Breadtalk, Old Chang Kee and QAF Limited.

I avoided buying Breadtalk's stock for a long time, probably for as long as I avoided buying their bread and I definitely have never bought their "fresh" soya bean milk before. All so expensive.

Yes, I know. AK is very giamsiap. Terrible!





A very high PE ratio and gearing makes the stock unpalatable. 

To make it even less attractive, the dividend is peanuts. 

Give shareholders only enough money to buy some bread, maybe.

However, I revealed that I nibbled at Breadtalk on price weakness during the last "Evening with AK and friends". Why har?





Reader:
Sir, there is one thing that puzzled me. You mentioned that you bought Breadtalk, but this seems contrary to certain principles which you always talk about. 

For example, the stock doesn't seem cheap, seeing that the PE of 44 is near its 5-year high. 

Second, the stock doesn't give very high dividends (you already explained this point). 

It is the first point that puzzles me, since you have always talked about buying an asset when it is cheap. How come this time it is different leh?





Assi AK:
If cash flow from ops is strong and CAPEX reduces, earnings will improve.

BT has strong CF... CAPEX needs to come down and if/when it does, earnings will go up and PER will improve. 

They could pay better dividend then. 

Not for the pure income investor.

Tsk, tsk...

Not for the purist income investor, to be sure, it is a smallish long position for me.

Consistent with my philosophy (remember "the pyramid") and to put things in perspective, it accounts for less than 1% of my portfolio.

Related posts:
1. Old Chang Kee versus Breadtalk
(Why AK prefers OCK to Breadtalk?)
2. QAF Limited.
(If you like bread, QAF is yummier!)
3. Bought cheaper bread on BREXIT!
(AK bought more at $1.03 a share.)

A good wife worries about retirement adequacy.

A recent conversation with a reader:

Reader says...

I have been a silent reader mostly for several years now. 

And i am ashamed to say that i now feel like i have not learned well from your blog, and am caught in this situation where i just do not know if i should bite the loss of almost 15k, or just continue with the plan i bought from my FA. 

Hence, I am writing to hear your advice.




I am 34 years old and my other half is 36... purchased a Retire Happy plan last year. 

My husband purchased it mainly because of me.

I was doing a review of this plan and chanced upon your words of wisdom on this Retire Happy. 

And then i realised that i might as well have topped up my own CPF account.




What should i do now?

Even though its my hubby's money, it is foolish to continue with a plan that is not value for money.

If i terminate the plan now, I will lose about 15k, which is damn a lot of money. 

If i don't, there is no guarantee that my hubby will save. 






After i have explored the CPF option, we are shocked to know how good it is but my husband still says he won't be maxing out his CPF as he doesn't have enough cash.

The most sensible and logical thing would be for my hubby to max out his CPF with the monies he is using for my plan and use it to provide for our retirement, but honestly, money is truly emotive and i don't know if he can.

What should i do, AK? I feel like a foolish wife now.

Would be eternally grateful for a response.

AK says...

I am only talking to myself in my blog. 

If you overheard me talking to myself, you have to decide if I make sense. ;)

I think you know what you want to do.

Does it make sense to continue sending money to where it is not treated best?




I understand that things are not as straightforward in your case because you are trying to force your husband to save money. 

Frankly, however, what is to stop him from not making regular payment towards Retire Happy?

I feel that if he is committed enough to pay regularly now, you should trust him.




Instead of paying Retire Happy, ask him to pay you and you manage the money. 

You could take the money, do MS Top Up to his CPF-SA and not keep it for yourself to show that you are doing this for him and the family. :)

To be quite honest, we cannot be sure of anything in life. It is all about trust. 

There is no guarantee that things will always go our way. 





We just have to do what we feel will give us peace of mind.

It depends on what we believe in.

I believe in having a risk free and volatility free portion in my investment portfolio. 

I believe in having an annuity that pays me not for only 20 years but for life. 

I am lucky to be a CPF member and I am maxing out the benefits of my membership.






Related posts:
1. Retire Happy.
2. How many $29K do we have?
3. How to upsize $100K to $225K?