I don't have a problem with their high profit margin being maintained. After all we are talking about a piece of chicken here not a 3D TV.
Printable View
This chart features a wide range of technical indicators suitable for monitoring RBD's current uptrend. Their individual sensitivity was set by fitting them to the low of September 2009. These indicators will provide clear signals when the uptrend weakens or ends. It is easy to see that right now, RBD is still very strong and none of these indicators are anywhere near triggering a Sell signal.
Some people think that the use of TA automatically leads to "overtrading". Charts like this show that this is not so. TA got you into RBD at 60 - 70 cents when the uptrend commenced, has kept you in for 18 months so far, and will get you out when the uptrend weakens or ends.
All too often here on ST we see people making handsome profits - then giving them back to the market because they have no exit strategy.
Don't let this happen to you!
http://i602.photobucket.com/albums/t...usPB/RBD83.gif
I notice that Phaedrus has subtley changed his RBD exit strategy. The last chart attached to post 1513 was based on an ordinary price scale which would have had Phaedrus starting to sell out when RBD breached that trendline when it bottomed out at $2.25 over the last month. The chart of Phaedrus post 1549 now has a logarithmic price scale with last months price wobbles still well above the trend line, presenting no reason to sell.
I am sticking to my long established FA call of picking $2.40 (i.e. about now) as a point where overweight shareholders should look at reducing their holdings. Past experience has told me that when no-one can think of any reason to sell, then that is a good time to start thinking about it. Liquidity of those RBD shares has certainly improved from when the price was lower, and that means a decent price should be attainable for moderately sized holdings.
Are there any FA reasons to sell now? On the face of it, no. I can't see that selling at a projected dividend yield of 10% and safely putting your money in the bank to earn just half that is appealing. There is no sign of weakness in the KFC renewal strategy. And just maybe the Pizza Hut selldown might start to gather some momentum. Rugby world cup year I think will bode well for Pizza Hut and may boost the income from the sale of Pizza and Pizza Outlets.
However, the downsides relate to the YUMisation of CEO Russel Creedy. Just because you can pull some things from the North American market and dump them here doesn't mean everything will work equally well. Taco Bell will be a multi-million dollar experiment which I am not sure will ever get the scale in this part of the world to be worthwhile. Didn't it fail in Australia? Will running half a dozen stores north of the Bombay hills ever cover the associated corporate overheads? In my mind South American style restaurants are going to be niche players in New Zealand for a long time. I think that if Creedy wants another restaurant chain he should look at other options, possibly outside of the YUM fold.
I think there is still too much Pizza Hut goodwill on the books. Admittedly this is a non cash item. But I think when the real market value of those Pizza Hut franchises being on sold to owner operators hits, the weakening of the balance sheet will not go unnoticed.
Furthermore I think that leaving the renegotiation of their banking facilities right up to the October deadline is a little arrogant. And although I cannot criticise the current boards actions, they are becoming a very small closed club. I think they need at least one new fresh minded strong independent director soon.
Beyond the World Cup, and nobody seems to be looking there, it is hard to see too much growth left for this business.
Nevertheless my scouring of the market for better investment opportunities has so far proved fruitless. I won't be selling down until I can see that better opportunity. So in this instance it is a question of those fellow RBD investors who want to sell down doing what I say rather than what I do!
SNOOPY
not selling mine, always about 6 cars queued up when I drive by in Invercargill center of the world
And the youngsters fighting to work there and wanting " to really get somewhere and get a career in fast food" :)
http://www.stuff.co.nz/nelson-mail/news/3993756/Applicants-queue-for-20-jobs-at-new-KFC-store[/URL]
Looks like the refurbishment of KFC is a definite winner with the younger generations. So like you Gonzo, I am staying the course and not considering selling in the near future.
Exit strategy button pushed Phaedrus- sold at $2.49. Today I am suffering a 'gamblers rush' at the thought of that RBD money rushing into my bank account! My 'exit' is a bit half hearted. I have only sold 1/6th of my shares with no immediate plans to sell more. RBD still my major NZX investment. Average entry price for my remaining RBD shares is now 73c(!). Even Danny Diab would be impressed with that. I think chances are 80%+ RBD shares will go higher. So I have retained 80%+ of my shares. Have outlined what I see as RBD risks in another post. But real reason for selling: I need the money! Or more the truth, I might if this NZS recapitalisation plan comes to pass and I don't want to be caught short. Good luck to those shareholders that remain (which includes me)!
SNOOPY
I hope you saw my 11th August RBD Blog on sharechat Winner
http://forum.sharechat.co.nz/showthread.php?t=2033
That was my quantitative case for my fiendishly astute planned selling. I used 'normalised earnings'. Not sure if that matches your 'owner earnings', but I don't have any more cashflows that I wanted to include. Paradoxically, you might look at my earnings per share model generated figures in a different way (compare to eps FY2011 actual forecasts), and brand me as a fool for selling. So what do you sharechatters reckon? Am I fiend or fool?
SNOOPY
Only time will tell Snoopy