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quote:Originally posted by Halebop
But then there is FA and there is FA. Over the last few years I've had a negative view on RBD using qualitative FA. So far both the market and RBD's operational results agree with me. So some part of the "determine fair value" approach must be subjective and subject to bias and flaw, because we both have very different perspectives on the merits of the very same company.
'Qualitative FA?' You mean you don't like RBD but you can't really explain why! Fair enough, you are entitled to your opinion Halebop.
No need to hide your opinion as representing some kind of new era pseudobusiness jargon though.
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I can see RBD as serving rubbish food but see their business model as profitable. What I can't see is RBD delivering rubbish service standards, returns and strategy and somehow delivering outsized long term returns.
A corporate business unit owned by RBD is never going to match the same business owned by an dedicated owner operator. But that doesn't mean they can't do significantly better than they are now. Use the strategy to set the service standards and returns should follow.
I don't know the confidential details of RBD's strategy. But staff turnover is reducing and they got some good PR in being the first of the big chains to phase out youth rates. The CHAMPS system is there to measure service quality so what are you saying? The CHAMPS hurdles they set for themselves are not high enough?
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RBD's performance has been less than average - their growth in sales has substantially lagged the takeaway segment, their acquisition strategy has failed, their dividends and profits have both declined in real and absolute terms and substantially underperformed alternatives listed on the NZX. There is very little that is "average" about their performance.
KFC has grown sales from $172.3m in FY1997 to $182.7m in FY2007. That is a compounding rate of sales increase 'r' of:
$172.6m(1+r)^10=$182.7m
That gives a compounding rate of sales increase of 0.6% per annum. Not good.
For Pizza Hut $44.5m worth of sales in 1997. $79.7m of sales in FY2007. Using the same equation:
$44.5m(1+r)^10=$79.7m
That gives a compounding rate of sales increase of 6% per annum. Nothing wrong with that. The success of the Eagle Boys integration must take some of the kudos for that.
Not sure how it compares with the growth of the takeaway industry in general over that same period.
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Their pizza acquisition strategy has failed on both sides of the Tasman,
Only on the OZ side. The Eagle Boys acquisition was successful.
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they have spent the silver from selling their real estate portfolio (the bulk of which was KFC - most of the Pizza Real Estate was divested years before)
That's history that has already been built into the RBD share price.
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and the Chicken Stores cost a lot of money to "makeover" - of course the franchiser will be positi