Breadtalk and Sheng Shiong

Recently, I wrote about investing in things I use - Mapletree Commerical Trust and Breadtalk.  The idea was really to look out for investment opportunities based on the goods and services that I come across in Singapore.  If one thinks about it, there are probably many goods and services that I use or come across during my daily life.  And that probably should get me thinking on whether this presents itself as a good investment opportunity.

Breadtalk


I frequent Breadtalk and Toastbox quite often.  So it is not surprising that I am pretty well acquainted with their business.  While you won't be able to find a toast box located side by side with Breadtalk all the time, most store outlets now usually have both Breadtalk and Toastbox located together.  In terms of crowds, Toastbox is always crowded.  It should be profitable.  Each Toastbox outlet probably only hires 4 to 5 staff. And the number of people ordering takeaways also seem to be quite a lot.  For Breadtalk, it is just a bakery but the morning crowds usually throng the place.  I like Breadtalk's business from how I view it.  At least the Singapore side of the story.  I remember seeing Breadtalk shops in Malaysia that looked quite empty.

Sheng Shiong

Well, perhaps this is a stock that I better start putting in my shortlist.  Sheng Shiong is Singapore's third largest(?) supermarket store.  It has stores located at many neighborhoods all around Singapore and caters to the heartlanders.

Most Sheng Shiong supermarkets that I go to are always crowded.  That is a general observation and so their business should be good though I recognise that profit margins for retail outlets always tend to be lower.  It is a competitive business afterall.

If Sheng Shiong commits to paying 90% of its profit after tax as dividends, the stock will probably be quite attractive. This is however unlikely as it probably looks to expand in Singapore and the region.  Nevertheless, its dividend yield at 90% payout is a very attractive 6%.

Investing in things I use - Mapletree Commercial Trust and Breadtalk

It is always good to have some insider insight to stocks that one will like to invest in.  One simple way to do that is to invest in retail REITs.  There are many REITs in the retail/commercial sector and many of them own shopping malls in Singapore.  Just take a walk at one of the malls and it might give you a good sense of how business might actually be doing for the REIT, whether there is potential for rent increase, whether asset enhancement initiatives are ongoing, etc, etc.  It is almost like an insider's view of the business.

Mapletree Commercial Trust

One of the properties owned by Mapletree Commercial Trust (listed on the Singapore stock exchange) is Vivocity.  To those who are not familiar with Vivocity (or Singapore), it is one of the largest malls around located at the southern tip of Singapore just at the entrance to Sentosa (where one of the integrated resorts - Resorts World - is located at).

Vivocity has 1,038,000 sq ft of net lettable area and 2,179 carpark lots. The occupancy rate stands at slightly above 98% and has 300 over tenants.  More recently in the news, PageOne bookshop closed citing high rental costs.  When PageOne moved out, the space was quickly taken up by two other retail outlets - Franc Franc and Cotton On.

Just walking around Vivocity, you will be quite amazed at the shoppers who are there.  Families, teenagers, tourists, office workers, etc.  One would expect it to be less crowded during the weekdays but it is not.  Sited just beside harbourfront, tourists from cruise ships often go there to shop.  Not to mention that Sentosa is just conveniently located by a monorail from Vivocity to Resorts World.  

The shops are also wide and varied.  There is Giant and Cold Storage (supermarkets) for those who want to do grocery shopping, a cinema, many food outlets and restaurants and lots of retail shops.  The shops cater to a wide mix of shoppers whether they are shopping for electronic products, home furniture, clothes, luxury goods, etc, etc

I think Vivocity will continue to do well but I am not certain what the impact of the new cruise terminal at Marina will have on the business it gets from tourists. Nevertheless, since it is conveniently located at the doorstep of Sentosa, I am certain it will continue to get lots of business from travellers who are staying at Sentosa.

BreadTalk

Well, it is easy to analyse a business if you can see how many customers there are.  Breadtalk is one of those business that has been expanding abroad.  While I am not too certain how the overseas outlets are doing, I can say that the outlets in Singapore are doing pretty well.  Breadtalk sells bread and together with many of the Breadtalk shops are Toast Box (basically a cafe like shop that rivals another famous Singapore brand Ya Kun).  

Anyway, let us focus on Breadtalk first.  Many of its outlets are conveniently located where there are office crowds.  Just walk into a Breadtalk outlet in the morning and you will be surprised to see the number of people queuing up to buy breakfast back to eat in office.  I figure that a typical Breadtalk shop can easily have more than 200 customers just during a one-hour window in the morning peak hour where office workers are streaming to the office and need to grab some food to eat.  Each customer probably spends $3 to $4 on their breakfast.  Many of them are repeat customers.

Conclusion

So there you have it.  Two businesses that are listed in the Singapore stock exchange that you can easily observe to determine how well they are doing.  At my writing, Mapletree Commercial Trust was trading at S$0.965 and Breadtalk was trading at S$0.50.