RBD - Restaurant Brands

[duncan macgregor]

funnier than that is now that you have lost your nerve and all has been exposed maca, YOU GOT NOTHING!

but 5% after tax:D That my friend might beat the average return in the sharemarket in 2008. The average NZX share competition selection in 2007 was minus 4%, in what was a bull market on the ASX. The average for the ASX equivilent competition was plus 17%. My one share in my trading account which i bought only for take over reasons went up 18% yesterday but still remains deeply in the red. I am right out the market waiting on stability to return to the world economy which right now is heading for a crash. Good luck if you think otherwise thats what makes a market, different view points nobody ever gets it right all the time. Macdunk

[duncan macgregor]

"nobody ever gets it right all the time"

but you claimed 9/10 times on this site - what happened:D:D:D

are you now saying this claim is false? SECTOR you seem to follow people round snipping at their heels why dont you enlighten us all with what you get up to. Nobody is interested in spoiled brat behaviour, i am out of the market for very good reason which has nothing to do with investment style being right or wrong. Tell us what you bought, and why. in other words grow up stop being a pain in the butt. Macdunk

[BRICKS]

JUST to put it right the Div is 10.79% gross tax paid and could go higher, WOW, Also Sunday lunch at KFC Paraparaumu had to put the house full sign where all the bachelors and divorces eat with NO problems but fun to watch and MEET..

[minimoke]

That is one classy pick up joint. And I bet they wonder why they are single? Though I guess the lardbellies have a mutual appreciation for fine dining.

[BRICKS]

That is one classy pick up joint. And I bet they wonder why they are single? Though I guess the lard bellies have a mutual appreciation for fine dining.

WELL the minimoke has jumped a gear and shown his faults and in full day light too, Sorry NO lard bellies or Brown people from any country just good living from Paraparaumu where every one love`s to live and growing at 6% a year BAD luck bet you never go out to enjoy YOURSELF..

[minimoke]

... and growing at 6% a year BAD luck bet you never go out to enjoy YOURSELF..
Is that RBD's projected growth or the waistlines of the residents. Tempting as it might be KFC wouldn't be my first choice as a place to go to enjoy myself, but giving the social opportunities around Paraparaumu I can see why KFC would be so appealing. Do KFC provide space to park mobility scooters?

[BRICKS]

Is that RBD's projected growth or the waistlines of the residents. Tempting as it might be KFC wouldn't be my first choice as a place to go to enjoy myself, but giving the social opportunities around Paraparaumu I can see why KFC would be so appealing. Do KFC provide space to park mobility scooters?

WELL minimoke is against GREY POWER as well, but remember you will be one very soon so look on your bright side and remember that you BANNED yourself from KFC..

[duncan macgregor]

funnier than that is now that you have lost your nerve and all has been exposed maca, YOU GOT NOTHING!

but 5% after tax:D SECTOR I notice you giving out share buys that are trading at well under the thirty day moving average thats high risk. When i go out in my boat i look at the weather first of all, then decide the risk in going out. I dont need the risk of being caught out in gales to prove how stupid i am, i can go out at a later date in relative safety. You will find if you want to catch the good waves you keep out of it during the gales where you risk being dashed up on the rocks.
The share market right now is unpredictable, with the american economy tanking, its rough out there. The market will either crash, or turn into a bear market which is pretty rough. I prefer to wait it out see what happens about the crash, before playing with the bears. That is being sensible playing the market for the sake of playing it is not only high risk but very stupid. Keep your predictions coming it will improve your performance in the end. MACDUNK

[BRICKS]

SECTOR I notice you giving out share buys that are trading at well under the thirty day moving average thats high risk. When i go out in my boat i look at the weather first of all, then decide the risk in going out. I dont need the risk of being caught out in gales to prove how stupid i am, i can go out at a later date in relative safety. You will find if you want to catch the good waves you keep out of it during the gales where you risk being dashed up on the rocks.
The share market right now is unpredictable, with the american economy tanking, its rough out there. The market will either crash, or turn into a bear market which is pretty rough. I prefer to wait it out see what happens about the crash, before playing with the bears. That is being sensible playing the market for the sake of playing it is not only high risk but very stupid. Keep your predictions coming it will improve your performance in the end. MACDUNK

ALL right you force me,, RBD.. 10.79% gross TAX PAID..

[JMKC]

ALL right you force me,, RBD.. 10.79% gross TAX PAID..

gross tax paid...there's a nice oxymoron.

Is it gross? Or is it tax paid (that would be net).

[Dr_Who]

McDonalds US just had a profit downgrade. The economy in the US is much worst than expected if the average Joe is not eating out at fast food joints.

[BRICKS]

gross tax paid...there's a nice oxymoron.

Is it gross? Or is it tax paid (that would be net).

BUY it and find out for yourself..

[JMKC]

ie you have no idea.

[JMKC]

Just to clear it up, using 07 dividends of 6 cps, and taking Monday's close of $0.83, for a 33% taxpayer it is a net yield of 7.2%. And a gross yield of 10.79%.

[BRICKS]

Just to clear it up, using 07 dividends of 6 cps, and taking Monday's close of $0.83, for a 33% taxpayer it is a net yield of 7.2%. And a gross yield of 10.79%.


YOU DILL you can read it in the paper which said the SAME..

[JMKC]

I'm the DILL? This coming from Mr (Oxy)moron gross tax paid.

[BRICKS]

I'm the DILL? This coming from Mr (Oxy)moron gross tax paid.

YOU should give up and go back to be a plumber or some other trade where you don't mix with people or MONEY..

[POSSUM THE CAT]

BRICKS then if they can maintain that 6 cents dividend it will be 25% when the price gets down to 24cents

[JMKC]

Possum that would be 25% net too!

[BRICKS]

YOU know why so many KIWI`s leave the country to get away from the likes of you two
CAT & DILL..........

[Viking]

McDonalds US just had a profit downgrade. The economy in the US is much worst than expected if the average Joe is not eating out at fast food joints.

It is quite a different story we hear here in NZ.
McDonald is reportedly doing quite well~

http://nz.news.yahoo.com/080128/8/3rip.html

CHICAGO (AFP) - Global fast-food giant McDonald's Corp. on Monday announced that its fourth-quarter profit rose by a more-than-expected 1.27 billion dollars.

The Oakbrook, Illinois-headquartered firm said its profit was bolstered by slightly higher US sales, and as food sales across Asia/Pacific, the Middle East and Africa rocketed by 11.4 percent at comparable stores from the same quarter of 2006.

Overall revenues for the October-December quarter rose six percent to 5.75 billion dollars as same-store sales around the globe increased 6.7 percent.

[POSSUM THE CAT]

BRICKS I came back here from Australia to get away from your aussie logic or should I call you THE KING.

[minimoke]

It is quite a different story we hear here in NZ.
McDonald is reportedly doing quite well~


Maccas global might be OK but the US side is looking gloomier: “CHICAGO (AP) - McDonald's Corp. showed its first sign of vulnerability to the U.S. economic slowdown Monday and uneasy investors responded by selling off the fast-food chain's stock despite its booming international sales and healthy $1.27 billion profit.
The company said sales were flat last month at U.S. restaurants open more than a year, blaming winter storms but also acknowledging ``softer consumer spending'' as Americans tightened their wallets in a volatile economy.
“Chief Executive Jim Skinner said customers showed more of a preference last month for items on its dollar menu. He said the weakened economy is likely to knock 1 to 2 percentage points off its U.S. comparable sales in the near term, with January U.S. sales roughly 1.5 percent above a year ago.
``We're recession-resistant, not recession-proof,'' Skinner said on a conference call.”
http://www.gateway.net/pf/story.jsp?floc=FF-APO-1310&idq=/ff/story/0001%2F20080128%2F1843050780.htm&sc=1310

[Steve]

BRICKS I came back here from Australia to get away from your aussie logic or should I call you THE KING.

What ever happened to THE KING?

I recall that THE KING would correct you if you agreed with him, but made the mistake of phrasing it differently...

[BRICKS]

What ever happened to THE KING?

I recall that THE KING would correct you if you agreed with him, but made the mistake of phrasing it differently...

THERE is an old saying but true :-

YOU may call me any name you like
But don't call me late for DINNER..

Never trust any one, this is MONEY..

[duncan macgregor]

Please all rise for this session of the Sharechat internet court, Judge Mick 100 presiding.

The defendent, Snoopy, is here to answer the following question

"Before you decide to hold or buy more shares in a company whose shareprice is plumetting in value - eg, restarant brands
Ask your self this question:"

"Is there a possibility that my decision making process is being affected by 'escaslation of commitment'?"

"So how about it Snoopy? Are you suffering from escalation of commitment?"

---------

A fair question Judge Mick. Now please allow me to present my evidence.

I am a foundation shareholder of RBD. I acquired my first shares in June 1997 at an effective $2.03. In March 1998 I purchased some more at an equivalent price of $1.29. I have made several purchases in subsequent periods, priced as follows: September 1998 62c (equivalent), February 2000 $1.20 (equivalent) and another batch at $1.18 (equivalent). More purchases were made in September 2000 at $1.14, March 2002 at $2.08, July 2002 at $1.71, September 2003 at $1.25, September 2004 at $1.26, December 2004 at $1.26, March 2005 at $1.29, July 2005 at $1.60, October 2005 at $1.30 and finally later in that same month at $1.24. My weighted average purchase price is $1.26. My weighted average share holding time is 2.5 years. (That's because most of my holding has been bought in the last couple of years, during the time RBD has suffered from the most derision on this forum.)

Based on a market price of $1.33 I have made an average capital gain of 2.5cps per year held. The current net yield is 10cps, or 12.5cps if we add the annualised capital gain. That gives a gross yield annual return of 13.8%. Now, I'm not going to claim that is a fantastic return, although it is double what you would earn in the bank. But I do see that return as more than satisfactory, given the conservative nature of the underlying investment.

Some people see successful investment, in the cricket analogy, as a process of hitting as many sixes as you can. Personally I prefer a technique which gets less headlines but over the long term can be just as rewarding if not more so (because you are taking less risks). I refer to the 'pushing for singles' method. Just go about your job quietly clocking up the runs and keeping the scoreboard ticking over.

Being an investor in RBD won't score you many bonus swoons at cocktail parties. But it's a great investment to put your mother into. That's because my quoted returns are IMO, quite sustainable - even if the business doesn't grow at all! That's why RBD should be a core holding of any income based portfolio. For this whole century, RBD has had a consistent dividend income record that puts *all* the listed property trusts to shame.

As for the 'plummeting share price', there has been no long term plummet since 1998, since the inital fall from grace after the IPO. The share price today is more or less what it was in 1998. Since RBD have paid out nearly all of their profits as dividends since then, this is to be expected.

The case for investment, since 1998 has always been based on dividend yield. Investing in this company from a dividend perspective makes as much sense in 2006 as it did in 1998 and virtually every year in between. Therefore I reject the 'escalation of commitment' argument. If you look at 'new' investment in RBD in 1998, 1999, 2000, 2001, 2002, 2003, 2004, 2005 and 2006 it has made huge sense every year, for eight different annually discrete reasons.

RBD, highly profitable, highly reliable and proven as a sound investment for every year of this century. Judge Mick, I rest my case.

SNOOPY

discl: hold RBD, and very satisfied with the investment performance. I have this post pinned up on my office wall. When anyone rubbishes TA i look up at this and smile. I think we all can make mistakes but without a sell system this is what can happen. I have been rubbished on the NZO thread for running a tight stop loss by the brain dead who think a stop loss is not for them. This can happen to most companies i only use this as an extreme example. Macdunk

[Nitaa]

Duncan I havent pinned this up on my wall. In saying that, I do beleive that Snoppy got his views on fundamentals wrong with this stock.

This stock is a very mature one in the sense that kfc, pizza, and to a much lesser degree starbucks have been in the market for some time. kfc and pizza hut will need to change tac to dramatically improve their sales and/or margins.

Refits, closing of stores etc couple by the fact that i do not se much room for expansion under their current format puts this company behind the eight ball.

So in my view only, this relevance for me with TA had nothing to do with it. it was purely fundamentals. TA in many cases come are the fundamentals unless insiders are at play and then thats a different story.

[duncan macgregor]

NITA, Is there a possibility that my decision making process is suffering escalation of commitment. Its nothing to do with fundamentals or technical analysis its rail track thinking unable to change direction blinded to reality. I argued with SNOOPY for years over RBD now i find myself arguing on other threads about the benefits of a running a simple stop loss to the blind all over again. Its a smart person that learns from others mistakes. Macdunk

[Nitaa]

not sure if we are both on track here. you put up your argument for a stop loss in perhaps in snoppy's case that would have been a wise move.

snoppy for a long time seemed less interested about the shareprice and more concerned about the divy. Personally i thought his thinking process was wrong but that was my opinion.

having said all that duncan, what everyones risk stratergies are at the time will also influence on what type of investment they want. Its fair to say that a nw scholl leaver can and should take more risks (calculted) than someone enertering retirement that is already fincially confortable.

What you seem to think is that everyone should have a 5% trailing stop loss which seems totally stupid to me. Here you may have a middle income worker working long hours to better themselves financially and they dont have the time to watch the markets, readjust there position day in day out. With a 5% trailing stop loss they are going to get kicked out of the market every few weeks or months and then they have to work out where their money is going next. For that reason, a more conservative stock such as your top 10 or 15 stocks would make logical sense as these investors will look for steady growth, capital gain and perhaps dividends. Ultimately its all about their current position.

Most of my work is currently done on a computer so i can have access to my information at the click of the mouse. Yet although i study the markets a litle bit i dont and cant be bothered spending more than 30 minutes a day at the very most in researching. My time is too important for that. So perhaps you need to consider everyones current position to understand why some invest in retail, conservative divy co's, speccy's or otherwise. I pulled out about 70% of my investment in stocks last year. Not because i thought the market was going to go down or crumble but i wanted to use that money somewhere else.

Back to Snoppy. Although i never agreed with his decision because they are far from my thoughts, I do understand why he has invested in such company's. That my friend is what makes life so flippin interesting. Everyone sees things differently and it 100% depends on what angle they look at it from. The last sentence explains the reasons the reason of why everyone does things so differently.

[Nitaa]

NITA, Is there a possibility that my decision making process is suffering escalation of commitment. Its nothing to do with fundamentals or technical analysis its rail track thinking unable to change direction blinded to reality. I argued with SNOOPY for years over RBD now i find myself arguing on other threads about the benefits of a running a simple stop loss to the blind all over again. Its a smart person that learns from others mistakes. MacdunkI dont know what you mean by "excalation of commitment".

The problem with your argument is that is your way and not the vast majority's way. Your way doesnt make it better or worse than someone who has a stop loss of 4% o 10%. If i had applied your system to my portfolio i can honestly tell you i would be owrse off. The main reason being is my stocks over the last 5 years have predominatly been energy related (mostly oil). Even though i would have done ok using your system i would have found myself buying the same stock on a continual basis make small gains and losses along the way. In the end where i would have ost out most is through brokerage fee.

So to prevent repeating yourself too often, I suggest you try and look through other peoples eyes to see why they dont follow your system. Most of the time its not because they think your system is useless or doesnt work, its because that system is not for them.

You are making one example of Snoppys losses over a certain period to back up your claim which is wrong even though in hindsight your system would prove to be better. The other side of the coin is when stocks are climbing, your system kicks you out on an uptrend and then the next question is, when do you buy back in? Under your system you may end up buying in at a lower or higher cost.

When the stock is trending down (easier to see after the event) then your system will save truckloads but the pposite will happen on a stock that is performing well.

Now hopefully you see that all things are not black and white.. its all grey and very subjective depending on your angle.

[duncan macgregor]

NITA, That is why i disclose my buys at the time not after the event. It shows that i have enough confidence in my buy system to risk egg on my face. Sell stop losses are not set at a rigid 5% in a long trend up. When in profit you lower them. Its only an insurance policy to protect your profits you play with your winnings not your savings. I see at a glance what i am buying or selling the market tells me. Macdunk

[Nitaa]

Have you considered my buy and hold system. I have enough confidence in my stock selection that i dont need to worry about a stop loss. If it drops below 5% they always go above my entry price. I dont want to be kicked out of quality stocks only to buy back at a higher price.

ps. no good for aussie speccys, you will get killed my friend

[duncan macgregor]

Have you considered my buy and hold system. I have enough confidence in my stock selection that i dont need to worry about a stop loss. If it drops below 5% they always go above my entry price. I dont want to be kicked out of quality stocks only to buy back at a higher price.

ps. no good for aussie speccys, you will get killed my friendNITA, The overseas markets are plummeting in a downward spiral or havent you noticed?. I more than doubled my money last year, which mostly sits in the safety of a secure bank at the moment.
To not have a tight stop loss on everything before this next crash shows of how unaware you are of the risk.
The American economy is doomed, the markets will take a big hit you are sitting duck material with your i am always right arrogance. Look at what happened to poor SNOOPY, he not only is so right he buys more when the market tells him he is wrong.
The market tells us a crash comming up. the market is never wrong its only you and i that gets it wrong sometimes.
To argue against life boats being necessary on the unsinkable Titanic was an equally stupid arguement, put out by some. Stormy seas are upon us NITA you have no life boats bleating on about what a fine ship you are sailing, oblivious to the reality of your situation. When the storm is over, i will be back picking up the wreckage selling back to another group of enthusiastic sailers, who no doubt will have learned nothing. Macdunk

[BRICKS]

NITA, The overseas markets are plummeting in a downward spiral or havent you noticed?. I more than doubled my money last year, which mostly sits in the safety of a secure bank at the moment.
To not have a tight stop loss on everything before this next crash shows of how unaware you are of the risk.
The American economy is doomed, the markets will take a big hit you are sitting duck material with your i am always right arrogance. Look at what happened to poor SNOOPY, he not only is so right he buys more when the market tells him he is wrong.
The market tells us a crash comming up. the market is never wrong its only you and i that gets it wrong sometimes.
To argue against life boats being necessary on the unsinkable Titanic was an equally stupid arguement, put out by some. Stormy seas are upon us NITA you have no life boats bleating on about what a fine ship you are sailing, oblivious to the reality of your situation. When the storm is over, i will be back picking up the wreckage selling back to another group of enthusiastic sailers, who no doubt will have learned nothing. Macdunk

RUN for your lives Mc Duck says the world is DOOMED< DOOMED and he is praying for SNOOPY to save his sole from the dreaded broker fees good to have a DILL around..
Save RBD PLEASE...

[duncan macgregor]

BRICKS, The world is not doomed. The only thing doomed is your financial investing strategy or lack there off. Prepare for a nice shock in tomorrows market my friend you deserve every thing coming your way. Global markets down 3% on average over night which was very predictable. Your market in NZ is closed LUCKY YOU EH?. Dreaded broker fees might have been more rewarding than whats this will end up costing you. When you get run over no worries mate i like buying roadkill. Macdunk

[BRICKS]

new lows

lower and lower it goes


65c possible? I remember buying when Bob Jones came on TV saying they were a bargain...64c from memory...good trade it was.

YOUR worrying needlessly these are bargain prices but the KIWI`s are just to frighted to back a good horse and its a wee wile before the final results come out with the div results..

[JMKC]

BRICKS, you mean the div comes out at the same level, but because the stock has $hat itself the yield looks better? Nice logic.

[BRICKS]

BRICKS, you mean the div comes out at the same level, but because the stock has $hat itself the yield looks better? Nice logic.

Good to see that your listening and you could be right who knows but you got to own the shares to COLLECT.. the div..

[Snoopy]

Actually, Pizza Hut was the mainstay in terms of profit growth. Up until 2-3 years ago, KFC was not profitable, and it was Pizza Hut (and to a lesser extent given its relative size Starbucks) that was underpinning performance. Happy to find the old annual report if you would like, or perhaps you could look through all the reports you clearly have on your bedside table?


I have transferred your post from the MCH thread JKMC, I hope you don't mind as it was off topic over there.

The figures below represent the total performance of RBD over the last five years. Those figures in black are taken from the appropriate annual report. The figures in blue are the ones I have estimated.

http://img.villagephotos.com/p/2005-3/963787/RBDdsct0308.gif

I don't claim these tables are 100% accurate. Indeed if you look at the 'tax' column you will see that the individual tax attributable to the business units when summed do not add up to the total tax paid.

There are reasons for that. I am not sure exactly how RBD organizes their affairs for tax. But I am fairly sure RBD is not split into only three sub companies exactly as I have assumed. Furthermore in the real tax accounts there are tax credits carried across from business year to business year. Whereas my tabled tax is calculated on a one year operational basis. Nevertheless I don't think I am too far away from capturing the operational *after tax* performance of the company, as opposed to the EBITDA figures and sales figures that the company likes to announce.

When you see the real after tax figures, taking into account head office costs, you can understand why the company only wants you to see the EBITDA unit results!

Perhaps you were swept away by the RBD PR machine JMKC, when they went on in glowing terms in the early 2000s about the growth of Pizza Hutt NZ? What RBD never emphasised, of course, was the level that growth was coming from!

In any event, this table should put to bed any myths about Starbucks and Pizza Hut N.Z. supporting the company in past years. It is KFC that is easily the most profitable franchise of the three, by an order of magnitude over both the others. KFC has had some not so good years (in relative terms). But to suggest that KFC in New Zealand has ever made a loss in NZ is just plain wrong. Even leaving aside the disastrous Pizza Hut N.Z. experience of FY2007, the after tax amounts earned by both Starbucks and Pizza Hut N.Z. have been pitiful. And I won't even mention the disaster that was Australia. Although I have presented the Oz results for completeness in shaded grey, I have not added them into the overall company performance figures because they are historic now.



