0 7.0 7.0
Accounts & Notes Receiv 10.0 9.0 14.0 144.0
Accounts Receivable, Net 10.0 9.0 14.0 144.0
Notes Receivable, Net 0.0 1.0 2.0 3.0
Inventories 10.0 11.0 10.0 59.0
Raw Materials 0.0 0.0 0.0 0.0
Work In Process 0.0 0.0 0.0 0.0
Finished Goods 0.0 0.0 0.0 0.0
Prepaid expenses 6.0 6.0 6.0 4.8
Other ST Assets 43.0 47.0 48.0 47.0
Derivative & Hedging Assets 0.0 0.0 0.0 0.0
Deferred Tax Assets 0.0 0.0 0.0 0.0
Misc ST Assets 0.0 0.0 0.0 0.0
Total Current Assets 148.0 169.0 179.0 213.0
Property, Plant & Equip, Net 226.0 221.0 206.0 180.0
Property, Plant & Equip 126.0 163.0 203.0 180.0
Accumulated Depreciation 351.0 384.0 408.0 360.0
LT Investments & Receivables 136.0 142.0 153.0 129.9
Other LT Assets 0.0 0.0 0.0 0.0
Total Intangible Assets 8.0 2.0 1.0 6.0
Goodwill 0.0 6.0 6.0 6.0
Other Intangible Assets 0.0 0.0 0.0 0.0
Derivative & Hedging Assets 0.0 0.0 0.0 0.0
Investments in Affiliates 0.0 0.0 0.0 0.0
Misc LT Assets 0.0 0.0 0.0 0.0
Total Noncurrent Assets 320.0 347.0 366.0 320.0
Total Assets 468.0 516.0 545.0 533.0

Liabilities & Shareholders' Equity

Payables & Accruals 0.0 0.0 0.0 0.0
Accounts Payable 0.0 0.0 0.0 0.0
Accrued Taxes 6.0 7.0 9.0 9.8
Interest & Dividends Payable 0.0 1.0 2.0 3.0
Other Payables & Accruals 176.0 180.0 171.0 71.0
ST Debt 30.0 76.0 38.0 7.2
ST Borrowings 0.0 0.0 0.0 0.0
ST Capital Leases 0.0 0.0 0.0 0.0
 Current Portion of LT Debt 0.0 0.0 0.0 0.0
Other ST Liabilities 0.0 0.0 0.0 0.0
Deferred Revenue 0.0 0.0 0.0 0.0
Derivatives & Hedging 0.0 0.0 0.0 0.0
Deferred Tax Liabilities 3.0 3.0 4.0 4.3
Misc ST Liabilities 0.0 1.0 2.0 3.0
Total Current Liabilities 213.0 263.0 262.0 218.0
LT Debt 138.0 121.0 120.0 74.8
LT Borrowings 138.0 121.0 120.0 74.8
LT Capital Leases 0.0 1.0 2.0 3.0
Other LT Liabilities 10.0 13.0 12.0 10.0
Accrued Liabilities 10.0 13.0 17.0 15.0
Pension Liabilities 0.0 0.0 0.0 0.0
Pensions 0.0 0.0 0.0 0.0
Other Post-Ret Benefits 0.0 0.0 0.0 0.0
Deferred Revenue 0.0 0.0 0.0 0.0
Deferred Tax Liabilities 3.0 3.0 4.0 4.3
Derivatives & Hedging 0.0 0.0 0.0 0.0
Misc LT Liabilities 0.0 0.0 0.0 0.0
Total Noncurrent Liabilities 161.0 150.0 154.0 164.0
Total Liabilities 374.0 414.0 416.0 382.0
Preferred Equity 0.0 1.0 2.0 3.0
Share Capital & APIC 33.0 33.0 33.0 33.0
Common Stock 33.0 33.0 33.0 33.0
Additional Paid in Capital 0.0 1.0 2.0 3.0
Treasury Stock 0.0 0.0 0.0 0.6
Retained Earnings 3.0 5.0 6.0 5.3
Other Equity 0.0 1.0 2.0 3.0
Equity Before Minority Interest 3.0 6.0 8.0 8.3
Minority/Non Controlling Interest 0.0 1.0 2.0 3.0
Total Equity 94.0 103.0 129.0 132.0
Total Liabilities & Equity 468.0 516.0 545.0 533.0

