Shares of BreadTalk Group were up 2.3% at $1.36 today as investors started to nibble after the stock fell yesterday to its lowest level in more than a week.
The counter was down for the fifth straight session yesterday on broad market weakness and ongoing concerns about the company’s products in Hong Kong, where authorities have ordered a ban on all lard and lard products supplied by a Taiwanese firm caught in a scandal over cooking oil.
Two of BreadTalk’s stores in Hong Kong were among hundreds of retailers and distributors found by the authorities to have used or sold lard oil blended with recycled waste oil supplied by Taiwanese firm Chang Guann.
Hundreds of bakeries and restaurants in Hong Kong and Taiwan had to remove some products off their shelves following a government recall of the oil.
“While two of BreadTalk’s outlets in Hong Kong used lard oil supplied by Chang Guann for their polo buns, it is not accused of any wrongdoings as long as the affected products were recalled,” says OSK-DMG.
“The company has since ceased usage of the affected oil. This has no major impact on our forecasts,” says the broking house, which has a “buy” rating and $2 price target on BreadTalk.
Current buying interest in the stock is low, based on its subdued volume. Resistance is seen at the current September high of $1.425. Year to date, the stock is up about 50%.
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