You talk about "market power". Pizza Hut has ZERO market power (think Dominos, Hell, Tempt).


Pizza Hut has half as many again outlets compared to both Dominos and Hell Pizza. They are the largest Pizza chain in the country bar none. I don't think your claim JMKC that PH has 'zero market power' is credible.



Starbucks has limited mkt power (certainly less than it used to given the consumer shift away from a) their brand and b) mass produced coffee.


While I accept that some no longer find Starbucks 'cool', I don't agree there is an overall consumer shift away from the brand. The overseas tourists in particular seem to love it.



KFC has SOME mkt power, however this is only in fried chicken. You cannot tell me that with the current push away from obesity and foods with large amounts of saturated fats that you think KFC is a growth business?!?


The revamp of KFC stores has certainly grown KFC in EBITDA terms (albeit only back to where is was in FY2003). But higher borrowings means the interest expense has actually reduced after tax profit for the 'KFC sub unit' verses five years ago. I think that KFC could be a modest growth prospect if company debt was reduced. No one goes to KFC for a 'healthy meal', but there are now healthier KFC options. Choosing mashed potato over chips and skinless chicken over traditional recipe, for instance.

SNOOPY

discl: hold RBD

Postscript: 2008 results added March 2009

[duncan macgregor]

[QUOTE=Snoopy, KFC has had some not so good years (in relative terms). But to suggest that KFC in New Zealand has ever made a loss in NZ is just plain wrong.

The revamp of KFC stores has certainly grown KFC in EBITDA terms (albeit only back to where is was in FY2003). But higher borrowings means the interest expense has actually reduced after tax profit for the 'KFC sub unit' verses five years ago. I think that KFC could be a modest growth prospect if company debt was reduced. No one goes to KFC for a 'healthy meal', but there are now healthier KFC options. Choosing mashed potato over chips and skinless chicken over traditional recipe, for instance.

SNOOPY

discl: hold RBD[/QUOTE] SNOOPY when will you ever learn?. When this dog sold its kennel to lease it back to fund a holiday in Australia, the shares shot up to $1-70.
Anyone with half a business brain would have known that was a bad move. You can borrow money cheaper on property than any other means, especially if you borrow money to do up the landlords premises at a million bucks a store.
Regardless of all this fundamental stupidity that the gullible swallowed, the shares have downtrended to exactly half in less than three years. Anyone holding long term only shows how little they understand the real world of good business.
The only thing going for it is the dividend, which to me looks like bait on a hook for the gullible to swallow hook line and sinker. Who gives a sh*t about mashed potatoes for petes sake you are going down the gurgler. Macdunk

[Phaedrus]

RBD is in a longterm downtrend with an unbroken confirmed trendline in place.

Take a look at the On Balance Volume though. See how it has risen over the last 8 months while the price has only tracked sideways? This stock is being slowly accumulated by the little guys.

Look at the QStick indicator. This too has been rising during the 8 months of price stagnation. The Qstick indicator is simply a moving average of the difference between open and close prices (the most important part of a candlestick - the body) Translation :- RBD is having more "Up" days than usual.

Will the support at 80 cents hold?

Could 2008 be the year RBD gives a Buy signal?

http://h1.ripway.com/Phaedrus/RBD220.gif

[limegreen]

It will be interesting to see what effect higher food prices have on take-away foods.
hiawatha

Article in the Herald (http://www.nzherald.co.nz/section/3/story.cfm?c_id=3&objectid=10492890) a few days back suggesting that especially the high volume low-cost operations suffering with high cheese prices. And there is a lot of cheese on cheap pizzas.

[Snoopy]

SNOOPY when will you ever learn?. When this dog sold its kennel to lease it back to fund a holiday in Australia, the shares shot up to $1-70.
Anyone with half a business brain would have known that was a bad move. You can borrow money cheaper on property than any other means, especially if you borrow money to do up the landlords premises at a million bucks a store.


I don't agree that without the benefit of hindsight the expansion into Victoria was a bad move Macdunk. If you add up the losses incurred by RBD in Victoria over five years, as detailed in my spreadsheet of the four divisions, I come up with:

$9.51m+ $8.01m +$3.29m + $4.05M +$5.80m= $30.66m

of shareholders funds down the drain. Nevertheless that is the sort of money it takes to establish an overseas chain. HLG and MHi have expanded successfully into the Australian market. If the Victoria venture had succeeded then RBD could well be worth $1.70 or more today. But that chapter for RBD is now closed and we have to move on.

Contrary to what you espouse, not owning the premesis you operate from is a common thing for retail store chains. Warehouse, Pumpkin Patch, Hallensteins, Michael Hill - none of these companies own their own stores and it hasn't stopped them from being successful. As for borrowing costs RBD were paying 7.58% last year, which I think compares favourably with mortgage borrowings costs of the time.

SNOOPY

[duncan macgregor]

SNOOPY, I told you at the time long before hindesight as you well know. Infact i was brow beating you so hard at that time i promised to shut up. MHI did it the right way by sticking the toes in the water first, to learn from the amall mistakes then make adjustments. To sell the kennel to lease back is the most stupid thing they could have done. On second thoughts spending millions doing the landlords premises up was equally as dumb. The dumbest thing of the whole lot was failing to get out when it was trending down all the way from $1-70 to 85c without a stop loss. Must correct that again. It was dumber to average down bleating about dividends yapping on about mashed potatoes versus chips.
MACDUNK

[Snoopy]

Another two part question from on the MCH thread, this time from Possum the cat

"Snoopy when does their rights to use the brands expire?"

Every ten years.

"And what is the cost of renewing these rights going to be?"

The rights for KFC have just been renewed as at May 2007 for 2x$NZ2.6m payments. This KFC renewal agreement covers 87 stores, which works out to be a one off cost of around $NZ60,000 per store. The renewal fees for Pizza Hut are I believe similar. 51 stores, the former Eagle Boys chain acquired in one hit, are up for renewal in 2010. That will mean a one off payment from RBD to YUM of some $NZ3m during that year.

"Yum Brands hold all the aces."

YUM brands does not have access to the high profile sites in New Zealand. That is where RBD comes in. But if you think YUM are onto a good thing, you can buy shares in them as well. That's what I did.

SNOOPY

discl: hold RBD, YUM

[Snoopy]

And just another follow up to JMKC

"You talk about "market power". Pizza Hut has ZERO market power (think Dominos, Hell, Tempt)."

An interesting website to keep abreast of the fast food scene in New Zealand is that of the Restaurant Association of New Zealand.

http://www.restaurantnz.co.nz

According to them the takeaway Pizza market was worth $177m in 2007.

As at the end of FY2007 there were 103 Pizza Hut New Zealand outlets, of which 15 were red roof restaurants. So that leaves 88 PH outlets as takeaway delcos. PHNZ total revenue was $79.7m. If we assume the revenue takings from a red roof restaurant are 50&#37; higher than from a delco, and the revenues from our mythical average delco is 'R', then when can calculate the average delco store revenue as follows:

88R +(15x1.5)R= $79.7m => R=$720,000

That means Pizza Hut's 88 takeaway delcos account for some $63.4m in sales. That gives Pizza Hut New Zealand 36% of the takeaway pizza market nationwide. I would say that makes them 'market leader'.

SNOOPY

[winner69]

Snoopy - the numbers from that site you provided a link for a either a load of **** ..... or RBD is a bigger dog than you even give it credit for

Pizza takeaway market might be $177M in 2007 but did you note that 3 years prior in 2004 it was $77m --- the pizza market has grown 130&#37; in those three years

However Pizza Hut sales didn't grow (Still about $80m and i didn't bother try to break it up into delcos etc) ............. MARKET UP 130% AND PIZZA HUT UP 0% MEANS A MASSIVE LOSS OF MARKET SHARE ......... competitors cleaning them out

Hardly what you would expect from a market leader is it ...... or are the numbers a load of ****

[BRICKS]

Snoopy - the numbers from that site you provided a link for a either a load of **** ..... or RBD is a bigger dog than you even give it credit for

Pizza takeaway market might be $177M in 2007 but did you note that 3 years prior in 2004 it was $77m --- the pizza market has grown 130% in those three years

However Pizza Hut sales didn't grow (Still about $80m and i didn't bother try to break it up into delcos etc) ............. MARKET UP 130% AND PIZZA HUT UP 0% MEANS A MASSIVE LOSS OF MARKET SHARE ......... competitors cleaning them out

Hardly what you would expect from a market leader is it ...... or are the numbers a load of ****

WOULD not make much out of your comments either as your a proven non buyer of anything but much finger pointer so the real question is 2008 now will we Buy/Hold/Sell,
as NZ is a very small place and not a real amount of NZX stock choice so as i read some where but now cannot find there are a lot of small people collecting a holding, these are the smart one`s not the people who Yap & Yap..

[Nitaa]

Snoppy, sorry for giving you a hard time but i agree with Winner and Md. You seem insensed on divies but your asset is diminishing day by day.

Its a bit like property investors who are claiming tax benefits but many forget they have to spend $1 to gett 33 cents back. RBD is a bit like as well.

There is basically no growth and margins are getting squeezed. A "sunset" stock that needs to have a radical remodelling.

How is this stock going to turn around under its current format.. it cant.. it needs some drastic changes and thats not to say it wont or cant happen but management seem at a loss on how to stem the flow


discl. dont hold.

[BRICKS]

Snoppy, sorry for giving you a hard time but i agree with Winner and Md. You seem insensed on divies but your asset is diminishing day by day.

Its a bit like property investors who are claiming tax benefits but many forget they have to spend $1 to gett 33 cents back. RBD is a bit like as well.

There is basically no growth and margins are getting squeezed. A "sunset" stock that needs to have a radical remodelling.

How is this stock going to turn around under its current format.. it cant.. it needs some drastic changes and thats not to say it wont or cant happen but management seem at a loss on how to stem the flow


discl. dont hold.

YET again another mouth full hear say and maybe bet the management are up to there necks trying to turn the biz around and if it was easy it would have been done long time ago but at lest Snoopy is coming up with hard facts and the next final will TELL..

[Nitaa]

YET again another mouth full hear say and maybe bet the management are up to there necks trying to turn the biz around and if it was easy it would have been done long time ago but at lest Snoopy is coming up with hard facts and the next final will TELL..bricks. i am happy to be proven wrong. i guess we all just see the facts differently.

I am also not implying that managment are not working hard to turn it around (or if i did say it, it is not what i meant). However the lack of positve signs indicate that mangament are having difficulity in finding a solution. Remember its a sunset stock and the light is fading. only my opinion of course.

[JMKC]

Snoopy, I stand by what I said about Pizza Hutt having no market power. Just because they once had the most market share/stores doesn't mean they have power. To quote a piece of the article mentioned by Limegreen above:

"Pizza Hut used to command the biggest slice of the market but has been in steady decline for a few years, slugged on one side by the popular iconoclastic Hell brand and on the other by the cheaper Domino's."

Pizza Hutt have ZERO competitive advantage. Their gourmet pizzas are not gourmet, Dominos undercuts them on the value side, raw material costs are rising, AND there is a general push away from fast food (albeit the last problem should be offset by general population growth).

The only time Pizza Hutt had any market power was when they were the only ones in the market. This has now well and truly changed.

If yield is what you're after, buy Telecom or Vector. At least you have some visibility over earnings. If you are in RBD for the corporate angle fine, but I could name a few I would rather be in ahead of it. I just don't think there is any material earnings upside over the next few years.

[BRICKS]

you are a funny KING BRICK but I would take W69s comments more seriously than yours as I know your track record - I would stop buying losing retailers if I were you too - RBD just another low margin loser

I see it tracking sideways for the whole 08 year around 75-90. Wheres the fun in that. Consolidation is where it is headed for at least 6 months, lets come back and chat same time next year.

trust me KING BRICK, come back when it breaks 90.

WITH 407 odd posts and living in Q you really know what goes on in NZ here you can buy a KFC stock on the NZ market but not in Australian market and just returned to AU where KFC is alive and well for the size of NZ in this country RBD is a BARGAIN,, so you don't see that along with all the other YAPPERS so that your`s and there`s PROBLEM..

[minimoke]

Hot and Tasty is back at KFC. That alone should add 2% to revenue. :D
I thought all their food was supposed to be hot and tasty. If its not then what is it?

[Nitaa]

I thought all their food was supposed to be hot and tasty. If its not then what is it?Orginal. dont forget, kfc have a secret recipe.

Here are my 3 q's . What are KFC going to do to improve their revenueand margins>

What is Pizza Hutt USP?

What next for Starbucks? starbucks offer the most leverage.

Never liked RBD and perhaps that explains my bias away from this stock

[Steve]

I mean to say Hot and Spicy chicken... LOL. Have you guys tried Nandos hot grilled chicken? It is very nice!

Nandos haven't made it down south yet, but I intend totry it next time I'm up north...

[Snoopy]

Pizza takeaway market might be $177M in 2007 but did you note that 3 years prior in 2004 it was $77m --- the pizza market has grown 130&#37; in those three years

However Pizza Hut sales didn't grow (Still about $80m and i didn't bother try to break it up into delcos etc) ............. MARKET UP 130% AND PIZZA HUT UP 0% MEANS A MASSIVE LOSS OF MARKET SHARE ......... competitors cleaning them out

Hardly what you would expect from a market leader is it ...... or are the numbers a load of ****

I can't vouch for the numbers Winner. But even if we accept they may not be the whole truth it would be hard to deny that Pizza Hut has lost a huge amount of market share. Everything else being equal you would have to conclude that it is company management that is not performing. And part of that 'non performance' may be tied up with the fact that globally Pizza Hut is no longer a 'hip' brand globally.

Nevertheless share price does not reflect 'market share'. Share price reflects overall profitability whether the business is shrinking, growing or static. If PH is currently static, with cost cutting just offsetting loss of market share that is a recipe for the 'Pizza Hut Share Price' to remain static, provided all growth expectations have been squeezed from the share price. At 80c I would argue they have. Of course you cannot invest in PH on its own. You have to take KFC and Starbucks and invest in the RBD 'package'. The picture for the overall package is far better than Pizza Hut considered on its own.

When I said Pizza Hut was 'market leader' I simple meant that no other pizza brand in the market has higher gross takings - nothing else. That is still true AFAIK.

SNOOPY

[Snoopy]

I would stop buying losing retailers if I were you too - RBD just another low margin loser

I see it tracking sideways for the whole 08 year around 75-90. Wheres the fun in that. Consolidation is where it is headed for at least 6 months, lets come back and chat same time next year.

trust me KING BRICK, come back when it breaks 90.

If I buy today at 80c and in a years time it is worth 90c then I have made a 12.5% return. Furthermore if I scoop up a 6c dividend along the way, my return jumps to 20% (after tax). That would be 'entertaining' enough for most people in today's market I would have thought!

I agree that retailers in general are going to face some headwinds. But being a contrarian that is exactly why I am interested in buying retailers - while everyone else thinks it is a bad idea and the prices are knocked down accordingly!

Now if we take a look at average margins over the last five years for a sample of five retailers, then RBD does not come out too well.

1/ HLG: (6.4+8.9+10.5+11.0+10.7)/5= 9.5%
2/ STU: (6.9+7.9+8.6+7.0+6.0)/5= 7.3%
3/ MHI: (4.6+5.8+6.1+5.1+6.0)/5= 5.5%
4/ RBD: (5.1+4.1+4.9+4.6+1.7)/5 = 3.5%
5/ SCY: (2.3+2.5+2.6+1.9+1.8)/5 = 2.2%

But you have to remember that food tends to be a 'low margin business'. If you look across to the other side of the tasman to Woolworths, Australasia's leading retailer, they currently have margins of 3%, a figure much improved from previous years that management are happy with. I don't think anyone would suggest that WOW (ASX) is a dog, which just goes to show you do not need high margins to be successful in the food retailing business.

Put in that light, I think there is now a convincing investment case for RBD which is why I bought some more at 80c on Friday.

SNOOPY

discl: hold RBD

[Snoopy]

Here are my 3 q's . What are KFC going to do to improve their revenue and margins?


KFC on its own revenue trends are as follows:

HY2008: $106.2m => $193.1m full year (my projection)
FY2007: $182.7m
FY2006: $171.8m
FY2005: $173.0m
FY2004: $171.12m
FY2003: $175.14m

Margins, after tax, for KFC on its own I have calculated as follows:

FY2007: $12.17m/$182.7m= 6.67%
FY2006: $13.22m/$171.8m= 7.67%
FY2005: $11.26m/$173.0m= 6.50%
FY2004: $9.65m/$171.12m= 5.64%
FY2003: $12.84m/$175.14m= 7.33%

These margins are actually very good for a food retail business, so IMO don't need improving.

There is enough evidence here for me to suggest that the 'KFC store transformation project' *is* working to increase revenues and maintain margins.



What is Pizza Hutt USP?


Pizza Hut do not have a 'unique selling point' any more than your Woolworths supermarket down the road does. What Pizza Hut offer is a known product of reasonable quality at a reasonable price. It is a classic middle of the road offering that doesn't seek to be anything pretentious. The mere fact that Pizza Hut have a bigger store footprint than any of their competitors means that they are on average located closer to their customers than the competition. Being a 'known quantity' 'close to your target market' is enough to be a serious market player. Pizza Hut don't need to strive for the extremes, just as your Woolworths supermarket doesn't.



What next for Starbucks? Starbucks offer the most leverage.


Starbucks number of stores and after tax profitability is as follows by my estimation:

FY2007: 47stores, -$0.68m
FY2006: 44 stores, -$0.05m
FY2005: 39 stores, $0.65m
FY2004: 35 stores, $0.29m
FY2003: 35 stores, $0.13m

With that kind of 'leverage' I would like to see RBD stop the distraction, sell the chain and get back to sorting out their core PH and KFC business. The money from a Starbucks sale would go a long way towards eliminating company debt too, further boosting profitability.

SNOOPY

discl: hold RBD

[Nitaa]

If I buy today at 80c and in a years time it is worth 90c then I have made a 12.5% return. Furthermore if I scoop up a 6c dividend along the way, my return jumps to 20% (after tax). That would be 'entertaining' enough for most people in today's market I would have thought!

SNOOPY

discl: hold RBDWhat you are talking about is IF. Do you reasonably expect RBD to return 6 cps in divvy this year? Yoy again talk about iIF. IF the sp rose to 90 cps in 12 months you have a reasonable case. IF it stays stagnant or drops you are in the poop again.

Your arguments are now based on hope and without fundamentals.
IF you can guarentee me those figures I WOULD JUMP IN IMMEDIATELY.

[duncan macgregor]

SNOOPY, On SHARECHAT sept 2003 you stated that you were happy to buy more RBD at $2-08. Considering you averaged down to get to that point and have frequently stated over the years since, about averaging down. Now that RBD are 80c, TEL, TUA,SKC,and SCT are in similar downtrends amongst some of your other companies, dont you think fundamental analysis is a load of old rubbish doing it your way. Any system is a load of rubbish that has no sell system, we all pick a clanger from time to time.
The market is heading for some major corrections in 2008 hope you wake up to yourself in time to bail out. Macdunk

[Snoopy]

What you are talking about is IF. Do you reasonably expect RBD to return 6 cps in divvy this year? You again talk about IF.


RBD paid a dividend of 6cps over the last 12 months. Management have stated they expect an improved performance for this year and there have been no further comments under the continuous disclosure requirements. So yes, I do expect a dividend of 6cps over the coming year.



IF the sp rose to 90 cps in 12 months you have a reasonable case. IF it stays stagnant or drops you are in the poop again.


If the share price is stagnant I earn a gross yield of over 11%. I can live with that.



Your arguments are now based on hope and without fundamentals.
IF you can guarantee me those figures I WOULD JUMP IN IMMEDIATELY.


I have posted more RBD fundamentals on this thread than you would find in any broker research house back room. I don't invest hard earned money on 'hope', you can be assured of that!

You *do* know there are no guarantees with investment , right Nita? For all I know RBD will be subject to another takeover bid now that all the KFC relicensing issues have been sorted.
But I'm not betting on it. I don't need to sell out in twelve months. So if things take a turn for the worse I will just sit there on the share register for a bit longer. I am v-e-r-y patient.

SNOOPY

[Snoopy]

SNOOPY, On SHARECHAT sept 2003 you stated that you were happy to buy more RBD at $2-08. Considering you averaged down to get to that point and have frequently stated over the years since, about averaging down. Now that RBD are 80c


I may have bought some RBD shares at $2.08 in 2003 but I did not 'average down' to do so.
I 'averaged up' which, as I have stated elsewhere before, was a mistake as I was not prepared to 'sell out' when the price went the other way.

You rightly observe Macdunk that RBD are now trading at 80c. So I will make my investment decisions on that basis, without any reference to what the share price was. Unlike you, I don't invest by looking in the rear vision mirror.



The market is heading for some major corrections in 2008 hope you wake up to yourself in time to bail out. Macdunk

RBD has fallen around 9% this year. If you compare that with what 'the market' has done you will see that holding a share like RBD is part of my plan to ride out any correction.