Source: Morningstar & Official Website

 FINANCIAL STATEMENT ANALYSIS - 2016
Measures BREADGROUP (5DA.SG) Company
Liquidity Ratios
Current Ratio 0.977
Quick Ratio 0.706
Asset Management Ratios
Days Sales Outstanding 85.603
Inventory Turnover Ratio 0.051
Days Sales Inventory 7178.333
FA Turnover Ratio 3.411
Total Asset Turnover Ratio 1.152
Debt Manaagement Ratios
Debt Ratio 0.308
Time interest earned 1.000
Profitability Ratios
Profit Margin Ratio 0.015
Basic Earning Power 0.011
Return on Asset 0.017
Return on Equity 0.068
Equity Multiplier 4.038
DuPont Measure 0.068
Sales Growth 9.87% 5.76% -1.60%
Company ROA ROE LOGEST
BREADTALK GROUP (5DA.SG) 1.69% 6.82% 12.50%

FORECASTED INCOME STATEMENT

2016 2017 2018 2019 2020
Revenue 690.77 777.13 874.30 983.61 1106.59
Sales & Services Revenue 0.00 0.00 0.00 0.00 0.00
Other Revenue 0.00 0.00 0.00 0.00 0.00
Cost of Revenue 312.20 351.23 395.14 444.55 500.13
Cost of Goods & Services 3.38 3.80 4.27 4.81 5.41
Gross Profit 687.39 773.34 870.03 978.80 1101.18
Other Operating Income 0.00 0.00 0.00 0.00 0.00
Operating Expenses 0.00 0.00 0.00 0.00 0.00
Selling, General & Admin 370.13 416.41 468.48 527.05 592.94
Selling & Marketing 0.00 0.00 0.00 0.00 0.00
Research & Development 0.00 0.00 0.00 0.00 0.00
Depreciation & Amortization 0.00 0.00 0.00 0.00 0.00
Other Operating Expense 0.00 0.00 0.00 0.00 0.00
Operating Income (Loss) 6.75 7.59 8.54 9.61 10.81
Non-Operating (Income) Loss 3.38 3.80 4.27 4.81 5.41
Interest Expense, Net 6.75 7.59 8.54 9.61 10.81
Interest Expense 3.38 3.80 4.27 4.81 5.41
Interest Income 37.13 41.77 46.99 52.87 59.47
Foreign Exch (Gain) Loss 3.38 3.80 4.27 4.81 5.41
(Income) Loss from Affiliates - - - - -
Other Non-Op (Income) Loss 3.38 3.80 4.27 4.81 5.41
Pretax Income 37.13 41.77 46.99 52.87 59.47
Income Tax Expense (Benefit) 3.38 3.80 4.27 4.81 5.41
Current Income Tax 13.50 15.19 17.09 19.22 21.63
Deferred Income Tax 0.00 0.00 0.00 0.00 0.00
Tax Allowance/Credit - - - - -
(Income) Loss from Affiliates 0.00 0.00 0.00 0.00 0.00
Income (Loss) from Cont Ops 19.13 21.52 24.21 27.23 30.64
Net Extraordinary Losses (Gains) 0.00 0.00 0.00 0.00 0.00
Discontinued Operations 0.00 0.00 0.00 0.00 0.00
XO & Accounting Changes 0.00 0.00 0.00 0.00 0.00
Income (Loss) Incl. MI 19.13 21.52 24.21 27.23 30.64
Minority Interest 9.00 10.13 11.39 12.82 14.42
Net Income, GAAP 10.13 11.39 12.82 14.42 16.22
Preferred Dividends 0.00 0.00 0.00 0.00 0.00
Other Adjustments 0.00 0.00 0.00 0.00 0.00
Net Income Avail to Common, GAAP 10.13 11.39 12.82 14.42 16.22
 FORECASTED BALANCE SHEET
2016 2017 2018 2019 2020
Total Assets
Cash, Cash Equivalents & STI 142.88 160.74 180.84 203.45 228.89
Cash & Cash Equivalents 135.00 151.88 170.87 192.24 216.27
ST Investments 7.88 8.86 9.97 11.21 12.62
Accounts & Notes Receiv 162.00 182.26 205.05 230.68 259.53
Accounts Receivable, Net 162.00 182.26 205.05 230.68 259.53
Notes Receivable, Net 3.38 3.80 4.27 4.81 5.41
Inventories 66.38 74.68 84.01 94.52 106.33
Raw Materials 0.00 0.00 0.00 0.00 0.00
Work In Process 0.00 0.00 0.00 0.00 0.00
Finished Goods 0.00 0.00 0.00 0.00 0.00
Other Inventory 5.40 6.08 6.83 7.69 8.65
Other ST Assets 52.88 59.49 66.93 75.29 84.71
Derivative & Hedging Assets 0.00 0.00 0.00 0.00 0.00
Deferred Tax Assets 0.00 0.00 0.00 0.00 0.00
Misc ST Assets 0.00 0.00 0.00 0.00 0.00
Total Current Assets 239.63 269.59 303.30 341.22 383.88
Property, Plant & Equip, Net 202.51 227.82 256.31 288.35 324.41
Property, Plant & Equip 202.51 227.82 256.31 288.35 324.41
Accumulated Depreciation 405.01 455.65 512.62 576.71 648.81
LT Investments & Receivables 146.14 164.41 184.97 208.10 234.11
Other LT Assets 0.00 0.00 0.00 0.00 0.00
Total Intangible Assets 6.75 7.59 8.54 9.61 10.81
Goodwill 6.75 7.59 8.54 9.61 10.81
Other Intangible Assets 0.00 0.00 0.00 0.00 0.00
Derivative & Hedging Assets 0.00 0.00 0.00 0.00 0.00
Investments in Affiliates 0.00 0.00 0.00 0.00 0.00
Misc LT Assets 0.00 0.00 0.00 0.00 0.00
Total Noncurrent Assets 360.01 405.02 455.66 512.63 576.72
Total Assets 599.64 674.61 758.96 853.85 960.61

