TL;DR : Personally, I don't think it's a good buy, looking at the financials on the surface, and considering that the F&B business is a very tough market both locally and abroad. Anyway, I have collated some pointers here that I picked up from other sources. Hope it helps! ! Source: TODAYonline Business Profile Most of us would recognise that the namesake bakery outlets but they also have got other businesses. They currently operate and franchise bakery/confectionary outlets, foodcourts and restaurants with 900 outlets over 17 countries. You could split their operations up into Bakery, Food Atrium and Restaurant. The bakery has almost 850 outlets, but almost 75% of them are run by franchisees. The Food Atrium segment operates under the chain of food courts under the name Food Republic, with 53 of them operating in SG and China. The restaurant segment operates 27 Din Tai Fung outlets in SG and Thailand. Financial figures used are for FY18 ! Profitability ! ! Source: BreadTalk Group Ltd Annual Report 2018 The overall profitability of BreadTalk Group is only 3.18%, quite low. Gross Margin is 56.2% while operating margin is 5.12%. The profit margin for the bakery segment is less than 1%, whereas the most profitable segment is actually the restaurant segment is around 20%. Since the bakery segment forms most of the revenue (almost 50%), this has resulted in the low profit margins. This actually shouldn't come as a surprise since prices charged for their bakery products need to be low to compete with other heartland bakeries. Moreover, the bakeries are usually positioned at mall locations with good frontage and high shopping traffic, which usually has very high rent too. For the restaurant segment, they can more easily differentiate themselves and charge more premium prices Balance Sheet Strength ! Source: BreadTalk Group Ltd Annual Report 2018 Compared to its peers, BreadTalk is quite highly leveraged. Based on the latest financials, their current and quick ratio fall below 1. It's capital structure is also made up mainly of debt, with debt being almost 1.5X of equity. It's debt mainly comprises of an equal proportion of short-term and long-term debt. Most of this debt had been taking on to finance overseas expansion, but a saving grace is that they have strong operating cashflows. Valuation ! Last Update: 23rd April BreadTalk's P/E ratio is currently near 32X. This higher P/E ratio could siginify investor's optimism that BreadTalk's ventures internationally would be positive. However, this valuation seems much higher than other players such as Kimly (13X), Koufu (16X), Jumbo (20X). Not sure if this high valuation for P/E is justified since BreadTalk has been experiencing some growth issues overseas. Personally, I do not think this valuation is justified since F&B market is quite tough overseas also, and value differentiation is still tough. As compared with other F&B businesses in Singapore, BreadTalk has the highest P/E and P/B ratio, and yet has the lowest dividend yield. This is quite an interesting phenomenon. Based on their financials, I do believe that other players such as Soup Restaurant and Japan Foods Holdings do have a lead on Breadtalk, as well as with Kimly and Koufu. This could be so because of the the weak profitability of the bakery segment. At a much higher P/E ratio, it seems that BreadTalk could be overvalued. Share Price Performance ! BreadTalk's last twelve month's performance reflected quite a huge dip since their peek in July, when earnings were released. I would say that most of such changes are due to the performances of their overseas outlet. I suspect that much of the valuation given were from expectations of overseas growth. Over the last 5 years, share prices did make a return of 17%, much better than the STI. With a 52-week high of $1.26, shares are trading at 65% of this high.