SNOOPY

[Grimy]

[QUOTE=Dr_Who;190106]Was at Starbucks Queen St the other day with the Mrs. The staff was grumpy, the place was dirty and smells. QUOTE]

Unfortunately, this sounds like the KFC (new format one) I have visited lately. Certainly won't be back in a hurry.

[Nitaa]

RBD paid a dividend of 6cps over the last 12 months. Management have stated they expect an improved performance for this year and there have been no further comments under the continuous disclosure requirements. So yes, I do expect a dividend of 6cps over the coming year.



If the share price is stagnant I earn a gross yield of over 11%. I can live with that.



I have posted more RBD fundamentals on this thread than you would find in any broker research house back room. I don't invest hard earned money on 'hope', you can be assured of that!

You *do* know there are no guarantees with investment , right Nita? For all I know RBD will be subject to another takeover bid now that all the KFC relicensing issues have been sorted.
But I'm not betting on it. I don't need to sell out in twelve months. So if things take a turn for the worse I will just sit there on the share register for a bit longer. I am v-e-r-y patient.

SNOOPY
Lets say you are correct and they payout 6 cps equates to 7.5% yield at a current 80 cps if the sharprice remains stagnet. This is still less that what you can acheive at a major trading bank on call.

If the slow down comes into the market as expected, KFC will do ok in relative terms, Pizza Hut not quite and starbucks will suffer. This isnt a growth company as i see it. I see it as a sunset stock that is slowly dwindling away.

Maybe there is a chance for another takeover which to me looks like the best chance for shareholders to make something out of this stock.

Defensively there are worse stocks but hard to see current returns making this shae viable. Are they continuing to downsize some of their stores?

[Nitaa]

if you want steady growth without too muck risk then i suggest you put the money into a one of the major banks.

Even then i see some of these banks are getting a bit over exposed to the mortgage lending sector such as the asb

[Snoopy]

Lets say you are correct and they payout 6 cps equates to 7.5% yield at a current 80 cps if the sharprice remains stagnant. This is still less that what you can acheive at a major trading bank on call.


Not correct Nita. That 7.5% dividend from RBD is *tax paid*. In order to earn the equivalent from the bank you would have to earn 11% (based on a 33% tax rate). You can't get anywhere near that, even on a term deposit special at a bank let alone a call account.



Are they continuing to downsize some of their stores?


Yes. All the Pizza Hut red roof restaurants are closing as the leases expire.

SNOOPY

[Nitaa]

Not correct Nita. That 7.5% dividend from RBD is *tax paid*. In order to earn the equivalent from the bank you would have to earn 11% (based on a 33% tax rate). You can't get anywhere near that, even on a term deposit special at a bank let alone a call account.



Yes. All the Pizza Hut red roof restaurants are closing as the leases expire.

SNOOPYThen that equates to a reasonable return subject to the sp staying at 80 cps this time next year. Im not sure where the bottom is, maybe its zero or now. For me the fundamentals are not as good as you portray them. I guess why i have never held

[BRICKS]

Then that equates to a reasonable return subject to the sp staying at 80 cps this time next year. Im not sure where the bottom is, maybe its zero or now. For me the fundamentals are not as good as you portray them. I guess why i have never held

WHY stocks stagnate is because NO one buys them [that's brain power] that what cause`s bargains that's why BRICKS keep`s buying them when at rock bottom price`s nothing ever stays down, with RBD paying Div`s and a turnover of $303 Million what more do you want,
in AU BRICKS buys SHL a blood test out fit because every one needs a test sometime, just like eating KFC..

[Snoopy]

Im not sure where the bottom is, maybe its zero or now.


Picking the bottom between yesterdays '80c' closing price and 'zero' is a pretty big spread Nita. I am certain history will prove your prediction 100% correct. But I am also certain your prediction is of no use whatsoever to any investor.

While recognising that nothing in investment is ever certain, I do suggest you do enough homework to give you a better idea of what a share is worth than that! Hopefully you do in the shares you actually invest in!

To give you some idea of where to start from, I usually assume that if a certain management team has been able to ring a certain performance out of a company in the past, the base line is that -at some time- they will be able to achieve that performance in the future. 'At some time' could mean 'next year' or it could mean the business cycle will have to go full cycle (however long that takes). Therefore you either have to believe in your ability to 'time the market' OR you have to have the patience to 'hold on' until the business cycle turns. As you have probably figured out, I favour the latter strategy.

One of the arguments against 'holding on' is the opportunity cost. But if you buy high yielding shares then I would argue that because you are getting a significantly higher income
than bank deposits what you actually experience is an 'opportunity gain' not an 'opportunity cost' while you are waiting.

Another argument against holding a high yielding share is that they may be high yielding because the company is in danger of going broke, or at least suffering a capital raising that will result in equity dilution. It is very important to check for that possibility. I do not consider RBD to be in that situation.

Another possibility is that the whole industry is suffering a 'step dislocation change' that means the market will never return to what it was. This is particularly likely to happen in technology businesses which is why as a general rule I avoid them (Telecom being my own obvious exception). You have to keep your mind open to possibility of an industry step change. But your investment decisions should not be ruled by 'fear of change'. Quite the opposite. You should position yourself to take advantage of 'fear of change' because the market has this persistant habit of overreacting.

What I am outlining here is that *if you take certain precautions* I think you can earn excellent risk adjusted returns by buying up companies that are down on their luck.

To clarify, I don't think RBD's market position over the last few years is just a result of bad luck. There have been strategic management blunders. But remember we are no longer being asked to pay over $2 for these shares. The price is only around 80c. That leads me to another investment rule of thumb that I can't claim to have invented myself. That rule is:

"always invest in a business sthat any idiot can run because sooner or later that is exactly who you will find in the managing directors seat!"

The takeaway food business is about having an appropriate marketing campaign, getting the location of your outlets right, meeting quality standards and giving your customers good value. Not every company gets all of that right all of the time. But the process is not 'rocket science'.

So here is my prediction. If the bottom for the RBD share price is not 80c (an 11% gross yield) , then the bottom will be 73c (a 12% gross yield). That's because if you can borrow money at the 'long term corporate borrowing rate' of 8% you can fund the purchase of RBD shares from dividends alone. Thus 'in theory' the demand for RBD shares over the business cycle at 73c is unlimited. The share price can't go any lower.

On the upside if Pizza Hut closed their doors tomorrow, then profits at RBD would double. That translates to a share price of $1.60 on a yield of 11%. Now I don't for a moment think Pizza Hut will be closed down, due to contractual obligations with master franchise holder 'YUM'. But all RBD have to do is get Pizza Hut to break even (after tax), surely not an impossible task, and an RBD share price of $1.60 is a possibility.

So there is my prediction: A price range of 73c to $1.60 over the next few years for RBD shares. Buying shares at 80c is not a safe bet, as no investment is safe. But I think it is a 'good bet' nonetheless.



For me the fundamentals are not as good as you portray them.


You are entitled to your opinion Nita. But I don't feel I have been overly optimistic nor pessimistic in my views on the company. If you think I have, in a more specific sense, please point out what assumptions I have made that you disagree with.

SNOOPY

discl: hold RBD. Will probably look to reduce my holding when the share price approaches $1.60

[Phaedrus]

While RBD is quite a volatile stock, the underlying trend is unmistakable. It has been in a linear downtrend for years. For a while it looked as though it had found support at 80 cents, but today RBD broke below that level, making a new long-term low.

The confirmed trendline shown here has a "slope" of -20%. In other words, since mid 2005, RBD's shareprice has fallen, on average, 20% every year. What price dividends?

Snoopy, I believe that one of these days you may well be finally "right" about RBD and the shareprice might begin to climb. In the meantime though, you have paid a very high opportunity cost for holding this stock.

I know I have said this before and must sound like a cracked record, but why not wait until the trendline is broken before buying?

http://h1.ripway.com/Phaedrus/RBD318.gif

[Snoopy]

While RBD is quite a volatile stock, the underlying trend is unmistakable. It has been in a linear downtrend for years. For a while it looked as though it had found support at 80 cents, but today RBD broke below that level, making a new long-term low.

The confirmed trendline shown here has a "slope" of -20%. In other words, since mid 2005, RBD's shareprice has fallen, on average, 20% every year. What price dividends?


While the share price has declined in a way that has been damaging for investors, this sensationalist 20% decline per year you have come up with Phaedrus is not a fair representation of what has happened. What you did not mention is that just prior to your chart the share price spiked from the $1.30s to the $1.60s as a result of a takeover offer. If you had extended your chart back another year the decline has not been nearly so pronounced for those investors that did not 'buy in' at takeover time.

The reason for the decline in share price, if we remove the effect of the takeover offer being withdrawn, can be summed up in one word: 'Pizza'. The expansion strategy into Australia by selling Pizza in Victoria unravelled. As a result RBD lost some $NZ30m, around 32cps.
This loss will not be repeated or extended because RBD has pulled out of Australia.

The rest of the loss in share value (some 20cps) is because of the decline in the 'Pizza Hut New Zealand' business. During FY2005 this business made approximately $2.2m in after tax profit for the company. Last year Pizza Hut New Zealand lost around $6.5m and there is no indication that things are getting better. Fortunately for 'we investors' the KFC side of the business is doing quite well and is offsetting the difficult conditions at Pizza Hut.

Dividends received over the period of your chart have been 18.5cps, which do mitigate the capital losses significantly.



Snoopy, I believe that one of these days you may well be finally "right" about RBD and the shareprice might begin to climb. In the meantime though, you have paid a very high opportunity cost for holding this stock.


I have paid a high price but not a 'very high price'. There are many retailers out there for which returns have been much worse: HBY, SCY, STU etc etc.



I know I have said this before and must sound like a cracked record, but why not wait until the trendline is broken before buying?


Because of the extension of Murphy's Law: "If anything can go wrong, it will." The more that goes wrong, the less there is left to go wrong so the lower the risk!

I made a prediction that the share price of RBD will range between 73c and $1.60 over the next two to three years. Perhaps $1.60 is a little optimistic, the way input costs are increasing. But I certainly think that $1.30 is a possibility, even a probability provided management can stop the losses at Pizza Hut. A gain of 60% plus dividends in just two years is too big a potential carrot to ignore. I can't afford to be out of this share, and the risk of missing out on such a gain for the sake of a few cents is IMO too high. That is why I am buying in now, not waiting. You have remarked yourself that support levels are not always a fixed number. So I would question whether the share price slipping a couple of cents below 80c is really evidence of the 80c support level being 'broken'. Indeed I see RBD is back up to 80c today.

Perhaps those of you who think Pizza Hut is doomed might consider the following.
Around half the chain comes up for franchise renewal in 2010. So if things have not improved by then RBD could simply slash the chain in size by half by not renewing the ex-Pizza Haven franchises. Because PH is focussed on takeaway, reducing the store footprint by 50% will not reduce sales by 50% so profitability should improve markedly. All RBD need to do to ensure profits improve by 100% or so is to tread water overall - surely not too demanding even for the current management team with their er 'track record'. If they can actually achieve any growth, and I'm not betting on it, then obviously my returns will be much greater than I am projecting. At 80c RBD looks like a 'no brainer' investment to me.

SNOOPY

discl: hold RBD

[Nitaa]

Snopy. It is fair to say that you are in denial. The value of your share has been deminishing year after year. RBDs overall gross profit margin is getting squeezed each year as well. Maybe RBD represents a good buy now, maybe not. I beleive you have been told year after year of the problem with RBD and this year doesnt look to be any different.

You were not concerned about a sp dropping in the past because you got paid a divvy. The real calamity of it is your value of investment is deminishing.

Lets hope for a takeover to recoup some of those losses. RBD reminds me of an extremely slow Feltex where Bel kept averaging down to the point where he almost owned the company but ended up with nothing.

[duncan macgregor]

SNOOPY, I dont think you will ever learn until you go under, and even then you will be in denial. All us low risk investors with sell systems are mostly sitting it out, looking on in bewilderment at your high risk investing style.
Even a simple stop loss set at 15 or 20% for a long term investor would have saved you heaps. Your buy system is deeply flawed, nobody in their right mind would hold on to what you hold. Lets go over what you say you hold and look at them over their high point during the last three years up until today.
1,RBD, $1-65 down to 80c
2,SCT, $2-95 down to $1-30.
4,TUA, $3-85 down to $1-02.
5,TEL, $6-25 down to $3-90.
6, PGW,$2-40 down to $2-05.
7, SKC, $5-75 down to $3-79.
8, LPC, $2-60, down to $2-41.
Thats only some of your stated holdings the trouble is most of the high points are nearly three years old with you stating that you averaged down. RBD is not your worst share TUA and SCT are. Investing is not about spreading your investments about like eagle sh*t over the country side in order to lessen the risk its about demand and supply and understanding market sentiment. 8.5% sitting in the bank definately beats what you are doing coming out of a bull market into a bear market. Mary Holm in granny Herald and you have one thing in common as far as i am concerned. I DO THE EXACT OPPOSITE.
RBD has nothing other than a declining business to sell when it all ends up hitting the fan. At least feltex had a few carpets left over to flog off. Macdunk

[BRICKS]

SNOOPY, I dont think you will ever learn until you go under, and even then you will be in denial. All us low risk investors with sell systems are mostly sitting it out, looking on in bewilderment at your high risk investing style.
Even a simple stop loss set at 15 or 20% for a long term investor would have saved you heaps. Your buy system is deeply flawed, nobody in their right mind would hold on to what you hold. Lets go over what you say you hold and look at them over their high point during the last three years up until today.
1,RBD, $1-65 down to 80c
2,SCT, $2-95 down to $1-30.
4,TUA, $3-85 down to $1-02.
5,TEL, $6-25 down to $3-90.
6, PGW,$2-40 down to $2-05.
7, SKC, $5-75 down to $3-79.
8, LPC, $2-60, down to $2-41.
That's only some of your stated holdings the trouble is most of the high points are nearly three years old with you stating that you averaged down. RBD is not your worst share TUA and SCT are. Investing is not about spreading your investments about like eagle sh*t over the country side in order to lessen the risk its about demand and supply and understanding market sentiment. 8.5% sitting in the bank definately beats what you are doing coming out of a bull market into a bear market. Mary Holm in granny Herald and you have one thing in common as far as i am concerned. I DO THE EXACT OPPOSITE.
RBD has nothing other than a declining business to sell when it all ends up hitting the fan. At least feltex had a few carpets left over to flog off. Macdunk

SO Mc Duck did you get a day of work so you could tell us & Snoopy the same story yet again,, "I DO THE EXACT OPPOSITE" quit shares & gone back to WORK.. tough..

[Phaedrus]

Snoopy, you are quite right to claim that the further back you go, the "better" the performance of RBD :-

Over the last 3 years, the shareprice has declined an average of -20% pa.
Over the last 6 years, the shareprice has declined an average of -13% pa.
Over the last 11 years, the shareprice has declined an average of -10.6% pa.

We can both agree that "the share price has declined in a way that has been damaging for investors"!

As things stand right now, we probably concur on other things as well. I agree with you that RBD is unlikely to fall much further, and that buying at around 80 cents could be seen as a good entry point for anyone wanting to buy into this stock. In short, it wouldn't surprise me if you have finally got RBD "right". To me, however, the most important question is this. How could you have got RBD so wrong for so long? I see it as a blunder of significant proportions and a serious indictment of your system. Forgive me for posting it here (http://www.sharechat.co.nz/cgi-bin/msgboards/post_show.pl?id=2632)Snoopy, but this 2002 post encapsulates the quintessence of your approach. Here you are, already holding RBD, buying yet more and still averaging down ("topping up") at $1.75.

The quality and depth of your analysis is truly impressive, though. (I am NOT being sarcastic)

So painstaking.
So measured.
So erudite.
So prudent.
So meticulous.

Yet so wrong.

[Snoopy]

SNOOPY, I dont think you will ever learn until you go under, and even then you will be in denial. All us low risk investors with sell systems are mostly sitting it out, looking on in bewilderment at your high risk investing style.

Lets go over what you say you hold and look at them over their high point during the last three years up until today.

1,RBD, $1-65 down to 80c
<snip>


Macdunk, I am not go to respond to all your off topic rubbish, as I have discredited it all many times before. The only thing I will say is that, unlike you, I buy at the 'low point' and *sell* at the 'high point'. Those 'high point prices' you quote are so far away from what I actually paid for all those shares it makes your 'analysis' of my performance a complete joke. And of course you assume that just becasue a share is quoted at a certain price it would have been possible to sell all of my shares at that price. Most of my shares are outside of the NZX10 which given the number of shares I hold (relative to liquidity) would make such theoretical sales impossible (in most cases).

For your information my average holding period for RBD *is* three years (just by co-incidence). However, my average purchase price is now $1.19, not $1.65. I have also received 19c in dividends per share over the last three years. So my average holding cost is in effect $1.

So I am down, but not by the amount you seem to think I am. And your response to that is I should 'sell out' at the *low point* because of historical information that is already built into the share price? I guess that shows why someone like you would never 'cut it' as a financial advisor.



Investing is not about spreading your investments about like eagle sh*t over the country side in order to lessen the risk its about demand and supply and understanding market sentiment. 8.5&#37; sitting in the bank definately beats what you are doing coming out of a bull market into a bear market.


Actually I think Mary Holm would be shocked to find that I only held nine NZX primary listed shares. Under your warped sense of reality you consider that a 'highly diversified portfolio'. But it isn't at all.

Only a few months ago you were telling us that due to your success in the markets in 2007 you had doubled your return target to 400% for 2008. Now you are completely out of the market cowering in the bank earning 8.5% and telling us what a great investor you are. Yet twelve months previously you were berating me for setting my return targets at twice the bank interest rates (over the long term business cycle) because that target was absurdly low!

I haven't changed my tune at all over all that time. Yet you have become a ranting and raving 'former investor' who is completely hypnotized by 'the market', like a possum standing in the middle of the road dazzled by headlights of money and power.

Actually investing is about ignoring what Mr Market is doing except when his irrational behaviour throws up silly prices. At that point you can take advantage of him and that is what I am doing now, buy buying RBD at 80c. I am not trying to 'time the market' though. I had my order in for about a month before it was actually triggered by Mr Market going manic depressive. In about three months time I will probably be back for more RBD as part of my 'value averaging' strategy.



RBD has nothing other than a declining business to sell when it all ends up hitting the fan. At least feltex had a few carpets left over to flog off. Macdunk

Did Feltex shareholders get anything from that final sell down of carpets?

SNOOPY

[Onthemoney]

I would be very careful all they run is brands for Yum. Loose those rights and they are in trouble. They would have nothing but sites. The story going around is that they were very lucky to secure some of the rights to KFC last time hence the investment.

[Onthemoney]

You are welcome hiawatha. They have the rights to trade from Yum - but apart from that a lot of expensive leases. Check out what their arrangements are with Yum. I would be sweating on renewals with some brands on current performance. What is stopping someone like TPP taking on the franchises or anyone else for that matter.

[Snoopy]

You are welcome hiawatha. They have the rights to trade from Yum - but apart from that a lot of expensive leases. Check out what their arrangements are with Yum. I would be sweating on renewals with some brands on current performance. What is stopping someone like TPP taking on the franchises or anyone else for that matter.

Onethemoney, all the KFC franchises have been renewed for another ten years over this last year. That agreement also carries a right of renewal for another ten years (for all the rebuilt stores) although I am not sure if YUM can get out of that renewal clause. The Pizza Hut franchises renew on a rolling basis on the tenth anniversary of each store opening. Basically they renew in dribs and drabs except for 2010 which is the tenth anniversary of the Eagle Boys acquisition. The renewal there involves some 30 stores.

Your suggestion that all the property leases are 'expensive' is curious. All of the property site sales were done on an open tender basis. At the time RBD announced that they were very pleased with the results of the tender process. Thus all of the lease arrangements are at 'market rates'.

The franchise renewal fees are independent of the profitability of the individual stores. YUM get their money whether the individual stores are profitable or not. The renewal payments are indexed to inflation, not performance. To a large extent YUM doesn't care about RBDs profitability because YUM get their money anyway.

While I accept the message of your post (it is important to know the structure of their arrangements with YUM) your posts seem high on insinuation and light on accurate content.

You also don't seem to know that RBD is not entirely under the thumb of YUM. The cafe side of the business is franchised from Starbucks, which is a completely independent company.

SNOOPY

[Onthemoney]

All I am going to say is that no agreement with Yum then RBD are left with lease commitments. The agreements with Yum I am sure are not tied to the lease terms on all stores. Remember Snoopy that those that have negotiated terms over the past 10 years have moved on.

They were just wage/salary slaves that have moved onto another company to collect their payment. There have been enormous stuff ups in this company leases, purchases and marketing decisions that have been made by those that have spent your money as a shareholder. By and by it is not their money so they are willing to experiment....

[Snoopy]

As things stand right now, we probably concur on other things as well. I agree with you that RBD is unlikely to fall much further, and that buying at around 80 cents could be seen as a good entry point for anyone wanting to buy into this stock. In short, it wouldn't surprise me if you have finally got RBD "right". To me, however, the most important question is this. How could you have got RBD so wrong for so long? I see it as a blunder of significant proportions and a serious indictment of your system. Forgive me for posting it here (http://www.sharechat.co.nz/cgi-bin/msgboards/post_show.pl?id=2632)

Snoopy, but this 2002 post encapsulates the quintessence of your approach. Here you are, already holding RBD, buying yet more and still averaging down ("topping up") at $1.75.