Liabilities & Shareholders' Equity

Payables & Accruals 0.00 0.00 0.00 0.00 0.00
Accounts Payable 0.00 0.00 0.00 0.00 0.00
Accrued Taxes 11.03 12.40 13.95 15.70 17.66
Interest & Dividends Payable 3.38 3.80 4.27 4.81 5.41
Other Payables & Accruals 79.88 89.86 101.10 113.74 127.96
 ST Debt 8.12 9.13 10.28 11.56 13.01
ST Borrowings 0.00 0.00 0.00 0.00 0.00
ST Capital Leases - - - - -
Current Portion of LT Debt 0.00 0.00 0.00 0.00 0.00
Other ST Liabilities 0.00 0.00 0.00 0.00 0.00
Deferred Revenue 0.00 0.00 0.00 0.00 0.00
Derivatives & Hedging 0.00 0.00 0.00 0.00 0.00
Deferred Tax Liabilities 4.84 5.44 6.12 6.89 7.75
Misc ST Liabilities 3.38 3.80 4.27 4.81 5.41
Total Current Liabilities 245.26 275.92 310.42 349.23 392.89
LT Debt 84.15 94.67 106.51 119.83 134.81
LT Borrowings 84.15 94.67 106.51 119.83 134.81
LT Capital Leases - - - - -
Other LT Liabilities 11.25 12.66 14.24 16.02 18.02
Accrued Liabilities 16.88 18.99 21.36 24.03 27.03
Pension Liabilities 0.00 0.00 0.00 0.00 0.00
Pensions - - - - -
Other Post-Ret Benefits - - - - -
Deferred Revenue 0.00 0.00 0.00 0.00 0.00
Deferred Tax Liabilities 4.84 5.44 6.12 6.89 7.75
Derivatives & Hedging 0.00 0.00 0.00 0.00 0.00
Misc LT Liabilities 0.00 0.00 0.00 0.00 0.00
Total Noncurrent Liabilities 184.50 207.57 233.53 262.72 295.57
Total Liabilities 429.76 483.49 543.94 611.95 688.46
Preferred Equity 3.38 3.80 4.27 4.81 5.41
Share Capital & APIC 37.13 41.77 46.99 52.87 59.47
Common Stock 37.13 41.77 46.99 52.87 59.47
Additional Paid in Capital 3.38 3.80 4.27 4.81 5.41
Treasury Stock 0.66 0.74 0.84 0.94 1.06
Retained Earnings 5.96 6.71 7.55 8.49 9.55
Other Equity 3.38 3.80 4.27 4.81 5.41
Equity Before Minority Interest 9.34 10.51 11.82 13.30 14.96
Minority/Non Controlling Interest 3.38 3.80 4.27 4.81 5.41
Total Equity 148.50 167.07 187.96 211.46 237.90
Total Liabilities & Equity 599.64 674.61 758.96 853.85 960.61
 FORECASTED FREE CASH FLOWS
2017 2018 2019 2020 2021
Net Income 10.13 11.39 12.82 14.42 16.22
Add: Non Cash Charges
Depreciation & Amortization 45.01 50.64 56.97 64.09 72.11
Add: After tax interest -22.10 -24.86 -27.97 -31.47 -35.40
Less: CAPEX 22.51 25.32 28.48 32.05 36.05
Less: Increment WC -0.63 -0.70 -0.79 -0.89 -1.00
Free Cash Flow To Firm 11.15 12.55 14.12 15.88 17.87
 Cost OF Equity
Risk Free Rate - 10 Yr T-bill (Yahoo Finance) 1.56%
Dividend Yield (Yahoo Finance) 1.30%
Growth Rate 12.50%
Expected return on market 13.97%
MRP 12.41%
Beta (Yahoo Finance) 1.0062
Cost of Equity 14.04%