The quality and depth of your analysis is truly impressive, though. (I am NOT being sarcastic)

So painstaking.
So measured.
So erudite.
So prudent.
So meticulous.

Yet so wrong.

I am glad you brought up that post from 2002 on RBD of mine Phaedrus. I highlighted it myself on the 'Fundamentals is Useless Thread' on the other channel on 25th February 2008 as an example of what 'not to do'.

I certainly did not do well buying RBD at $1.75, even though I wasn't averaging down as you claim I was doing. I did learn a lot from this 'mistake' though. The problem was the preliminary screening criteria showed that the 'Method of Buffett' would not work with this share. So I ignored that, simply assumed that for the next year the company results would be much better so that I could use the 'Method of Buffett' and did it anyway. 'Making up' results so that I could use this method was as bad mistake. I am not sure what possessed me to do it - perhaps it was plain old greed. Anyway I got my comeuppance, and not only that, the mistake was preserved on the internet for all to see. But I learned an important lesson. I don't make up results any more to justify my investment decisions!

Having said all that, I don't think that old post from 2002 read too badly. It was titled 'Buffespeculation' to let people know there was a 'speculative' element to what I was posting. I also posted as a caveat that

"Victoria may prove a difficult stalking ground for the pizza arm in Australia"

How prophetic that statement turned out to be! The other mistake I made was that I assumed that if Australia didn't pan out that RBD could get out at no cost. In fact it cost them $30m to get out of Victoria! Chalk that mistake up to naievity!

All in all though, if you read the 2002 post in its entirety noting all the caveats along the way was it so wrong? I actually think it reads quite well and is to some extent almost prophetic all these years later. I even got the 10% rate of return correct. The only mistake was that the 10% figure should have had a negative sign in front of it ;-P

SNOOPY

discl: (still) hold RBD, but no longer analyze it using the 'Method of Buffett'.

[Snoopy]

All I am going to say is that no agreement with Yum then RBD are left with lease commitments. The agreements with Yum I am sure are not tied to the lease terms on all stores. Remember Snoopy that those that have negotiated terms over the past 10 years have moved on.

They were just wage/salary slaves that have moved onto another company to collect their payment. There have been enormous stuff ups in this company leases, purchases and marketing decisions that have been made by those that have spent your money as a shareholder. By and by it is not their money so they are willing to experiment....

I hear what you are saying 'Onthemoney'. I did query RBD on franchise costs a few years ago. I was rather startled by how readily they closed leases and wrote off store franchise fees just so they could resite a store a couple of blocks away. I found it hard to believe that an owner operator would act in the same way.

But I guess leaving a shop in the wrong place could be thought of as being pig headed as well. Then again I am not a Restaurateur, so what would I know ;-P ?

SNOOPY

[duncan macgregor]

SNOOPY, I told you a great number of years ago that RBD is a dog. You have argued the point buying more, and more, of something worth less and less. We are now heading into a recession, with your investing style setting you up to losing the lot. Any one with half a brain wont swim against the tide, you wait until the tide turns, then swim with it.
RBD sold its kennel for an overseas trip, then leased the kennel back which was a huge mistake as i told you at the time.
They followed that by spending huge ammounts doing the kennel up. The bad times are upon us they pay leases when they might have been mortgage free if they had stuck to their knitting. The best way to expand a business is pay the mortgage off first, this can be used to borrow cheaper money for further expansion.
In the bad times the business is in a good position to compete being rent free. RBD are now in a very bad position, owning nothing, with the bad times now upon us. All you have to do is think back to the last time you heard a kid ask to go to a RBD restaurant. I cant think of one can you?. Macdunk

[BRICKS]

SNOOPY, I told you a great number of years ago that RBD is a dog. You have argued the point buying more, and more, of something worth less and less. We are now heading into a recession, with your investing style setting you up to losing the lot. Any one with half a brain wont swim against the tide, you wait until the tide turns, then swim with it.
RBD sold its kennel for an overseas trip, then leased the kennel back which was a huge mistake as i told you at the time.
They followed that by spending huge ammounts doing the kennel up. The bad times are upon us they pay leases when they might have been mortgage free if they had stuck to their knitting. The best way to expand a business is pay the mortgage off first, this can be used to borrow cheaper money for further expansion.
In the bad times the business is in a good position to compete being rent free. RBD are now in a very bad position, owning nothing, with the bad times now upon us. All you have to do is think back to the last time you heard a kid ask to go to a RBD restaurant. I cant think of one can you?. Macdunk

IF you keep this up the BOSS will give you the SACK..

[ronthepom]

IF you keep this up the BOSS will give you the SACK..

you come up with some funny ones bricks

[Snoopy]

SNOOPY, I told you a great number of years ago that RBD is a dog. You have argued the point buying more, and more, of something worth less and less. We are now heading into a recession, with your investing style setting you up to losing the lot.


Actually Macdunk, the food business is a very good business to be in during a recession.



The best way to expand a business is pay the mortgage off first, this can be used to borrow cheaper money for further expansion.

RBD sold its kennel for an overseas trip, then leased the kennel back which was a huge mistake as i told you at the time.


Macdunk, RBD sold their properties to finance their foray into Australia. They did exactly what you said they should do - used their property holdings to finance their expansion into new markets. The fact that their expansion strategy into Australia ultimately failed does not mean they were wrong to try it.



They followed that by spending huge amounts doing the kennel up. The bad times are upon us they pay leases when they might have been mortgage free if they had stuck to their knitting.


As much as it urks you Macdunk, the rebuilding of the KFC restaurants seems to be working for RBD. If you believe what others spout that are 'onethemoney', they may not have had a choice about their refurbishment program anyway.



In the bad times the business is in a good position to compete being rent free. RBD are now in a very bad position, owning nothing, with the bad times now upon us.


...as are *all* listed retailers. Can you name even one that own all their own stores?



All you have to do is think back to the last time you heard a kid ask to go to a RBD restaurant. I cant think of one can you?.


No I can't, but I think RBD targets more the late teen early twenties market. Plus the fat middle aged who are their captive customer base. I actually went to my local KFC on Saturday. It was quite late (after eight) yet there was a steady steam of custmers coming in the door. Business looked to be steady and the staff seemed fully occupied dealing with customers. It was a similar story at the local mall food court at lunch time this week. Very few lined up at the Macdonalds till. At KFC, the customers were 'stacked back'. That is the reverse of the situation a year ago.

SNOOPY

[minimoke]

No I can't, but I think RBD targets more the late teen early twenties market. Plus the fat middle aged who are their captive customer base.

SNOOPY
Don’t forget BRICKs and his zimmer frame mates in kapiti – or is he already in one of these other demographics

[BRICKS]

Don’t forget BRICKs and his zimmer frame mates in kapiti – or is he already in one of these other demographics

YOU do know Mini they don't make moke`s any more,, just like your statements and people live in expensive housing at Kapiti myself just a beach house for the odd NZ holiday and the odd trip to KFC. Make`s feel that i should BUY more stock of this BARGAIN..

[Dr_Who]

Looks like the hard times have hit Starbucks. All the latte addicts are doing home bake lattes instead of buying them from the local tinny house Starbucks.

http://www.nzherald.co.nz/section/3/story.cfm?c_id=3&objectid=10499444

[ratkin]

When i moved to this country there was KFC ,Mcdonalds , burger king and pizza hut. In that environment RBD didnt exactly set the world alight.

Now there are indian and thai takeaways , subway , countless different pizza joints , kebab shops , chinese and coffee shops all over the place.

Add to that the general negative sentiment towards fatty foods, the backlash against chickens being kept in terrible conditions and the countless reality tv shows that rubbish fast food and it hard to see much future for this company

[BRICKS]

When i moved to this country there was KFC ,Mcdonalds , burger king and pizza hut. In that environment RBD didnt exactly set the world alight.

Now there are indian and thai takeaways , subway , countless different pizza joints , kebab shops , chinese and coffee shops all over the place.

Add to that the general negative sentiment towards fatty foods, the backlash against chickens being kept in terrible conditions and the countless reality tv shows that rubbish fast food and it hard to see much future for this company

THANKS for telling all of us your another non buyer we have been waiting for this vital information so now RBD can move ahead without with a clear mind without the worry of
"THE RATKIN"

[Nitaa]

Looks like RBD has found its bottom.........and top

[E C K Witty]

Do not forget the pulling power of KFC as the reality of a slowing economy begins to kick in. As the opportunity cost of dining at the next tier restaurant/takeaway begins to weigh more heavily, KFC will loom large for many as a viable alternative.

The same goes for Pizza Hut, and lets not forget the rugby season has kicked into action. Last year there was a bit of a "turn-off" attitude from the rugby public because the top players were out of the game. This year a good number of the stars are already in the game, so expect the viewer numbers to climb again. And with it, the orders will come rolling in. Providing Pizza Hut can maintain their market share, then they should experience increased year on year sales without needing to significantly compromise margin.

Starbucks, I perceive coffee appreciation locally to be very much at a personal level. The places that make good coffee get to be known, for their coffee, their ambience, or both. This is why they get frequented by the locals. Of course, it is a bit more pot luck when you are "roaming". I like to explore New Zealand and speaking from personal experience, I can assure you that we have stopped for a cuppa at some terrible establishments whilst on our travels. I can also tell you that there is a primo barista operating out of Oamaru, although I have no idea what the name of the cafe is. For the roamer, Starbucks & the likes offer a safe bet. They have therefore established their place within the New Zealand coffee culture.

To my way of thinking the outlook for the group looks somewhat brighter than many of you have been suggesting.

[Nitaa]

witty. where do you see their growth stratergy.

I must confess, was went into an overseas pizza folunch. nice ambience, menu and a lunch menue (personal pizza, bread and pepsi) for less than $NZ3.50 equvilant. not a lot of margin in it though. maybe they can also make pizzas without cheese (sky rocketing dairy products) to boost their margin.

[Scuffer]

Pizza franchises are cut throat and thats how its gonna stay for awhile but the big boys will move back in eventually watch and see even corner dairies are being squeezed out in Britain by supermarket chains opening smaller shops in direct competition in the suburbs it all goes around.

[ratkin]

Best pizza i ever had was from an asda supermarket in cornwall last year.
They have a pizza counter and they make them to order from around twelve potential ingredients , a large one with massive amounts of toppings only cost three pounds fifty (around ten dollars).
Puts the sad efforts of our supermarkets into perspective.

[winner69]

Best pizza i ever had was from an asda supermarket in cornwall last year.


Which parts of Cornwall were you in Ratkin .... spend a bit of time over their with wife's rellies .... great place

[biker]

.............. I can also tell you that there is a primo barista operating out of Oamaru, although I have no idea what the name of the cafe is........

To my way of thinking the outlook for the group looks somewhat brighter than many of you have been suggesting.




It is called Steam. Heading south, go sraight ahead at the end of the main street, on the left just before entering the 'old quarter.'

[Deev8]

For the roamer, Starbucks & the likes offer a safe bet. They have therefore established their place within the New Zealand coffee culture.In the US Starbucks are starting to introduce fully automated coffee machines that eliminate the need for a skilled barista. Following that trend would be a real mistake for Starbucks in New Zealand.

[BRICKS]

Do not forget the pulling power of KFC as the reality of a slowing economy begins to kick in. As the opportunity cost of dining at the next tier restaurant/takeaway begins to weigh more heavily, KFC will loom large for many as a viable alternative.

The same goes for Pizza Hut, and lets not forget the rugby season has kicked into action. Last year there was a bit of a "turn-off" attitude from the rugby public because the top players were out of the game. This year a good number of the stars are already in the game, so expect the viewer numbers to climb again. And with it, the orders will come rolling in. Providing Pizza Hut can maintain their market share, then they should experience increased year on year sales without needing to significantly compromise margin.

Starbucks, I perceive coffee appreciation locally to be very much at a personal level. The places that make good coffee get to be known, for their coffee, their ambience, or both. This is why they get frequented by the locals. Of course, it is a bit more pot luck when you are "roaming". I like to explore New Zealand and speaking from personal experience, I can assure you that we have stopped for a cuppa at some terrible establishments whilst on our travels. I can also tell you that there is a primo barista operating out of Oamaru, although I have no idea what the name of the cafe is. For the roamer, Starbucks & the likes offer a safe bet. They have therefore established their place within the New Zealand coffee culture.

To my way of thinking the outlook for the group looks somewhat brighter than many of you have been suggesting.

GOOD ON you Witty about time we had a clear view of the way ahead and agree with your comments, RBD the bargain, as for Starbucks can see NO change on the way ahead in NZ as there is not the competition as in USA as stated before not much you can BUY in NZ on the NZX so just to say to every one just do your BEST..

[ratkin]

Which parts of Cornwall were you in Ratkin .... spend a bit of time over their with wife's rellies .... great place

Falmouth area where im from , parents still live their so go there often. my kiwi wife loves it, wants us to move to cornwall.

[ratkin]

GOOD ON you Witty about time we had a clear view of the way ahead and agree with your comments, RBD the bargain, as for Starbucks can see NO change on the way ahead in NZ as there is not the competition as in USA as stated before not much you can BUY in NZ on the NZX so just to say to every one just do your BEST..

So someone who has a positive view has a "clear outlook" while more realistic views are ignored or brushed aside.

Pizza hut is very shoddy and overpriced. Here in christchurch they ruined pizza hut by doing away with the sit down outlets (except northlands) and went takeaway.
Then they decided they would takeover the competition (eagle boys) . Guess what , as soon as they did that what happened? Hell pizza thats what , they all over town , have a more funky image , are cheaper and are the outfit more likely to be recieving a call during a rugby match.

As for KFC , you are underestimating the move towards healthy food and the impact of outlets like subway.
KfC very last century as my kids would say.

Starbucks , passing fad , many independent coffee shops now open doing a better job

[winner69]

Falmouth area where im from , parents still live their so go there often. my kiwi wife loves it, wants us to move to cornwall.

We make our HQ at a relatives place on the edge of the Percuil River .... last time we were over there we rowed across the river and talk a short walk through the fields to St Mawes and then got the ferry to Falmouth for the day ........ great part of the world isn't it

[Nitaa]

Milestone for minimum wage campaign
12:00PM Saturday March 29, 2008



Youth rates will soon be a thing of the past.
The minimum wage will rise to $12 an hour from Tuesday, but unions say they will continue to campaign to lift it to $15 an hour.

The Government announced the rise in December, saying it was meeting its obligation to New Zealand First and the Green Party under their post-election deal.

The change will affect about 140,000 workers and means the minimum 40-hour-week wage would be $480.

The Government has already raised the minimum wage once this term, to $11.25 an hour, which came in on April 1 last year.

Council of Trade Unions (CTU) secretary Carol Beaumont said campaigning to lift low wages was paying off.

"Unions campaigned for a $12 an hour minimum wage, and through agreements between Labour with both the Greens and New Zealand First, this has now fully delivered on it."

The abolition of youth rates will also come into effect on Tuesday, meaning 16- and 17-year-olds will see their minimum wage rise from $9 to $12 after 200 hours or three months, whichever is sooner.

Advertisement"National frequently talks about the wage gap with Australia but has so far failed to come up with any meaningful solutions," Ms Beaumont said.

"We know that they are on record wanting to cut workers' conditions, which will reduce wages, but they need to put their money where their mouth is and say how they will lift wages.

Ms Beaumont said the CTU argued for a three-pronged approach to address low pay, which comprised:

- lifting the minimum wage to $15 an hour;

- strengthening the rights for workers to be covered by industry wide employment agreements;

- and ongoing investment in skills, infrastructure and modernising work practices.

------------------------------------------------------------------------------

RBD have 2 choices, take a hit on margins or push those cost on to the end user. With oil prices and wage increases, fast food oultlets will need to increase their costs by at least 10% over a 12 month period. If so then how will this affect demand?

[Grimy]

"With oil prices and wage increases, fast food oultlets will need to increase their costs by at least 10% over a 12 month period. If so then how will this affect demand?"

Probably not much, as all fast food outlets will be in the same boat - more or less.

[Nitaa]

"With oil prices and wage increases, fast food oultlets will need to increase their costs by at least 10% over a 12 month period. If so then how will this affect demand?"

Probably not much, as all fast food outlets will be in the same boat - more or less. Then do you expect the fast food chains to absorb most of the costs?

[Dr_Who]

Fast food is a highly competitive with low margins. If RBD increase its price and the others dont follow, they will lose market share.

[Grimy]

Then do you expect the fast food chains to absorb most of the costs?

Whether they decide to pass on the costs, or absorb them, as long as they do much the same (and in the competitive industry they're in, they will know what each other are doing almost instantly), then there won't be any (or minimal) positional change between the competitors.
And general cost increases are also hitting other food providers, so I don't see that any particular chain/brand is going to be better or worse off in comparison with their competitors.

[Steve]

And general cost increases are also hitting other food providers, so I don't see that any particular chain/brand is going to be better or worse off in comparison with their competitors.

It comes down to negotiating power and who has the supply contract that comes up for renewal first.

Depending how often the supply contracts are renewed, one competitor may be re-priced next month, while another competitor may not be re-priced until next year.

It could make quite a difference in the short-term...

[minimoke]

YOU do know Mini they don't make moke`s any more,, just like your statements and people live in expensive housing at Kapiti myself just a beach house for the odd NZ holiday and the odd trip to KFC. Make`s feel that i should BUY more stock of this BARGAIN..
Just helped your investment this weekend BRICKS. Went out and bought from Pizza Hutt for the first time in years and years. Four large pizzas for $26. YUMmy! (they were better than Dominos as well)

[BRICKS]

Just helped your investment this weekend BRICKS. Went out and bought from Pizza Hutt for the first time in years and years. Four large pizzas for $26. YUMmy! (they were better than Dominos as well)

THANKS mini but as you know RBD is committed to reducing Pizza Hutt stores just hope they don't close the one near YOU...

[minimoke]

THANKS mini but as you know RBD is committed to reducing Pizza Hutt stores just hope they don't close the one near YOU...
No worries, there’s a KFC round the corner and its mobility scooter friendly. Once the dementia really sets in I’ll be able to go there.

[BRICKS]

No worries, there’s a KFC round the corner and its mobility scooter friendly. Once the dementia really sets in I’ll be able to go there.


THEN your more than lucky then and you have AGE on your side as well, Next you will be telling BRICKS that your so happy that you bought some RBD..

[minimoke]

THEN your more than lucky then and you have AGE on your side as well, Next you will be telling BRICKS that your so happy that you bought some RBD..
I’m not sure what mental illness I’d need to get me to buy RBD, but I sure hope I don’t get it. Where is that book on euthanasia?

[BRICKS]

I’m not sure what mental illness I’d need to get me to buy RBD, but I sure hope I don’t get it. Where is that book on euthanasia?


PITY you need treatment for being a "DILL" so if that's it so be IT..

[POSSUM THE CAT]

BRICKS you need to ask for a refund of your treatment Fees. As you are still a "Dill" that bought RBD.

[Phaedrus]

http://h1.ripway.com/Phaedrus/RBDd41.gif

[winner69]

http://h1.ripway.com/Phaedrus/RBDd41.gif

The 3793 went near the close at sellers price of 79 as [part of 25,000 order by the looks of it ... seems to have guzumped the 5000 order at 75 ..... maybe they will get them tomorrow

[Onthemoney]

I hear that the cheese Pizza Hut were buying in the $20 per bag is now approaching $50. While the chicken is increasing as well. Damn there goes those savings mentioned a while ago.

[Nitaa]

P. That is Snoppy who is averaging down.

Snoppy 1 question. Why dont you sell all of your rbd now. Just before divvy time buy them again to get your fantastic divvy that you love so much and save your loss od share value in the mean time. sort of gets the best of both worlds. Of course the sp will adjust itself after the divvy payout.

this is all reminisent of Bel...averaging down with Feltex. Only thing rbd is much more slower and painful.

[Nitaa]

well well well. does nita have to eat some humble pie? rbd increasing today albeit on small volume. you may have the lst laugh yet Snoppy.

I have read the brief summary and my view hasnt changed with the stock. the big positive is the refits appear to have some impact. Although note, labour costs havent yet made a significant impact of operating costs but they will do.

69% increase on gross profit is still stuff all and is not worth reading into at all. Time will tell but still cannot see where the growth is coming from and where they can recapture their market share. still plenty of worse stocks around.

[Phaedrus]

RBD has been in a downtrend for 3 years, but this morning broke above its longterm confirmed trendline, giving a Buy signal (marked by the green arrow).

The red dots mark where fundamental analysts bought, mainly on the basis that the shareprice at that point was well below RBD's theoretical "value". As circumstances changed, these valuations were progressively reduced, but the market price was always below RBD's calculated "worth", so the buying continued - all the way down.

A simpleton with a chart, pencil and ruler would have done better. Wouldn't it make you spit?

http://h1.ripway.com/Phaedrus/RBD410.gif

This chart is just an update of the one on Page 15 (http://www.sharetrader.co.nz/showthread.php?p=116499#post116499) of this thread. It is accurate as at 1pm, but of course the Close may be different.

[BRICKS]

BRICKS is back in the black and swimming in Div`s now Mr Chips do your stuff have increased my MCH by 5% holding,, Well turnover of $303 million , div`s up 1 cent to 6.5 cents told you it was a BARGAIN small fish are tasty. This is NZ and a very quite place for making money but if you do it slow that what makes it SURE..

[Dr_Who]

Whats the debt to equity ratio for RBD?

[BRICKS]

Whats the debt to equity ratio for RBD?

YOUR kidding go read today's report sick of stupid QUESTIONS..

[Steve]

Snoopy, I would appreciate your updated thoughts on RBD...

[duncan macgregor]

Whats the debt to equity ratio for RBD? DR WHO, Its not as simple as that. There are two kinds of debt good debt, and bad debt.
Good debt is the debt that most of us take on at some time or other, example being mortgage debt. This debt reduces in percentage of value as the property price rises.
Bad debt is the debt occured by leasing a property, then doing up the landlords property.
RBD did the stupid thing in the past by exchanging good debt, for bad debt with the resulting drop in share price when it turned to custard.
RBD has to much bad debt, whatever the figure which loses the advantage in a very competative sector. Macdunk

[BRICKS]

DR WHO, Its not as simple as that. There are two kinds of debt good debt, and bad debt.
Good debt is the debt that most of us take on at some time or other, example being mortgage debt. This debt reduces in percentage of value as the property price rises.
Bad debt is the debt occured by leasing a property, then doing up the landlords property.
RBD did the stupid thing in the past by exchanging good debt, for bad debt with the resulting drop in share price when it turned to custard.
RBD has to much bad debt, whatever the figure which loses the advantage in a very competative sector. Macdunk

THANKS for your riddle about DEBT and look forward to your next lesson about BATMAN..

[duncan macgregor]

Leasing a property and doing it up doesn't actually involve any debt.
There are not two sorts of debt, there is just debt. Sometimes it is a necessary evil, but it's never "good".
hiawatha Leasing a property then doing it up when in debt definately either requires additional debt, or the ability to pay back the origional debt. Nobody takes on debt for the sake of it, unless they are as thick as a brick. How come you two are not in the NZO competition?. Macdunk

[Dr_Who]

I am abit concern with the high debt level of RBD and the rising input cost (raw material - food). The fast food market is very competitive and it is hard to pass on those cost.

MD, I have no idea where NZO sp is going mate, hence I never play the options market.

[duncan macgregor]

But presumably nowhere near as much debt as they would have needed to purchase the Victoria outlets, had they gone down that path.
hiawatha
ps The NZO competition is a traders' competition. I don't really consider myself a trader. More of an INJUN THAN A COWBOY THEN.

[BRICKS]

More of an INJUN THAN A COWBOY THEN.

ENOUGH riddles about debt, Tell us about BATMAN better still talk about RBD constructively..

[Snoopy]

Whats the debt to equity ratio for RBD?


The last published figures are the half year accounts, dated 10th September 2007.

That balance sheet shows total assets of $119.8m, made up of liabilities of $80.6m and shareholders equity of $39.2m.

In the FY2007-2008 results announcement we learn that debt has been reduced by $6.1m on the prior year. Last year total liabilities were listed at $85.1m, so we can assume total company debt is now $79m.

Nontrading charges of $3.4m have been racked up due to store transformation write offs (and include a $1.2m write down of Pizza Hut New Zealand goodwill). This comes straight off shareholders equity. Offsetting that will be the 'retained operational earnings' from the declared profit of $9.5m. From that $9.5m, 6cps or $5.8m has been paid out leaving $3.7m of new equity on the books. So there has been a net increase in equity from last year of something like $3.7m-$3.4m= $0.3m. Working on last years shareholder equity figure, that would indicate that shareholders equity is at balance date:

$32.6m + $0.3m = $32.9m

If I'm right, that means we are looking at a debt ratio of:

$79m/($79m+$32.9m)= 71&#37;

Some may consider that 'high'. But I am much more interested in the company's ability to service the debt, rather than the ratio of the debt per se. The company's ability to pay down debt is better than the bare figures might indicate because:

1/ Customers pay cash for the goods, so there is no large 'customer debt ledger' to worry about like big ticket item retailers.
2/ Annual depreciation charges have risen by $3m over the last five years. But this extra depreciation is not a cash item and represents an underlying cashflow that does not flow through to profits but can nevertheless be used to pay down debt short term 'if required'.

My own spreadsheet predicts an ongoing operational after tax profit of $8.2m. This is less than the declared operating profit of $9.5m largely because RBD management consider a $1.2m write off in Pizza Hut New Zealand as a 'one off item' whereas I consider this goodwill writedown as a normal and recurring item that will have to be written off every year (as it was up until this year under old accounting rules). If we take the total loans and finance leases both current and non-current I get a total minimum debt repayment time of:

($44.108m+$0.624m)/$8.2m = 5.4 years.

That is slightly higher than the less than five years I consider desirable. But it is a big improvement on twelve months ago when the equivalent minimum debt repayment time figure was:

($49.171m+$0.795m)/$5.0m= 10 years

As the Pizza Hut chain rationalisation gather pace and the KFC transformation strategy continues to bear fruit, I would expect a modest rise in underlying profit with retained earnings being used to pay down debt further. Thus with rising profits and lessening debt, I see the risk profile of RBD improving from here on in, and I don't the the company's current debt levels to be of concern.

SNOOPY

[Snoopy]

Snoopy, I would appreciate your updated thoughts on RBD...


Thanks Steve. The market response to the full year result has been muted. I was somewhat surprised given that, on paper, the company has made real progress. However if you read between the lines the result isn't quite as good as the headline figures proclaim.

General and Administration costs have reduced to $11m from $11.1m. Great. But now that the PH Victoria Operation has been sold, that means the administration costs must be allocated around just the New Zealand KFC, PH and Starbucks outlets. Just as an example I estimate the after tax performance of KFC has been reduced by $0.6m annually as an *indirect* result of closing the Victorian PH business.

Debt has been reduced by $6.1m over the year, or around 13%. However, most of the companies debt is financed on a floating interest rate basis. It so happens that nominal interest rates have increased from around 7.6% to 8.6%. That is an amount that neatly wipes out the lower interest rate bill that would normally kick in as overall debt levels reduce.

So the interest bill has not been reduced. However due to the closure of the Victorian operation, the interest expense must be allocated around fewer retail outlets. Over the past two years there has been a previous big jump in overall debt as a result of the KFC concept renewal fees from YUM. Taking KFC as an example again, the interest expense that must be allocated to this business unit has jumped by about $900,000 per year annually.

The same 'problem' of having to allocate expenses around fewer business outlets affects Starbucks. RBD management tell us that EBITDA performance continues to improve. But any real business needs top pay its interest bill and associated depreciation and amortisation of the business concept licence. By my calculations Starbucks in New Zealand lost around $150,000 last year at the 'after tax fully cost allocated operational level', even as EBITDA performance improved by 7% to +$3.9m.

I guess you won't be surprised to learn that by my reckoning Pizza Hut NZ has lost another $6.4m after tax over the FY2007-2008 period after losing a similar amount last year. I am including in that $6.4m figure, the $1.2m written off in goodwill which RBD claims is just a 'one off', an assessment I don't agree with.

The whole RBD business is tied together by the magnificent ongoing performance of KFC. By my calculations that arm of the business made over $14m after tax for FY2007-2008. Compare that $14m with the declared group profit some 25% lower and that gives some indication of what might happen to the RBD share price if they could just stem the losses at Pizza Hut and Starbucks. I think what we are seeing is a good result in that the rot has stopped. But I think it will take a turnaround in the Pizza Hut business, before the share price really turns. Of course from an 'investment perspective' it will be too late if you wait for that as the share price will have already moved. Buy now, stick it in the bottom drawer and dine on the dividends along the way whiel you wait for the recovery. That would be my recommendation for any investor wanting to get into this food business.

SNOOPY

discl: hold RBD

[duncan macgregor]

SNOOPY No worries mate RBD is not your worst clanger over the last three years. It only dropped from a high of $1-70 to 83c which is not to bad if you are in no rush to go broke.
I reckon TUA from $3-00 to 95c is a better jump out the window on the way out bet.
SCT at $2-95 to $1-19 or what about TEL $6-25 down to $3-78. I wont mention SKC you only lost a couple of bucks on that. You are a great teacher SNOOPY keep it up we are all learning heaps from your fundamental approach to investing. Macdunk

[BRICKS]

BRICKS is in RBD at cost price of 83 cents and holding heaps so what may happen let it HAPPEN.. just look at what has happen to Mr Chips being bought out for HEAPS just send me the MONEY..

[Snoopy]

SNOOPY No worries mate RBD is not your worst clanger over the last three years. It only dropped from a high of $1-70 to 83c which is not to bad if you are in no rush to go broke. You are a great teacher SNOOPY keep it up we are all learning heaps from your fundamental approach to investing. Macdunk

'Former Investor Macdunk' (may I call you 'FIM' from now on?), RBD got to $1.70 because of a *takeover offer* in the market. It wasn't me who was making the takeover. It wasn't me who was buying in at $1.70. So as usual with all of your three year old share charts you scavenge from your favourite broker website all I can say about your fabrications of my share investing performance is 'in your dreams'.

For your information I have more than doubled my holding in RBD over the last three years. At the moment my average holding price is $1.23, not including the 27c in dividends per share I have received since 31st March 2005. Most of my loss was due to the unwinding of the Victorian Pizza Hut venture. Sometimes company expansion plans do not go according to plan. Get over it. Just because RBD didn't make a good fist of PH in Victoria does not mean they won't do a good job of revitalising KFC in NZ.

SNOOPY

[Dr_Who]

Hey Snoopy, just a few more questions.

1. How many more RBD do they need to rennovate? What is the cost per store rennovation? Will they need to carry more debt to do the rennovations?

2. Will they look at selling Pizza Hut? Doesnt make sense to keep it while it continues to loose market share to Dominos. Can RBD afford to rennovate Pizza hut with such a high debt level?

3. I have noticed that some of the Starbucks coffee places are starting to look tired and the staff services are getting very slack. The services at some Starbucks are so bad they have lost me as a customer. Will they need to rennovate the Starbucks stores?

4. Are they looking to bring in any new businesses?

RBD looks cheap to me at these levels, but I have the above concerns that stops me from investing in it.

[Phaedrus]

Dr Who,
For the first time in literally years, RBD has broken above its long-term trendline (blue arrow). It is quite possible that you are not the only one with fundamental concerns though, because this Buy signal remains unconfirmed, so far. Notice the dead flat On Balance Volume indicator (circled). There is precious little volume behind this event. Remember that volume confirms the trend. See how the trendline break was caused by RBD simply tracking sideways, rather than heading off Northward. Technically RBD is still in a downtrend, it is still making lower lows and lower highs.
Nevertheless, if you want some RBD, the time to buy just might be approaching - wait a little longer though. There is no hurry - is there?

The red dots mark where fundamental analysts bought, mainly on the basis that the shareprice at that point was well below RBD's theoretical "value". These valuations were progressively reduced, but the market price was always below RBD's calculated "worth", it was always a "bargain" so the buying continued - all the way down. See how TA kept you out of this stock for years, while the downtrend ground inexorably on. See how even this tentative, unconfirmed technical "Buy" signal knocks the socks off each and every entry made by people who calculated that they were buying "value".

This has been a wonderful stock to be out of these last 3 years - regardless of the seductivly high dividend yield.

http://h1.ripway.com/Phaedrus/RBD423.gif

[Snoopy]

Hey Snoopy, just a few more questions.

1. How many more RBD do they need to rennovate?


RBD have signed an agreement with master franchise holder 'YUM brands' which provides for a committed investment by the group of $35m into the KFC store transformation project over a three year period ended 31 August 2008. $25.8m of this amount has already been spent. (source 2008 Interim Report as at 10th September 2007, p17 Note 8, )

RBD have 87 KFC stores. As at the February 28th 2008 balance date, 30 stores have been renovated.

Obviously the $35m RBD have agreed to spend is not going to transform all 87 stores. However, it is my view that the transformation project has been so successful RBD will continue it beyond the $35m commitment previously agreed. But from August 2008, the timing of the transformations will be to RBDs scheduling, not YUM's.



What is the cost per store rennovation?


Around $NZ1m for each KFC store.



Will they need to carry more debt to do the rennovations?


That depends on the profitability of the KFC stores transformed. Will the increase in sales justify financially the capital costs of the renovations and staff retraining? Past experience is no guarantee of future performance. But in the FY2006-2007 annual report on page 10 we read:

"The transformation process continued to go from strength to strength, averaging 20&#37; growth from upgraded stores." (21 transformed stores completed at the time that statement was written.)

Given that nine transformations happened over the 2007-2008 financial year, and debt did not increase, I would have to say that RBD need *not* carry more debt to continue with the renovations.



2. Will they look at selling Pizza Hut? Doesnt make sense to keep it while it continues to lose market share to Dominos. Can RBD afford to rennovate Pizza hut with such a high debt level?


'Pizza Hut' is also franchised from master franchise holder 'YUM'. It is possible, although I have no proof of this, that Pizza Hut and KFC are 'joined at the hip' and that RBD will not be allowed to give up one franchise and still retain the other. I don't think Pizza Hut will become saleable anyway until the store network becomes profitable at EBITDA level.

Pizza Hut are being transformed into a wholly 'delco' chain. That isn't an expensive process. All you need is an oven, a counter and a cash register. The PH transformation is largely complete. But the transformatioon will become complete when the last 'red roof restaurant' is closed as the associated expensive sit down restaurant lease comes to an end.



3. I have noticed that some of the Starbucks coffee places are starting to look tired and the staff services are getting very slack. The services at some Starbucks are so bad they have lost me as a customer. Will they need to rennovate the Starbucks stores?


I know that new director Sue Suckling wants them to install more comfortable chairs into the Starbucks stores. Does that count as a renovation :-P



4. Are they looking to bring in any new businesses?


I think RBD have first refusal on introducing any of the other YUM brand restaurant concepts.
Hopefully they won't introduce more because, quite frankly, I think management are fully stretched looking after the three franchises they have already.



RBD looks cheap to me at these levels, but I have the above concerns that stops me from investing in it.


You are right to be sceptical Doctor. No investment is risk free. I think the latest seasonal stats show restaurant and takeaway sales down, possibly due to budgetry constraints caused by high interest rates and petrol prices. But people are not going to give up their entertainment. Even if it means swapping going out for a meal and on to a movie for eating a pizza at home and watching the Telly! Personally, I don't see RBD suffering if things get tighter - but I could be wrong.

SNOOPY

[winner69]

If we take the total loans and finance leases both current and non-current I get a total minimum debt repayment time of:

($44.108m+$0.624m)/$8.2m = 5.4 years.

.

SNOOPY

I think we have discussed before but over the last few years RBD isn't exactly the cash cow it is made out to be.

Like the last 5 years (to 2007) free cash flow has been only $18.6m (cumulative) and they have paid out $47.1m in dividends (cash). I don't think the situation has changed much in 2008.

The story over the last 5 years is essentially free cash generated of $18.6m and borrow $28.4m to pay out $47.1m id dividends.

I don't really know what capex requirements are for the next few years but I presume they are still quite high. Paying cash dividends in excess of free cash flow isn't really sustainable is it ... so is RBD living in hope (hopefully really confident of) much improved cash flows (mainly from lower capex requirements) so they can pay dividends as well as reduce debt.

So Snoopy based on the last 5 years performance and if the dividend policy changes one could say they will never pay back debt (in theory and thsi staement only made in response to your debt cover calculation above)

Something perverse in me drives me to keep updating a finacial model I started last century and no doubt when I see the 2008 financials I will update them again. One thing though is in spite of what most feel about them they actually consistently make excessive returns over their cost of capital ..... its just unfortunate that the market once thought that they could actually make super excessive returns and valued them accordingly ... it isn't really RBDs fault that the share price appears to be languishing ..... its the punters who pushed the sharepirice over $2 because of their lofty expectations'

[Snoopy]

The red dots mark where fundamental analysts bought, mainly on the basis that the shareprice at that point was well below RBD's theoretical "value". These valuations were progressively reduced, but the market price was always below RBD's calculated "worth", it was always a "bargain" so the buying continued - all the way down. See how TA kept you out of this stock for years, while the downtrend ground inexorably on. See how even this tentative, unconfirmed technical "Buy" signal knocks the socks off each and every entry made by people who calculated that they were buying "value".

This has been a wonderful stock to be out of these last 3 years - regardless of the seductivly high dividend yield.


I have some sympathy with that fundamental analyst Phaedrus. He must be some kind of kindrid spirt.

If I look back at my own purchasing of RBD shares over the time period of your chart, I see that I purchased some RBD shares in July 2005 for $1.60 (as did he). I purchased shares twice in October 2005 at $1.30 and $1.24 (same price and very close to his purchase dates), and in August 2006 at 96c (as did he), in June 2007 at 88c (same price as his purchase around the same time) and in even September 2007 at 87c (just like him). The co-incidences are just amazing! I know this fundamentalist can't *be* me though. Because I purchased some more RBD shares in mid March 2008 at 80c and this guy didn't. I know at least *I* would have got credit from you Phaedrus for buying 'at the trendline break' (at last!) even if this poor sod obviously forewent that opportunity!

There is another difference between what that guy looked like he was doing and what I have been up to. I use a technique called 'value averaging'. That means I have a fixed dollar amount I wish to spend on shares, and I will buy as many shares as that dollar amount gets me. Thus when the share price is high I will buy less shares and when the share price is low I buy more. The result is that when a share price goes up and down (or even all down for the time period of your graph) the average price I will pay per share is much less than than the 'seeing eye average' the brain calculates from estimating the average position of all those red dots.

Anyway Phaedrus you obviously know this fundamentalist well, having that much detail on his transactions. How about sending him a private e-mail asking if he would like to meet me? I would really like to extend my right hand to his right hand in the spirit of friendship. What do you think are the chances of such a 'shaking'?

SNOOPY

[Snoopy]

I think we have discussed before but over the last few years RBD isn't exactly the cash cow it is made out to be.

Like the last 5 years (to 2007) free cash flow has been only $18.6m (cumulative) and they have paid out $47.1m in dividends (cash). I don't think the situation has changed much in 2008.


Factor in the $NZ30m lost (after tax) in Victoria, Australia over the years 2003 to 2008 inclusive and you might identify where our cash cow was leaking its milk. The good news is *that* leak has been plugged.



The story over the last 5 years is essentially free cash generated of $18.6m and borrow $28.4m to pay out $47.1m id dividends.


If RBD hadn't lost that $30m in Australia, they wouldn't have had to borrow the $28.4m....



I don't really know what capex requirements are for the next few years but I presume they are still quite high.


...could be $NZ10m per year...



Paying cash dividends in excess of free cash flow isn't really sustainable is it? ... so is RBD living in hope (hopefully really confident of) much improved cash flows (mainly from lower capex requirements) so they can pay dividends as well as reduce debt.


Capex expenditure isn't bad per se. It is only bad if the capital expenditure does not generate the anticipated cashflows that supported the business case for the capital expenditure in the first place.



So Snoopy based on the last 5 years performance and if the dividend policy changes one could say they will never pay back debt (in theory and this statement only made in response to your debt cover calculation above)


I should have added that I do not *expect* RBD to ever pay back their debt. It would probably be inefficient use of shareholder capital if this was done. The minimum debt repayment time is more a 'measuring stick concept', to show what kind of financial strength the company is in without resorting to the traditional debt to equity ratio straightjacket standard.



One thing though is in spite of what most feel about them they actually consistently make excessive returns over their cost of capital ..... its just unfortunate that the market once thought that they could actually make super excessive returns and valued them accordingly ... it isn't really RBDs fault that the share price appears to be languishing ..... its the punters who pushed the shareprice over $2 because of their lofty expectations'


If the expansion into Australia had succeeded, and RBD had continued to make the kind of ROA that they had traditionally been doing in NZ, then $2 plus would have been cheap. For a while, it would seem the market believed the RBD management dream. It is a pity that the market isn't always right!

SNOOPY

[duncan macgregor]

I am on your side as usual SNOOPY. What about all those RBD shares you used to talk about before that chart?. i seem to remember we used to debate the issue Long time previous to that chart. Tell us about all those dividends that you and BONGO [before he went broke] used to skite about. I never remember you ever selling anything, so obviously you must be a high earner to keep averaging down. Look at what a simple stop loss might have saved you from doing. Macdunk

[Dr_Who]

Thanks for the great posts Snoopy, Phaedrus, Winner and others. :)

Just one more ques for Snoopy. Do you think RBD will do a cash issue to reduce debt? It seems prudent in this environment to reduce debt. I may look at buying some RBD if the debt level was not so high. High debt is a dirty word in my portfolio, with the exception of VCT which is a utility asset with a monopoly.

[Snoopy]

Just one more ques for Snoopy. Do you think RBD will do a cash issue to reduce debt? It seems prudent in this environment to reduce debt. I may look at buying some RBD if the debt level was not so high. High debt is a dirty word in my portfolio, with the exception of VCT which is a utility asset with a monopoly.


Doctor, the "interest coverage ratio" ( EBIT/(Interest Expenses) ) for RBD for FY2007-2008 as best as I can estimate it was:

($45.1m-$12.8m-($1.2m+$5.5m))/ $3.41m = 7.5

This is traditionally the measure fundamentalists use when assessing how easily a company can meet its debt obligations. I don't use it much myself so I'll leave it to others to comment as to whether this number is 'good' 'bad' or 'indifferent'. Generally the higher the number the better though.

My feeling is that RBD will not have a cash issue as their expansion will very likely be incremental from now on: a million here, a million there. IOW there will be no real need for a large lump of capital. Last year they were certainly under more pressure than now. My feeling is that if they were going to have a decent cash issue, they would have done it 'back then'.