WACC (using required Rcs)

Interest Rate (2016) 4.01%
Cost of Equity 14.04%
Debt Weight 72%
Equity Weight 28%
WACC 6.85%
 FREE CASH FLOWS
2017 2018 2019
Free Cash Flows 11.15 12.55 14.12
Terminal Value
Net FCF 11.15 12.55 14.12

Intrinsic value computation

1. Value of operations
CF0
FCF1 (2016) 11 CF1
FCF2 (2017) 13 CF2
FCF3 (2018) 14 CF3
FCF4 (2019) 16 CF4
FCF5 (2020) 496 CF5

g 3.00% Vop
Rcs 6.85%

HV5 478

2. Value of entire firm

Vnon-op 137
STI 7 <- Balance sheet
LTI 130 <- Balance sheet

Vtot = Vop + Vnon-op 538

3. Value of common stock

Vdebt 82
STD 7 <- Balance sheet
LTD 75 <- Balance sheet

Vcs = Vtot - Vdebt 456

4. Intrinsic value per share

ncs 281 <- Given

P = Vcs / ncs 1.62

Market price 1.31 2017.02.23

Difference 0.31

2015 2016 2017

Market Cap (Yahoo Finance) 367.87
FCF 11.15 12.55
Net FCF -367.87 11.15 12.55
IRR 9%
 2020 2021
15.88 17.87
477.76
15.88 495.63

Multiples Valuation Method

P/E Ratio 45.17 P/S Ratio 0.599
0 Earnings 2016 9 Sales 2016 614
11 Valuation 406.53 Valuation 367.87
13 Price per share 1.45 Price per share 1.31
14
16
496

401
2018 2019 2020

14.12 15.88 495.63

14.12 15.88 495.63
 Sensitivity Analysis
Increasing Selling prices Increasing Equity level
Base - 20% 104.25 156.38
Base - 10% 117.29 143.35 300.00
Base 130.32 130.32
Base + 10% 143.35 117.29
Base + 20% 156.38 104.25 250.00

Conclusion: Increasing selling prices increases the intrinsic value far more 200.00
than increasing the equity level

150.00

100.00

50.00

0.00
Base - 20%
 SENSITIVITY ANALYSIS
300.00

250.00

200.00

Increasing Equity level

Increasing Selling prices
150.00

100.00

50.00

0.00
Base - 20% Base - 10% Base Base + 10% Base + 20%
sing Equity level
sing Selling prices
 Multiples Valuation Method
P/E Ratio
Earnings 2016
Valuation
Price per share

Precedent Transaction Aproach (Food &Beverage Industry) - 2015

Acquirer
J. M. Smucker's Company
Flowers
Del Monte Foods
USA Pork
McCormick & Co
McCormick & Co
McCormick & Co
Average Price
Outstanding Shares of BreadTalk Group
Price per Share
ples Valuation Method
45.17 P/S Ratio 0.599
9 Sales 2016 614
406.53 Valuation 367.87
1.45 Price per share 1.31

h (Food &Beverage Industry) - 2015

Acquiree Transaction Value
Big Heart Pet Brands 5800
Dave's Killer Bread 275
Sager Creek Vegetable Co 75
Cargill US 1400
One World Foods 100
Brand Aromatics 63
Drogheria & Alimentari 97
1116
181
$ 6.16