I also think that RBD is unlikely to have a 'small cash issue' because they have suspended - voluntarily - their dividend reinvestment plan. That plan was in effect a way to get more cash into the company 'should it be required'.

You should also take note that KFC, by far RBDs largest division, is in effect a 'quasi monopoly' , even if Pizza Hut and Starbucks are not!

SNOOPY

[Snoopy]

I am on your side as usual SNOOPY. What about all those RBD shares you used to talk about before that chart?. i seem to remember we used to debate the issue Long time previous to that chart. Tell us about all those dividends that you and BONGO [before he went broke] used to skite about.


Bongo may be gone FIM, but he aint broke - so lets have no more of these scurrilous insinuations. When I said my average entry price was $1.23 that covers ALL the RBD shares I own. Not just the half I bought over the time frame of that chart.

And since you asked about dividends, since listing RBD shareholders have received 88.3cps in dividends - more than each current share is valued at on market. Of course you consider dividends to have virtually no value, which is why you are so wrong about the investment prospects of RBD.



I never remember you ever selling anything, so obviously you must be a high earner to keep averaging down. Look at what a simple stop loss might have saved you from doing. Macdunk

I think, more obviously, it shows your memory has become selective. I sold down my holding of SKC, while Telecom gave a decent chunk of capital back to me last year. I also sold out of Carter Holt, the old BIL International, Foreign and Colonial Trust, Deutsche Bank and Rinker over the last two or three years. In addition to that I redeemed a decent sized government bond that I had held for years. The truth is I have sold off heaps of stuff and have been gradually feeding these funds into the NZX as opportunities come up. But unlike you I 'buy low' and 'sell high'. So you won't see me 'selling out at the bottom' which is what you seem fond of exhorting me to do. I guess that just reflects the fact that I am still an investor whereas you are firmly in the 'former investor' category.

SNOOPY

[chippy52]

From my understanding of this matter a figure above 5 is considered a good ratio

[Steve]

Stopped in at the Gore KFC on my way thru on Monday for a travelling snack pack.

While the food was FRESHLY cooked (not often I get so lucky), the service while pleasent (again, not often I get so lucky) was a bit of a shambles - why have only 1 counter operating at 12:30pm on the first monday of the school holidays? The line was almost stretching to the door!

Obviously they were trying to keep a tight control on expenditure...

The biggest negative would have been having to listen to the cook out the back spending 5 minutes moaning to the manager about why he hadn't done what had previously been asked of him. If the guy had simply shut his mouth and got on with cooking, he wouldn't have had anything to moan about.

[BRICKS]

Stopped in at the Gore KFC on my way thru on Monday for a travelling snack pack.

While the food was FRESHLY cooked (not often I get so lucky), the service while pleasent (again, not often I get so lucky) was a bit of a shambles - why have only 1 counter operating at 12:30pm on the first monday of the school holidays? The line was almost stretching to the door!

Obviously they were trying to keep a tight control on expenditure...

The biggest negative would have been having to listen to the cook out the back spending 5 minutes moaning to the manager about why he hadn't done what had previously been asked of him. If the guy had simply shut his mouth and got on with cooking, he wouldn't have had anything to moan about.

DID you enjoy the feed as you can vouch it keep you ALIVE.. FUN TIMES..

[JMKC]

BRICKS, somewhere there is an asylum with your name on it :)

[POSSUM THE CAT]

JMKC surely you mean not on the asylum but on the asylum's patient or inmates list

[Steve]

JMKC surely you mean not on the asylum but on the asylum's patient or inmates list

Probably listed under 'MALCOLM' too! ;)

[BRICKS]

BRICKS, somewhere there is an asylum with your name on it :)

YOU need to take a shower every now and THEN..

[Steve]

No wonder PH is not making any money...

Pizza bill's 16-year bounce (http://www.stuff.co.nz/4496016a11.html)
Richard Forbes' hard-luck story takes some topping - 16 years after bouncing a cheque for a pizza he found himself dragged in front of a Wellington judge, with no idea what his crime was.
...
In court he was told that his sin was the long-forgotten "bounced" $10 cheque for the pizza.
...
"Pizzas haven't gone up much in price, have they?" Judge Bruce Davidson said.

[Grimy]

While the food was FRESHLY cooked (not often I get so lucky), the service while pleasent (again, not often I get so lucky) was a bit of a shambles - why have only 1 counter operating at 12:30pm on the first monday of the school holidays? The line was almost stretching to the door!

Obviously they were trying to keep a tight control on expenditure...



Same in Palmerston North Anzac day, 6.30 pm. The food was good (they were barely keeping up), but only two people on the counter. Spent about 15 minutes in the (not long) queue. When I left, the queue was still to the door. I heard one woman reply (when the counter staff said "enjoy your meal, see you again soon") - "not likely".
It really wasn't a good look. A couple more staff would have made it good food, friendly BUT ALSO FAST, service.
I must point out it was not only KFC that seemed to have misjudged. After the dawn service there was a bagel/coffee business open less than 100 metres from the cenotaph and a crowd of 3000 people. Number of staff? 3! Half an hour for a coffee. I spoke to the manager and she agreed she should have "perhaps" rostered on more staff!

[Snoopy]

Same in Palmerston North Anzac day, 6.30 pm. The food was good (they were barely keeping up), but only two people on the counter. Spent about 15 minutes in the (not long) queue. When I left, the queue was still to the door. I heard one woman reply (when the counter staff said "enjoy your meal, see you again soon") - "not likely".
It really wasn't a good look. A couple more staff would have made it good food, friendly BUT ALSO FAST, service.
I must point out it was not only KFC that seemed to have misjudged. After the dawn service there was a bagel/coffee business open less than 100 metres from the cenotaph and a crowd of 3000 people. Number of staff? 3! Half an hour for a coffee. I spoke to the manager and she agreed she should have "perhaps" rostered on more staff!

I passed the Christchurch Riccarton Road KFC on ANZAC day around 1pm. I had never seen it so busy. I didn't go inside because I wasn't in the market for lunch, let alone KFC. But the drive in queue was spilling out onto the road, which is a rare sight since the longer queue path that was part of the site layout redesign. There didn't seem to be any car park places. There was a long queue inside as well, and all the dining tables in the main area looked to be occupied. Was this a nationwide phenomenon on ANZAC day, perhaps fed (sic) by other competitive outlets not opening because of public holiday pay rates?

SNOOPY

[BRICKS]

I passed the Christchurch Riccarton Road KFC on ANZAC day around 1pm. I had never seen it so busy. I didn't go inside because I wasn't in the market for lunch, let alone KFC. But the drive in queue was spilling out onto the road, which is a rare sight since the longer queue path that was part of the site layout redesign. There didn't seem to be any car park places. There was a long queue inside as well, and all the dining tables in the main area looked to be occupied. Was this a nationwide phenomenon on ANZAC day, perhaps fed (sic) by other competitive outlets not opening because of public holiday pay rates?

SNOOPY

ALL this is good news for the till, KSC in AU is just the same there is NO lack of customers but here they hire more staff as required it will happen in NZ soon, As for pizza the quicker they shut the unprofitable stores the better sack the staff or move them to KFC the stock price is shore to rise when BRICKS gets Mr Chips money will double the holding yet again..

[BRICKS]

AS above this man is NO different as it seems bought the lot on credit and levering is for the birds but when the whole mob do it its a disaster as it has worked out, love ANZ to dump the shares on the NZ market boy we would be picking them up for NOTHING..

[Dr_Who]

Has ANZ started selling the RBD stake?

[Mysterybox]

I don't know if this is helpful or not but I actually work for the pizza hut(NZ) callcentre, so I know quite a bit about the changes to pizza hut at least.

Under investment strategies I read about speaking to the "lea ladies" etc, so I guess I am one of those in this perspective?

If this is not the case then ignore this post but if you have any questions about pizza hut feel free to PM me and if I can help I will.

[duncan macgregor]

MYSTERYBOX, Great name for a tea lady if i might be so bold. We would all like to know the secret recipe if you can lay your hands on it. Macdunk

[ratkin]

I passed the Christchurch Riccarton Road KFC on ANZAC day around 1pm. I had never seen it so busy. SNOOPY

Thats a coincidence , i was driving through riccarton with the other half at about that same time. She wanted to go to mcdonalds for some strange reason.
There was such a big queue we didnt bother. , so i guess it must be an anzac day thing rather than a mass conversion to chicken eating

[Mysterybox]

There is no secret receipe, all pizzas are constructed in store, with the exception of the bases. The only mystery is what is included in the seafood swirl.. >.>''

[duncan macgregor]

There is no secret receipe, all pizzas are constructed in store, with the exception of the bases. The only mystery is what is included in the seafood swirl.. >.>'' I know the bases are only a great thick scone normally with a bit of melted cheeze burned into it. This seafood swirl is a mystery does it come with a couple of sardines and a bit of crunchy seaweed?. Feel free to let the cat out of the bag we are all friends here. Macdunk

[Mysterybox]

I am doubtful there is seafood, but ill analyse the allergies chart and question my supers, this information is potential for a large SP movement, I understand the urgency ;p

[BRICKS]

I know the bases are only a great thick scone normally with a bit of melted [cheeze] burned into it. This seafood swirl is a mystery does it come with a couple of sardines and a bit of crunchy seaweed?. Feel free to let the cat out of the bag we are all friends here. Macdunk

YOU love to dig the crap, Mc Duck when you find a sucker you bleed it/them to DEATH..

[Snoopy]

I don't know if this is helpful or not but I actually work for the pizza hut(NZ) callcentre, so I know quite a bit about the changes to pizza hut at least.

Under investment strategies I read about speaking to the "tea ladies" etc, so I guess I am one of those in this perspective?

If this is not the case then ignore this post but if you have any questions about pizza hut feel free to PM me and if I can help I will.


Hi Mysterybox,

Have you worked in a call centre before this? If so I was wondering how the new Pizza Hut operation compares? Am I right in saying the call centre is all part of the new open plan office complex where everyone, management and workers, is all together on one floor?

Kind regards,

Snoopy

[POSSUM THE CAT]

Mysterybox when do you get your one way ticket to Egypt

[Snoopy]

I've already left the company, I am merely describing the nice working conditions and layout of the office which anyone can view :) but if they want to send me overseas I'd be keen.

You first posted on this thread at 2:35pm as a call centre worker and four hours later you have already been sacked? I guess there aren't too many employees at the PH Call Centre wasting time on the internet then !? ;-P

SNOOPY

[Snoopy]

I am unaware if the setup is "new" but I can describe the floor plan to you, we even have a section about it on the intranet.


RBD moved their new HQ during FY2006-2007. The date of September 2006 sticks in my memory from something said at the last AGM. But that memory may be faulty.



You're correct, the floor plan is open and all managers/workers/team leaders work near each other, the offices (higher staff) are close also (same floor), the office circles around a centrepoint (lifts in the middle) with various teams located on either the north/south/east side (west = break room) oh and one small training area on the west.

Work conditions/atmosphere are excellent and the management/higher staff are always friendly, everyone knows everyone by name.


I am imagining some kind of palace from your description Mysterybox, with glass elevators reaching for the stars! They have a separate wing for each of KFC, Pizza Hut and Starbucks? Perhaps that explains why their General and Administrative expenses dropped only $0.1m (around 1&#37;) when the move was made to the new 'low cost site'.

One question: Approximately how many "higher staff" (as you put it) are there at HQ? Do they all have secretarial support?



I did a study on the callcentre operation as part of my management paper so I know a lot about the systems/efficiencies etc, I can imagine it would work very efficiently; the systems are well in place and the user interface is easy to adapt/work with.


Mysterybox, do I detect you may be just slightly overqualified to be a 'career call centre person'? Perhaps you have some opinion on how well the office layout works for cross fertilization of ideas between the three company divisions? Does it actually work having three what some may see as reasonably disparate businesses (KFC, PH and SB) under the single 'RBD umbrella'?

SNOOPY

[POSSUM THE CAT]

mysterybox would you like the Egyptian rates of pay

[BRICKS]

THINK Mr Mysterybox has had a burnout or his BOSS has got to HIM..

[Nitaa]

There is no secret receipe, all pizzas are constructed in store, with the exception of the bases. The only mystery is what is included in the seafood swirl.. >.>''This is a very common thing with RBD. There have been several instances in the past where the "tossed salal" (coleslaw) has contained the additive ingrediant in your mayo to give it some extra spice. So what you are alluding to is very common. in fact testing done at peppermints inside the VIP room at SKC showed
similar traces and have since have wrapping over them

[Snoopy]

Shares claim granted leave (from the age)
Leonie Wood
May 8, 2008

A MELBOURNE businessman, who secretly planned to buy more than 20% of the company that owns the Pizza Hut, KFC and Starbucks fast-food chains in New Zealand, has won an early round in his bid to retrieve shares from failed broker Opes Prime.

Phisci is part of Mr Higgon's Southern Restaurants group, which in recent years ran some Pizza Hut and KFC outlets in Australia and which last year asked Opes to help it buy 23.5 million shares in Restaurant Brands NZ.

Between September 6 and January 21, three stockbrokers acting for Phisci accumulated 1.23 million RBNZ shares, or about 1.3%, in 44 on-market transactions. The shares ended up with Green Frog Nominees.

-------------
20% stake means he has faith in RBD...
I'm guessing once RBD goes ex dividend, it will fall through the 80c support...

disc:hold RBD

Hi utopian, can you further explain your logic?

You have just told us that this private company Phisci has 1.3% of RBD shares and wishes to acquire 23.5% of the company. Phisci will have to make a partial takeover bid to do that. Yet you still expect the RBD share price to fall???? What have I missed?

SNOOPY

discl: hold RBD

[Snoopy]

An interesting change in tone I detect from reading the RBD annual report today.

From the Chairmans report on page 9:

"the company's ability (is) to leverage off good brands- the essence of what Restaurant Brands is about - and confirms that the group is first and foremost a brand manager *not restricted or inhibited by its current brand portfolio.*" (my emphasis)

Later on page 9

"Directors will continue to review Pizza Hut's future and take whatever steps necessary to protect future *group* growth and profitability." (my emphasis)

Then on page 10

"*Directors and management will be redoubling their efforts to ensure it (Pizza Hut) ceases to be a drain on the group*. The directors will not shy away from making firm decisions over Pizza Hut in the interests of overall group profitability." (Chairman's emphasis)

Now we move on to page 13 and the CEO's report

"The bulk of Pizza hut stores come up for renewal in 2010and we are working with YUM restaurants international (the Pizza Hut and KFC franchisor) on renewal terms for the franchises on these stores."

Perhaps I am drawing a long bow here....

But reading between the lines I would suggest the 'corporate pizza cutter' has been taken out of Chairman Van Arkel's desk. And the blade is being sharpened for an FY2010 deadline!

Also in late paging news (page 64) former CEO Vicky Salmon has sold all of her shares in the company, at a significant loss.....

SNOOPY

discl: hold RBD

[duncan macgregor]

An interesting change in tone I detect from reading the RBD annual report today.

Also in late paging news (page 64) former CEO Vicky Salmon has sold all of her shares in the company, at a significant loss.....

SNOOPY

discl: hold RBD VICKY did not sell her shares at a significant loss. SHE GOT THEM FOR NOTHING FROM YOU MUGS. Look at all those dividends along the way all extra payment on top of a massive salary for running the company into the ground. If she had a significant loss what have the mug investors still in got?. Macdunk

[BRICKS]

VICKY did not sell her shares at a significant loss. SHE GOT THEM FOR NOTHING FROM YOU MUGS. Look at all those dividends along the way all extra payment on top of a massive salary for running the company into the ground. If she had a significant loss what have the mug investors still in got?. Macdunk


WISH you a happy day Mc Duck and now GO back to WORK for a CHANGE..

[Steve]

Snoopy, could RBD just be upping the ante to secure more favourable franchise terms for pizza hutt when it comes time to renew the agreement in 2010?

[Snoopy]

Snoopy, could RBD just be upping the ante to secure more favourable franchise terms for Pizza Hut when it comes time to renew the agreement in 2010?


I hope so Steve! RBD have been pretty weak negotiating with YUM before I think. Partly their own fault through using the KFC franchise as a cash cow to fund other expansions while neglecting KFC franchise development in its own right in New Zealand. This has been turned around with the KFC refurbishment program showing promise. Hopefully that will also strengthen RBDs negotiating position!

Pizza Hut in New Zealand is not alone in being a 'problem child'. YUM have recently taken back fully in house their Pizza Hut business in the UK, after reacquiring the 50% they didn't own by buying out their joint venture partner. It is YUM's intention to refranchise 300+ of these 500+ stores when market conditions permit.

In the US, Pizza Hut is (in market share terms) much weaker in the Pizza market than KFC is in the chicken meal market and Taco Bell is in the Mexican restaurant market. YUM are trying an interesting dual brand strategy with Pizza Hut in the US by launching 'Wingstreet' , a boneless and boned chicken wing and sauce offering that is projected by the end of 2009 to be America's largest wing chain.

YUM's strategy when deciding whether to own a store outright or on sell it as a franchise is as follows:

"If we can run our stores well and provide great returns for our shareholders , we'll own the restaurants ourselves. If our company operations are not getting margins that well exceed our cost of capital, we'll sell our restaurants to franchisees who can do a better job of running them." (page 7 YUM 2007 Annual Report)

then they go on to say

"We will be taking total US ownership down from 22% to possibly less than 10% by owning fewer Pizza Huts, KFCs.."

You can read into that how well Pizza Hut in the first world is doing in general. Of course in China, Pizza Hut is going great guns.

SNOOPY

discl: Hold RBD, YUM (U.S.)

[E C K Witty]

A small but significant thumbs up for RBD on Fair Go tonight.

Their corporate response to the effective wage rates being paid by a third party to those "contractors" that distribute RBD flyers on their behalf was top notch. A good many other corporate citizens declined to comment, which won't do them any favours in the short term.

disc - normally don't have much time for Fair Go as they tend to sensationalise a good number of their stories, but IMHO this one struck the right note.

[BRICKS]

RBD has pick up in the last week to 87 cents and still CUM DIV, BRICKS is contemplating going to this years Annual meeting if they would state where its to be Held but over all now with the departure of Mr Chips Co, RBD is the only place to Sell them CHIPS..

[Steve]

Interesting to see that they have made note of the contraction in retail spending, which is continuing to decrease...

[BRICKS]

Interesting to see that they have made note of the contraction in retail spending, which is continuing to decrease...

SO what are you saying or how much DECREASE...

[Snoopy]

Steve wrote:
"Interesting to see that they have made note of the contraction in retail spending, which is continuing to decrease..."

SO what are you saying or how much DECREASE...

The decrease in sales is because of the closure of several Pizza Hut outlets. On a per store basis RBD sales are still increasing. OK the increase isn't great, and much (all?) of it is probably due to inflation. Nevertheless in relative terms, RBD is performing better than most retailers. Can you name a better performing NZX retail share this year? Off the top of my head I can't. Shareholders are getting an apparently sustainable yield of 11&#37; gross and the share price has climbed back to the 87c or thereabouts it was at the start of the the year.

I'm not saying it is all plain sailing from here. Like most (all?) retailers, RBD still has issues. Overall I think the food sector will suffer less than many others. While top line restaurants might have a hard time the hard wiring of the 'convenience food culture' coupled with the surprising number of people that don't know how to cook means that turnover at the cheaper end of the restaurant trade is safe. Safe doesn't mean I'm predicting a quick further recovery in share price to $1. Nevertheless for the investor that values dividend income and wants a significant boost over what the bank might give them, I think they would be hard pressed to argue for 'no RBD' in the portfolio starting from this point.

SNOOPY

discl: hold RBD

[Deev8]

BRICKS is contemplating going to this years Annual meeting if they would state where its to be Held ..The annual meeting will be at Ellerslie Events Centre, Gleenlane, Auckland - 19th June at 11am

[BRICKS]

I notice that the Johnsonville Pizza Hut has reduced its hours to from 4pm to 10pm.
hiawatha

THEY should shut the small Para store as well its a total waste of TIME..

[lakedaemonian]

I usually don't post in the RBD thread, but I've been following the company a little bit in recent years as well as the pizza market in NZ after having followed it in North America for some time.

It's my understanding that the pizza business in North America was always considered to be somewhat recession proof with enough room for national franchised low cost players(Dominos, Pizza Hut, Papa Johns, and Little Cesaers), national gourmet players(California Pizza Kitcken, Bertuccis), regional franchise players, and privately owned units.

In my opinion, the NZ pizza industry has gone from being quite under-developed as little as 5 years ago, to becoming quite competitive quite quickly with the existing Pizza Hut chain, Dominos very rapid expansion, rapid expansion of Hell Pizza on the higher end of the pizza food chain, and the entry of low cost private players like Big Pizza.

The serious concern I would have as an investor in RBD's Pizza Hut business is that profitability at the franchisee level is probably quite poor at the moment for the following reasons:

1.) Cheese prices...even bulk purchasing and hedging by a franchisor present a real problem.

2.) Rent...retail rents are only going in one direction.

3.) Staff...increased minimum wage, very low unemployment.

4.) Competition...market has gone from underserved to excess capacity in many regions eliminating any retail pricing power Pizza Hut once had when they were the only big player in the market.

Anecdotally, there are quite a few Dominos and Hells Pizza units for resale in a couple of the bigger markets.....if biz were that good, owners wouldn't be looking to leave.

It's analogous to the Subway franchise system..........Subway is very successful in NZ, but the franchisor has a habit around the world of putting Subways on every corner......increasing overall franchise system sales, but lowering average franchisee unit sales. When Subway opened in NZ, you had to pay BIG money to buy a resale unit......now that Subways are nearly everywhere, buying one isn't so expensive anymore.

And while looking at things from the coal-face franchisee's perspective may not be analogous to looking at thngs from RBD's perspective, those that ignore it for too long, do so at their peril.

Just my opinion on the Pizza Hut portion of the RBD business....I suspect Pizza Hut is going to get worse before, if ever, it gets better.

[Snoopy]

The serious concern I would have as an investor in RBD's Pizza Hut business is that profitability at the franchisee level is probably quite poor at the moment for the following reasons:

1.) Cheese prices...even bulk purchasing and hedging by a franchisor present a real problem.


I made a jumbo sized pizza myself last week complete with mozarella cheese as part of the topping. The 100g of cheese I used on its own cost more than $6, just to do a single pizza!



2.) Rent...retail rents are only going in one direction.


Yes I agree, although if there is a bit of a retail downturn it might help in renegotiating some of those Pizza Hut delco leases. The largest number of Pizza Hut franchise ten year renewals happen in 2010. I have no idea if the actual shop leases contracts correspond to the franchise renewal dates though. But if management were any good, they should.



3.) Staff...increased minimum wage, very low unemployment.

4.) Competition...market has gone from underserved to excess capacity in many regions eliminating any retail pricing power Pizza Hut once had when they were the only big player in the market.

Anecdotally, there are quite a few Dominos and Hells Pizza units for resale in a couple of the bigger markets.....if biz were that good, owners wouldn't be looking to leave.


Yes, Pizza Hut isn't the only one 'feeling the competition'.



And while looking at things from the coal-face franchisee's perspective may not be analogous to looking at thngs from RBD's perspective,....


It is analagous. RBD are the franchisee

SNOOPY

[BRICKS]

IF this is done in an orderly way and only keeping the Best there is a ground floor as the other brands are doing the same RBD will return to profit, If I had my way would shut the lot cant stand the stuff and it looks the same for Mr average KIWI..

[Onthemoney]

Big Pizza has gone into liquidation - There was a fire sale of plant a few weeks ago. No money for any creditors. Check out 'thats amore' liquidators report on the companies site.

[Steve]

Anecdotally, there are quite a few Dominos and Hells Pizza units for resale in a couple of the bigger markets.....if biz were that good, owners wouldn't be looking to leave.

Didn't one of the Hell franchisees spit the dummy a couple of months ago and close his stores?

[Onthemoney]

Didn't one of the Hell franchisees spit the dummy a couple of months ago and close his stores?

Yeah Matt Blomfield??? of Cinderella Advertising - apparently made up 8&#37; of Hells turnover with his stores. Food costs of 40% he reckons - his comment was that if you think he closed his stores quickly, other franchisees will close 10 times faster. Life under TPP must be tough - a lot of ticket clipping I say.

[lakedaemonian]

Big Pizza has gone into liquidation - There was a fire sale of plant a few weeks ago. No money for any creditors. Check out 'thats amore' liquidators report on the companies site.


Wow.......I'm disappointed I didn't hear about the asset auction sooner......I would be keen to buy a 2nd hand commercial pizza oven...not sure about the wife though.

[lakedaemonian]

Yeah Matt Blomfield??? of Cinderella Advertising - apparently made up 8% of Hells turnover with his stores. Food costs of 40% he reckons - his comment was that if you think he closed his stores quickly, other franchisees will close 10 times faster. Life under TPP must be tough - a lot of ticket clipping I say.

I recall reading something about that.

I would think there would be stronger and more defensible margins in the gourmet/top end of the pizza market.......perhaps not.

[Dr_Who]

Strange to see RBD sp up.

The result is not very good, why is the sp up?

Whats the rumour out there?


ps: have to say NZSE SSH notice looks like dog tucker!!! Cant even read it!

[duncan macgregor]

Strange to see RBD sp up.

The result is not very good, why is the sp up?

Whats the rumour out there?


ps: have to say NZSE SSH notice looks like dog tucker!!! Cant even read it! DOC dont look for a reason without looking at the ammount traded. $7600 worth its hardly the smart money moving in. Macdunk

[BRICKS]

DOC dont look for a reason without looking at the ammount traded. $7600 worth its hardly the smart money moving in. Macdunk

THOSE two fine dills Dr Who [doom] and his mate Mc duck..

[Onthemoney]

I recall reading something about that.

I would think there would be stronger and more defensible margins in the gourmet/top end of the pizza market.......perhaps not.

Yeah in the NBR above article about Hells distribution company going into liquidation....

[Snoopy]

Strange to see RBD sp up.
The result is not very good, why is the sp up?


Here is the note my broker sent me on April 10th

----------

(RBD.NZ) Restaurant Brands - BUY (price $0.83)

Sector: Food and Beverages

Despite a good result yesterday, RBD has not moved, we expect to see
some appreciation of the share price in the short-term as the market
recognizes RBD's good performance.

---------



Whats the rumour out there?


No rumour Doc. You have just been asleep for six weeks. Oh and the share is about to go ex a 3.5c dividend soon. But I guess if you are a member of the dividend deniers cult like some around here...

SNOOPY

discl: hold RBD

[duncan macgregor]

A 3.5 cent dividend would hardly explain a 10 cent jump in the share price. However , I notice the chart is giving a buy signal, so perhaps the TA people are piling in. Bless their cotton socks; what would we do without them?
hiawathaYou are obviously not a trader my Indian friend. Traders dont trade in companies with a low volume. Traders like to get in and out barely leaving a ripple in the share price. I blame the averaging down brigade, lets face it they are the only ones getting buy signals in a down trending share. RBD have been heading down for years, it must go up against the trend on the rare occasion, when the odd nutter invests a few thousand. Macdunk

[Snoopy]

A 3.5 cent dividend would hardly explain a 10 cent jump in the share price.


No you are right Hiawatha, it doesn't. However a 3.5c dividend, plus the realisation that the deteriorating operational performance has been arrested (leading to a PE rerating) might.

SNOOPY

[Phaedrus]

I notice the chart is giving a buy signal, so perhaps the TA people are piling in. Bless their cotton socks; what would we do without them?
What buy signal is that Hiawatha? Are you possibly referring to the trendline break of some weeks ago? Those that bought then would now be well in profit, but let's take a closer look at that signal. While there was a clear break of a trendline that had held for 3 years, the signal lacked confirmation. Look carefully at the On Balance Volume plotted here. See how while the 2 year long OBV downward trendline was broken back in February, this trendline break was caused by the OBV merely tracking sideways - there was no OBV uptrend such as would indicate a significant change in market sentiment.

http://h1.ripway.com/Phaedrus/RBD530.gif


There seems to be a clear buy signal so the TA bods must be getting excited.
Nah. It takes volume to excite a techie, Hiawatha. No volume, no excitement. Look at the histogram along the bottom of the chart. See how volume is in fact falling (marked by the heavy magenta line) as this little uptrend procedes? Remember that it takes volume to confirm a trend. This is evidence of a weak uptrend. You say "Perhaps the TA people are piling in". Nah - in fact no-one is piling in. Look at the falling volume.

I wouldn't scoff at technical buy signals if I were you, Hiawatha. Click here (http://www.sharetrader.co.nz/showthread.php?p=196315)to see where skilled, competent fundamental analysts were buying into RBD on the basis of "value" and "good" dividends. (Bless their cotton socks!)

No contest!

[Steve]

Went in to the South Dunedin KFC, an upgraded store, to cash in my annual shareholder freebie and was greeted by their newly acquired "D" rating issued by the DCC on 29 May 2008.

The only positive that I can tske from this is that it must be a good 'D', otherwise they would have been closed down to clean up their act... :(

[BRICKS]

WELL RBD has 476 less KIWI owners in 2008 since2007 had 6669 now 6193 but most of the buyers are existing large holders with Director D Diab now 4,000,000 up from 3,444,300. ,,
there are also 10 Asian names in top twenty so must know where to make money in FOOD..

There is 166 Australian Holders down 3...

[golden city]

what caused the sp spiking to over 90cents

[Snoopy]

What buy signal is that? Are you possibly referring to the trendline break of some weeks ago? Those that bought then would now be well in profit, but let's take a closer look at that signal. While there was a clear break of a trendline that had held for 3 years, the signal lacked confirmation - there was no OBV uptrend such as would indicate a significant change in market sentiment.

Nah. It takes volume to excite a techie. No volume, no excitement. Look at the histogram along the bottom of the chart. Remember that it takes volume to confirm a trend. This is evidence of a weak uptrend.

I do find it amazing the extent some go to to convince themselves that investing in RBD is a bad idea. We know about those that disregard dividends and so get the return calculations wrong. But there are plenty of other intelligent non investors on this very thread.

We have others who are 'afraid' to invest because they don't see hundreds of others piling in, (even though a couple of big spending Aussies have been busy climbing up the top ten shareholder list). We have still others who didn't 'believe' that the latest result was any good, despite the positive earnings lift and boosted dividend.

Now we have one of the country's most respected and rigorous chartists saying he wouldn't join the uptrend because it is only a 'weak' uptrend, so it isn't 'confirmed' (?) What happened to the 'higher highs' and 'higher lows' definition of an uptrend? I guess if you don't want to follow your own system, the answer is create a new measuring stick so that you don't have to (?)

I do have shares that I would struggle to exit over a week, but RBD isn't one of them. Nearly 22,000 share were traded this morning, and this is in a 'weak' uptrending market (uptrending for RBD shareholders that is, general NZX index investors aren't so lucky)! So while 'the many' dream up ingeneously creative solutions as to why they should not invest in RBD, those that *are* invested are now doing very nicely thanks. Trades were going through at 92c this lunchtime. That is up 15% from the 80c long term support level frequently visited earlier in the year. Good for those like me willing to take advantage of these price dips, and ignore what has gone on in the rear vision mirror.

SNOOPY

discl: hold RBD

[Dr_Who]

Yeah in the NBR above article about Hells distribution company going into liquidation....

Congrats to Snoopy and BRICKS for their RBD investments. I have been keeping a close eye on RBD. At present I still struggle to see the fundamentals coming through that will convince me to invest. The short term sp movement on Hell's Pizza potential liquidation will make investors take notice.

If RBD is smart they will use this opportunity to secure the top and med end pizza market. I will see how they will react and what strategies they adopt on the opportunity of HELL falling over. Till then I am still not convinced RBD has any strategy at all for Pizza Hut.

On a T/O value RBD, the current sp looks very cheap. But then the sale process have been around the block and no one wants it at the crazy price the directors are asking.

Still gonna wait and see how things pan out.

Anyone have a link to the NBR Hells Pizza article?

[Phaedrus]

Now we have one of the country's most respected and rigorous chartists saying he wouldn't join the uptrend....
Snoopy it is very naughty of you to make false statements like that and attribute them to me. At NO stage did I EVER say that I "wouldn't join the uptrend".


.....it is only a 'weak' uptrend, so it isn't 'confirmed'?
No, it is a 'weak' uptrend BECAUSE it isn't confirmed. Volume confirms price, and volume has been falling.


What happened to the 'higher highs' and 'higher lows' definition of an uptrend?
That's unchanged, Snoopy. No-one is disputing the existence of a new uptrend. We are speculating here on its strength. Two separate issues.


I guess if you don't want to follow your own system, the answer is create a new measuring stick so that you don't have to!
I'm astonished to see you claim that I have "created a new measuring stick" just for RBD, Snoopy. Hardly! For many years I have been actively advocating use of the OBV indicator. You know that.


Good for those like me willing to take advantage of these price dips, and ignore what has gone on in the rear vision mirror.
Ah, but Snoopy, you have been ignoring the rear vision mirror and "buying the dips" for literally years! Had you looked in the rear vision mirror back then you would have seen that you were (on all but one occasion) buying into a confirmed downtrend. The dips just kept on getting lower and lower - see this (http://www.sharetrader.co.nz/showthread.php?t=3228&page=66)chart, for example.

The concern occasioned by the flat OBV as expressed in this (http://www.sharetrader.co.nz/showthread.php?t=3228&page=67) chart proved to be very well founded. In the days following that post, the RBD shareprice fell away, it again broke below the trendline and made a low at 78 cents before reversing, breaking the trendline yet again and moving into the current uptrend. (With, you will notice, a rising OBV).

[COLIN]

Snoopy: I think the moral of the story is: "Be sure that the bull has actually been de-horned before you venture into the arena!"
But I give you full marks for bravery.

Cheers!

[Phaedrus]

More like "Make sure the Bear has been de-clawed before you enter the pit"!

[Phaedrus]

Volume indicators such as Accumulation/Distribution, Price/Volume Trend and On Balance Volume are all quite similar. Nevertheless I did manage to find a point in RBD history where they were not quite aligned. You can see here that the A/D indicator totally missed the nicely timed 2002 "Sell" step that the other 2 picked up.
http://h1.ripway.com/Phaedrus/RBDstep.gif

Generally speaking, though, these three indicators are so much the same as to render comparisons all but irrelevant. Take a look at this comparative chart and tell me which volume indicator is "superior"!
http://h1.ripway.com/Phaedrus/MFTstep.gif
Given such a high degree of correlation, it would be silly to argue strongly for (or against) any one of these indicators.

[Snoopy]

Snoopy it is very naughty of you to make false statements like that and attribute them to me. At NO stage did I EVER say that I "wouldn't join the uptrend".


No Phaedrus you didn't say, "I wouldn't join the uptrend" in those words However, we both know the process of investment is not tied up in the minuitae of semantics.



The concern occasioned by the flat OBV as expressed in this (http://www.sharetrader.co.nz/showthread.php?t=3228&page=67) chart proved to be very well founded. In the days following that post, the RBD shareprice fell away, it again broke below the trendline and made a low at 78 cents before reversing, breaking the trendline yet again and moving into the current uptrend. (With, you will notice, a rising OBV).

For example in what you wrote above you haven't *said* that you would never buy a share at the trendline break without a rising OBV. However, I don't think any reasonable person reading that paragraph would suggest that buying a share on the trendline break *without* a rising OBV would be inside your circle of comfort.

Now Phaedrus, here is what you wrote six pages back, on a post dated 10th April which you subtitled: "RBD BUY SIGNAL!!!!!! Look Mum, no hindsight!"

Phaedrus wrote
"Dr Who,
For the first time in literally years, RBD has broken above its long-term trendline (blue arrow). It is quite possible that you are not the only one with fundamental concerns though, because this Buy signal remains unconfirmed, so far. Notice the dead flat On Balance Volume indicator (circled). There is precious little volume behind this event. Remember that volume confirms the trend. See how the trendline break was caused by RBD simply tracking sideways, rather than heading off Northward. Technically RBD is still in a downtrend, it is still making lower lows and lower highs.
Nevertheless, if you want some RBD, the time to buy just might be approaching - wait a little longer though. There is no hurry - is there?"

Then yesterday Phaedrus, you wrote
"No, it (the uptrend) is a 'weak' uptrend BECAUSE it isn't confirmed. Volume confirms price, and volume has been falling."

"That's unchanged, Snoopy. No-one is disputing the existence of a new uptrend. We are speculating here on its strength. Two separate issues."

OK, same story but with one key observational difference. The observation that RBD is now in an uptrend, albeit unconfirmed.

Now I'll reprise your conclusion from six pages ago from your post titled "RBD BUY SIGNAL!!!!!! Look Mum, no hindsight!".

Phaedrus wrote:
"Nevertheless, if you want some RBD, the time to buy just might be approaching - wait a little longer though. There is no hurry - is there?"

The above is the phrase I take issue with.

At that point the share price was 84c and when I wrote my post yesterday it was 92c. That may be just a few cents to you, but it amounts to nearly 10&#37; of the company valuation. For those that bought in at the 80c support level at the time the results were announced on 10th April, the increase in share price has been more- 15%. The actual increase in operational EBITDA when the final results were announce was an EBITDA increase of 17.3%. From a fundamentalist perspective you could argue that belatedly, two months later, the market has caught up with the operational position of RBD. By ignoring this opportunity with your "There is no hurry - is there?" attitude you have given away almost all of the arbitrage available between after the result was announced (and the share price hardly moved) and yesterday.

If the OBV on RBD spiked tomorrow, perhaps you would then decide to buy? Perhaps it would be a good move? Only time would tell. But would it be a lower risk move because you are acting on a 'confirmed' uptrend, rather than just a trendline break? I would argue no. That's because ultimately you would be gambling on an *even higher* EBITDA performance or a PE rerating (a sentiment factor that is difficult to forecast ) in the medium term to justify your entry price. IMO, it is much safer to 'risk' your investment money on an existing EBITDA improvement that has already been banked which 'the market' hasn't noticed yet. By claiming there is 'no hurry' to act, you have given away 87% (so far) of the gains available to you on a platter!

SNOOPY

discl: hold RBD, and *did* buy more at 80c while RBD shares were trading around that 80c support point.

[Phaedrus]

Now Phaedrus, here is what you wrote six pages back, on a post dated 10th April which you subtitled: "RBD BUY SIGNAL!!!!!! Look Mum, no hindsight!" "For the first time in literally years, RBD has broken above its long-term trendline (blue arrow). It is quite possible that you are not the only one with fundamental concerns though, because this Buy signal remains unconfirmed, so far. Notice the dead flat On Balance Volume indicator (circled). There is precious little volume behind this event. Remember that volume confirms the trend. See how the trendline break was caused by RBD simply tracking sideways, rather than heading off Northward. Technically RBD is still in a downtrend, it is still making lower lows and lower highs. Nevertheless, if you want some RBD, the time to buy just might be approaching - wait a little longer though. There is no hurry - is there?"

Snoopy, you are still being very naughty and continue to wilfully misquote me. Here's what I REALLY wrote on April 10th (Post #978, page 66) :- "RBD BUY SIGNAL!!!!!! Look Mum, no hindsight! RBD has been in a downtrend for 3 years, but this morning broke above its longterm confirmed trendline, giving a Buy signal (marked by the green arrow). The red dots mark where fundamental analysts bought, mainly on the basis that the shareprice at that point was well below RBD's theoretical "value". As circumstances changed, these valuations were progressively reduced, but the market price was always below RBD's calculated "worth", so the buying continued - all the way down. A simpleton with a chart, pencil and ruler would have done better. Wouldn't it make you spit?." That's it - the full text.

My next post was two weeks later on 23/4/08 (#997, page 67) by which time RBD had made a bearish double top formation and the OBV had demonstrably failed to rise. The breakout was not looking so good by then. That's why I advised those that were still wanting to buy RBD to wait a little longer. Good advice as it turned out, because RBD continued to drop right back to 78 cents, with the OBV falling quite sharply.


Then yesterday Phaedrus, you wrote "No, it (the uptrend) is a 'weak' uptrend BECAUSE it isn't confirmed. Volume confirms price, and volume has been falling." OK, same story but with one key observational difference. The observation that RBD is now in an uptrend, albeit unconfirmed.
The "key observational difference" stems from the fact that this comment came 5 weeks after I had stated that RBD was "still in a downtrend" - by then the trend HAD changed.

Snoopy, here is a chronology of when and why people may have got into RBD on technical grounds :-
10/4/08 Trendline break. Entry at 84 cents. (Signal posted on ST before the Close)
18/4/08 Trendline break (2). Entry at 84 cents.
12/5/08. Trendline break (3). Entry at 81 cents.
14/5/08. Volume spike and rising OBV. Entry at 85 cents.
23/5/08. RBD now in uptrend. Entry at 86 cents.
27/5/08. OBV now in confirmed uptrend. Entry at 87 cents.

You need to compare these technical entry points with those based on fundamentals such as "EBITDA performance or PE rerating based valuations". Fundamentally derived "value" based entry points have given abysmal results with this stock. Here, for example, are some 2005 quotes from Snoopy's RBD posts, from a thread with the unfortunate title "RBD - Bad Sales numbers" :-
"Even at $1.65, the shares are still cheap IMO, which perhaps explains why I bought a few more RBD shares in the market today at $1.60."
"I'm picking $1.65 as below the bottom of the fair value range".
"My latest RBD purchase locked in a very attractive equivalent bond coupon rate of 9.3% (gross) on those new shares. I'll get that return on those funds whatever Mr Market does or does not do!"
"I'm not worried by a drifting share price." (I had been helpfully pointing out the fact that Snoopy was buying into a downtrend.)
"If the share price ever falls back towards $1.35, *that* will be the time to buy." (It did, and he did!)

[Snoopy]

Snoopy, you are still being very naughty and continue to wilfully misquote me. Here's what I REALLY wrote on April 10th (Post #978, page 66)
<snip>

My next post was two weeks later on 23/4/08 (#997, page 67) by which time RBD had made a bearish double top formation and the OBV had demonstrably failed to rise. The breakout was not looking so good by then. That's why I advised those that were still wanting to buy RBD to wait a little longer. Good advice as it turned out, because RBD continued to drop right back to 78 cents, with the OBV falling quite sharply.


Phaedrus, I wasn't willfully misquoting you. Those charts on successive pages (66 and 67) are effectively the same. Even you hadn't taken off the red spot purchase dots from p66 when you reposted the chart on p67 with OBV added. Nor had you removed the 'Average Capital Loss 25&#37;, Dividend Yield 7%' graphics. Nor I would suggest should you have removed these things. Interchange the comments you made on p66 and p67 with the respective graphics and your main points still make sense. The only difference is that the p66 chart showed the first trendline break at 83c, and the p67 chart with the addition of a tiny squiggle (representing the time period from the first chart posted on 10th April and the second on 23rd April) shows a second trendline break at 82c. These tiny differences are real, but they make no difference to *my* F/A argument or what *I* was trying to say.



The "key observational difference" stems from the fact that this comment came 5 weeks after I had stated that RBD was "still in a downtrend" - by then the trend HAD changed.


Yes, I never meant to suggest you changed your mind for no good reason Phaedrus. I only ever meant to suggest that the data had changed with time and you changed your observation accordingly



Snoopy, here is a chronology of when and why people may have got into RBD on technical grounds :-
10/4/08 Trendline break. Entry at 84 cents. (Signal posted on ST before the Close)
18/4/08 Trendline break (2). Entry at 84 cents.
12/5/08. Trendline break (3). Entry at 81 cents.
14/5/08. Volume spike and rising OBV. Entry at 85 cents.
23/5/08. RBD now in uptrend. Entry at 86 cents.
27/5/08. OBV now in confirmed uptrend. Entry at 87 cents.

You need to compare these technical entry points with those based on fundamentals such as "EBITDA performance or PE rerating based valuations".


Yes you do, but not for the reasons you think Phaedrus. I introduced the 'EBITDA Performance Improvement' and 'PE Re-ratings' as possible reasons for the share price turning. These are not 'alternative' entry points I have dreamed up to be compared with yours. I know that you T/A exponents do not need to understand the reason behind stock movements. But as an F/A exponent, I *do* have to understand what is going on, or at least try to explain it as I see it.

A 10% improvement in operating performance means the market will generally mark up the share price by 10%. If the market is very efficient you cannot make any profit out of this because the share price will have gone up 10% already, in anticipation of the result being 10% better. But the market isn't always efficient, because as in this case that share price rise took two months to happen. Thus the shrewd F/A operator had a value arbitrage play with RBD just sitting there for some weeks and no careful timing or use of T/A required. The use of T/A in this instance simply got you in at a higher price for the same reward, and thus a lower return. T/A was not helpful, *in this instance*.

Your argument that over the longer term timing your entry using T/A would have been better than simply buying an equal number of shares or dollar value at the 'red dot points' is fair enough. But as far as I am concerned that is a straw man argument, because that is not what I advocated doing and not what I did.

SNOOPY

[Steve]

Even Subway is going the way of the pizza chains and canabilising stores thru competition...

Subway franchisee faces bankruptcy (http://www.stuff.co.nz/4599872a13.html)
A Christchurch Subway store owner is accusing the multi-national sandwich chain of flooding the city with too many stores, bringing her to the brink of bankruptcy.

[BRICKS]

http://www.bizjournals.com/columbus/stories/2008/06/30/daily17.html

YES read early this morn and nothing to do with NZ,, in the store at Hamilton had a lovely time meet the lady manager and she said thing where just FINE what I like was the mini Que of 3 to 4 people waiting to be served at about 1.00 pm..

Still a BARGAIN..

[Deev8]

http://www.bizjournals.com/columbus/stories/2008/06/30/daily17.htmlIt was disappointing to read that "Details on how the closures will affect Central Ohio, which has more than 90 shops and kiosks, weren't available." We will be on the edge of our seats awaiting those details.

[BRICKS]

It was disappointing to read that "Details on how the closures will affect Central Ohio, which has more than 90 shops and kiosks, weren't available." We will be on the edge of our seats awaiting those details.

THEY are going to open USA 200 more before September but are closing 600 non performers back in NZ we should shut all the non making money Pizza joints that's the HEADACK..

BUY the BARGAIN..

[Snoopy]

http://www.bizjournals.com/columbus/stories/2008/06/30/daily17.html


You post a link about Starbucks closing restaurants in the USA 'funguspudding'. Dare I suggest that this is a truffle pessimistic. The chain is planning to close a net 400 stores out of 16000, a total of 2.5%. And most of those that are to be closed have been opened in the last three years. This isn't actually that many stores, as a percentage.

RBD operate 44 Starbucks stores across NZ. Last year they closed 3 stores, which represented 6.4% of the NZ total. So the cutbacks in NZ have already been far more drastic than those which are proposed in the US, in percentage terms. What is more EBITDA profitability improved from $3.6m to $3.8m in NZ, despite those store closures.

You could argue RBD are ahead of the overseas trend already. I don't believe your implied forecast of a further 'retreat' for Starbucks in NZ is justified.

I am not sold on RBD's involvement in Starbucks myself. That's because I believe that after corporate costs are taken into account, Starbucks in NZ is loss making and has been since FY2005. This isn't the fault of the Starbucks 'concept' as such. It is IMO a result of Starbucks being 'top heavy' in management in New Zealand, and the holding company carrying too much debt for the Starbucks sub concept to be profitable. I think RBD has already streamlined some KFC and Pizza Hut head office management. Perhaps they should do the same with Starbucks? Or perhaps Starbucks can not inherently generate sufficient profits to have a third party corporate (RBD) clipping the ticket on the way through?

I am bemused by the Starbucks strategy myself. In Christchurch the three central city stores are all within five minutes walking distance of each other. That surely must result in sales cannibalisation. Yet all three stores seems to have a steady trade of customers each time I pass them. And this is exactly the kind of store distribution that 'works' in large overseas cities, which have a Starbucks on each corner.

SNOOPY

[biker]

You post a link about Starbucks closing restaurants in the USA 'funguspudding'. Dare I suggest that this is a truffle pessimistic.


SNOOPY


Very Droll :-)

[Snoopy]

Um, er, I don't recall implying anything. I merely posted a link, with a question as the heading. Your response is interesting apart from the strange claim that I was forecasting something.

I don't wish to make a big deal out of this. But your question in the header was:

"Sign of things to come?"

My concise Oxford (1) Definition of the word forecast is: 'conjecture beforehand'. That is exactly what your header is - a forecast by definition! Granted you did not say whether you 'agreed' or 'disagreed' that the retreat of Starbucks in the USA will flow through to N.Z.. But consider this:

1/ You posted a link that makes a point and raise the conjecture "Sign of things to come?"
2/ You make no further written qualification on your referenced listed link.

I think 99% of people would assume you agree with the facts in the linked article and you believe the decline of Starbucks in the USA is directly relevant to a future decline of Starbucks in N.Z., especially given you posted on this RBD thread.

*I* certainly thought that was what you meant.

Bricks titled his reply post "Nothing To Do With Nz.. " so he obviously thought your reference was posted because you thought it relevant to N.Z..

Deev8 titled his reply "How bad will it be for Central Ohio?"

Then said in his post
"Details on how the closures will affect Central Ohio, which has more than 90 shops and kiosks, weren't available." *We will be on the edge of our seats awaiting those details.*

That highlighted piece between the asterisks indicated sarcastically that whatever happens in Central Ohio is likely to be of little relevance to N.Z. (so Deev8 thought you were thinking of your article as a portent to what could happen in N.Z.)

Go back to your post 'funguspudding' and see if it could have been interpreted in *any other way* than the way myself, Bricks and Deev8 interpreted it.

If you were trying to present any alternative interpretation you would have to have presented your linked message in a more different way. I don't think my own comprehension skills have failed me in this instance.

SNOOPY

[Snoopy]

BUY the BARGAIN..


I have a bone to pick with you Bricks (or should that be a stone?)

WILL YOU PLEASE QUIT BUYING RBD SHARES!

I am waiting for the price to go lower into my buy zone, willing it down, down, down and it never does get there. So just quit buying will you!

Funnily enough for all the flack we have taken over the years Bricks, over the last two years RBD shareholders have done quite well as the rest of the retail market has melted down around them. Who would have thought two years ago that RBD would turn into the best (NZX) retail investment of all!

Well two years ago I knew that it would turn out like that eventually, but I didn't know when and I didn't expect it to be 'number one' so soon. It is nice to be enjoying the payoff from all of those (now) increasing dividends at long last!

I went into my 'local' last week to cash in my shareholder freebie burger voucher. I thought I would try some 'wicked wings' as a side but was told they had sold out! Looking around there didn't seem to be a shortage of customers although come Sunday night there was no free newspaper to read (do KFC still have those?). The menu seems to have got simpler since the last time I went to KFC. There is no sign of the "twisters", for example, and there was only one kind of chicken on offer (I see that RBD have reintroduced the option of bonesless fillets this week). All good news in terms of streamlining the ship. Was it my imagination or were they turning the customers around faster?

But in more bad news for my buying program, RBD was up another 2c today. Arrrgh!

SNOOPY

discl: hold RBD

[duncan macgregor]

I have a bone to pick with you Bricks (or should that be a stone?)

WILL YOU PLEASE QUIT BUYING RBD SHARES!

I am waiting for the price to go lower into my buy zone, willing it down, down, down and it never does get there. So just quit buying will you!

Funnily enough for all the flack we have taken over the years Bricks, over the last two years RBD shareholders have done quite well as the rest of the retail market has melted down around them. Who would have thought two years ago that RBD would turn into the best (NZX) retail investment of all!

SNOOPY

discl: hold RBD SNOOPY exactly two years ago the share price was $1-25 today it is 86c. You would have to be a real nutter to think that was a great return. Macdunk

[Snoopy]

SNOOPY exactly two years ago the share price was $1-25 today it is 86c. You would have to be a real nutter to think that was a great return. Macdunk

According to the 'Sharechat' charts the price two years ago was $1.10.

Actually you are right Macdunk. I was looking at the one year chart where the share price was 80c a year ago. It is now 86c and add to that the 6.5c of dividends received over the last 12 months makes a total of 92.5c. That is a 15.6% return after tax. Not too shabby at all, and it beats you Australian cash holdings which is of course the main thing :-).

Come to think of it though, even though I was looking at the wrong chart, the two year return is still -7.5% per year. I think I might still be right! Is there any NZX retail share out there that has performed 'better' over the most recent two year period?

SNOOPY

[duncan macgregor]

Sorry to say SNOOPY you should learn to read charts. If you go to direct broking site, get into super charts look up rbd over a two year period from today it starts at $1-25. You might be interested to know that MHI is about where it was two years ago, which is still a dead loss in the uptrending market we had during that time. Take into account some of us more than doubled our money in that period with the more astute investors taking their money to Australia, and sitting on a 13% exchange gain in that period. I have told you for years now that you will end up losing the lot on this dog of a company. The straw that broke the camels back was when they sold the kennels to go on that overseas trip, leaving them paying rent in this the bad times. Incidently i am sitting out the market this year, after predicting the market would downtrend leading up to a crash. Know when to play the game SNOOPY, and know when to stand aside, learn a sell system or you will go under bleating about how right last years fundamentals are. Macdunk

[Snoopy]

Sorry to say SNOOPY you should learn to read charts. If you go to direct broking site, get into super charts look up rbd over a two year period from today it starts at $1-25.


Hmmm, you seem to be right. I am too though. The sharechat two year chart definitely shows $1.10



You might be interested to know that MHI is about where it was two years ago,


OK, so one retailer has outperformed RBD. Good on ol' Mike



Take into account some of us more than doubled our money in that period with the more astute investors taking their money to Australia, and sitting on a 13% exchange gain in that period.


Are those the same astute investors, that after doubling their money in the first year, then invested in PEM which subseqently declined from over $3 to just 67c as of yesterday in just twelve months? A near 80% decline?

That would give a two year return on capital of: 2 x 0.2 = 0.4

IOW a net result of losing 60% of your investment capital in just two years. Perhaps Macdunk you are referring to a new meaning of 'astuteness' with which I am unfamiliar?

And IIRC these same astute investors got their original seed capital by selling out of PGW on the NZX, which over the comparable two year period produced a return of +80%?



Incidently i am sitting out the market this year, after predicting the market would downtrend leading up to a crash. Know when to play the game SNOOPY, and know when to stand aside.


Oh it hasn't been an easy market. I have made some big losses and some big gains this year. Overall though my NZX investments are about even. I haven't seen losses anywhere near those that most investors on this forum seem to have suffered. And meanwhile those dividends just keep rolling in! I think I have a good chance of outperforming Aussie cash over the next 18 months by just sticking to my NZX knitting.

SNOOPY

discl: hold CEN, LPC, NZS, PGW, RBD, SCT, SKC, TEL, TUA

[BRICKS]

DOUBT the price will go below .83 cents that's my bench mark if it does Great BUY,,
At Rotorua has two stores KFC one Palm Springs has been done over and full of Happy faces,
Well in the main town is indeed of a need for a work over a lot of money has passed over the counter there but always full Japs and things as the stores are out for three months this store may be down the List..

AS for Mac Duck the quicker he finds out a "DOG" is what humans take for a walk so they can mess up the place and nothing to do with RBD..

[duncan macgregor]

SNOOPY, Thats why the more astute investors have stop loss systems to save them from themselves when they buy a stock that goes the wrong way. look at the ammount of money you have lost riding RBD down over the years bleating about dividends buying more and more, which is worth less and less. Nobody ever gets it 100% right all the time at the buy time, the idea is to take the small loss admit your mistake to yourself and dump the company. The market is now starting to crash you would be well advised to change your methods before its to late. Macdunk

[Steve]

Went in to the South Dunedin KFC, an upgraded store, to cash in my annual shareholder freebie and was greeted by their newly acquired "D" rating issued by the DCC on 29 May 2008.

The only positive that I can tske from this is that it must be a good 'D', otherwise they would have been closed down to clean up their act... :(

Pleased to report that KFC South Dunedin has been promoted to a 'C' rating by the DCC... :)

[Grimy]

Pleased to report that KFC South Dunedin has been promoted to a 'C' rating by the DCC... :)

That would still worry me. Last time I was in an Auckland one it had a "B", and the tables were so dirty we decided it would be preferable to eat in the car!

[Nitaa]

I have a bone to pick with you Bricks (or should that be a stone?)

WILL YOU PLEASE QUIT BUYING RBD SHARES!

I am waiting for the price to go lower into my buy zone, willing it down, down, down and it never does get there. So just quit buying will you!

Funnily enough for all the flack we have taken over the years Bricks, over the last two years RBD shareholders have done quite well as the rest of the retail market has melted down around them. Who would have thought two years ago that RBD would turn into the best (NZX) retail investment of all!

Well two years ago I knew that it would turn out like that eventually, but I didn't know when and I didn't expect it to be 'number one' so soon. It is nice to be enjoying the payoff from all of those (now) increasing dividends at long last!

I went into my 'local' last week to cash in my shareholder freebie burger voucher. I thought I would try some 'wicked wings' as a side but was told they had sold out! Looking around there didn't seem to be a shortage of customers although come Sunday night there was no free newspaper to read (do KFC still have those?). The menu seems to have got simpler since the last time I went to KFC. There is no sign of the "twisters", for example, and there was only one kind of chicken on offer (I see that RBD have reintroduced the option of bonesless fillets this week). All good news in terms of streamlining the ship. Was it my imagination or were they turning the customers around faster?

But in more bad news for my buying program, RBD was up another 2c today. Arrrgh!

SNOOPY

discl: hold RBDIt looks like you have your wish Snoopy.

[minimoke]

DOUBT the price will go below .83 cents that's my bench mark if it does Great BUY,,

There you go BRICKS, in just two weeks its gone down to $0.74 yesterday.

[winner69]

Maybe punters listening to Tony Alexander and some comments he made about the take aways sector last week

http://www.bnz.co.nz/binaries/w100708.pdf

Comments like

Sales in the March quarter were down a very large 9% from a year earlier .... and .... Our analysis suggests takeaway sales may have seen their worst cyclical rate of decline already and activity could now flatten out at best ........ Good growth as such is unlikely before early 2010


Just for whats it worth

[BRICKS]

Maybe punters listening to Tony Alexander and some comments he made about the take aways sector last week

http://www.bnz.co.nz/binaries/w100708.pdf

Comments like

Sales in the March quarter were down a very large 9% from a year earlier .... and .... Our analysis suggests takeaway sales may have seen their worst cyclical rate of decline already and activity could now flatten out at best ........ Good growth as such is unlikely before early 2010


Just for whats it worth

WE have not heard you moaning for sometime and yet you have not stopped eating your KFC.

Well it was a good try with lots of pagers about cafes & take a ways but its was just a general state of the whole nation eating habits and guess what not one word direct about RBD trying to tie by suggestion but it DID not work, share price fell yesterday as there is NO buyers for any stock and NSX turnover is at a low ebb, again a good moan but we knew that ANYWAY..

[duncan macgregor]

WE have not heard you moaning for sometime and yet you have not stopped eating your KFC.

Well it was a good try with lots of pagers about cafes & take a ways but its was just a general state of the whole nation eating habits and guess what not one word direct about RBD trying to tie by suggestion but it DID not work, share price fell yesterday as there is NO buyers for any stock and NSX turnover is at a low ebb, again a good moan but we knew that ANYWAY.. So when do you think they will go under then BRICKS. Macdunk

[BRICKS]

So when do you think they will go under then BRICKS. Macdunk

Explain what your on about,, Quack, Quack..

[ratkin]

Yum brands (im a holder) Came out with a very good result today , they are the owners of KFC taco bell and pizza hut and a few other high profile brands. They are achieving massive growth in china.

There was one dark cloud in their result

"Meanwhile, operating profit in the U.S. fell by 12 percent to $168 million, which the company blamed mainly on commodity inflation along with weak sales and profit results at KFC."


Looks like its not just here that KFC is under pressure

[duncan macgregor]

Sorry BRICKS if i am getting to far in front of you to keep up. I only asked you a simple question so perhaps i will break it down to make it easier to follow.
1, Three years to the day RBD was $1-60.
2, Two years to the day RBD was $1-22.
3, One year to the day RBD was 80c.
4, yesterday at close RBD was 74c.
Surely even you can work it out what the next question might be from that.
Your old mate Macdunk having some fun with you thick one.

[BRICKS]

Sorry BRICKS if i am getting to far in front of you to keep up. I only asked you a simple question so perhaps i will break it down to make it easier to follow.
1, Three years to the day RBD was $1-60.
2, Two years to the day RBD was $1-22.
3, One year to the day RBD was 80c.
4, yesterday at close RBD was 74c.
Surely even you can work it out what the next question might be from that.
Your old mate Macdunk having some fun with you thick one.

RIGHT Mc Duck well never own any three years ago but own some now @ 74 cents, QUACK
you should go and talk to ratkin he is Big time in KFC..

[Dr_Who]

So when do you think they will go under then BRICKS. Macdunk

LOL... RBD wont go under mate. I am actually keeping a close eye on this pup. I would like to see a strategic plan for Pizza Hut before I invest in RBD. I am wondering why is it taking them so long to get a plan (if any) for Pizza Dog Hut?

disc: not a shareholder yet

[ratkin]

Was thinking about RBD this morning , conclusion i reached was that why bother when you can buy the parent company instead? .
Where is the grwth in RBD going to come from? The local takeaway market is already saturated. Only one i like the look of is Nandos . (who owns them?).

[Deev8]

Sales in the March quarter were down a very large 9% from a year earlier .... And the temperature in Auckland plummeted a massive 12.5% from 16C to 14C.

[Nitaa]

And the temperature in Auckland plummeted a massive 12.5% from 16C to 14C.For sales to drop 9% in a mature market is significant. On top of that they have problably increased their RSP as the cogs would have skyrocketed. Therefore volume has probably decreased by more than 9%.

Unless there is a magic wand or something others can see that i cannot, i can only see one way the sp can go.

[BRICKS]

For sales to drop 9% in a mature market is significant. On top of that they have problably increased their RSP as the cogs would have skyrocketed. Therefore volume has probably decreased by more than 9%.

Unless there is a magic wand or something others can see that i cannot, i can only see one way the sp can go.

WHO`s sales dropped 9% state a FACT..

[Nitaa]

I was stating Tony Alexander whoever he is. How true it is i do not know so i therefore stand to be corrected.

[bermuda]

I was stating Tony Alexander whoever he is. How true it is i do not know so i therefore stand to be corrected.

Had a lunch with a fellow punter on Monday. I couldnt believe he had RBD. Loved it due to the yield. THe old argument...yield.

(Yield...Talk to people about telecom. Yield...$6..5..4...3?)

Told him to buy TEX....and then I realised I had advised him to buy the only 'gambling' stock I own. So I got hold of him and told him what I should have empasised.
DYOR

[winner69]

That 9% fall BNZ economist Tony Alexander mentioned relates to the takeaways sector in the Retail Trade Survey from Stats NZ .... ie all takeaway outlets

He made no mention of RBD but as several have pointed out KFC and PH have a large share of this sector so total sector perfprmance is some guide as to how RBD are and will do .... but the RBD will say that they are gaining share in the sector

[BRICKS]

That 9% fall BNZ economist Tony Alexander mentioned relates to the takeaways sector in the Retail Trade Survey from Stats NZ .... ie all takeaway outlets

He made no mention of RBD but as several have pointed out KFC and PH have a large share of this sector so total sector performance is some guide as to how RBD are and will do .... but the RBD will say that they are gaining share in the sector

GOOD try again 69 same horse but you changed the race colours means nothing,, Tell me a lot of KIWI pay TAX so how much do they PAY.. [each..]