RBD - Restaurant Brands

[Pennywise]

what is the current yeild on this stock?

someone mentioned now 16%??

haven't they paid 10cps PA over recent times

can someone clarify current yeild @ 95c and yeild going forward


cheers, PW

[BRICKS]

quote:Originally posted by Sideshow Bob

In the meantime, Bricks is looking in the dictionary to see what 'vitriol' means.........

BOB thanks your still thinking of me soon be HOME.. [8D]

[Snoopy]

quote:Originally posted by Pennywise

Snoop...maybe dismissable as hype.

from the top, chairmans address less than 3 months ago included...

"Overall therefore, we believe that the market will quickly come to recognise that Restaurant Brands' earnings are sustainable into the future, and when this occurs it will be reflected in the company's share price."

their valuation $1.65-75.

Pennywise the (old) chaiman Falconer who uttered that quote of yours prefixed it with:

"If we could eliminate the losses being experienced in Australia, either by successfully completing the turnaround of that business, or by exiting it, then the earnings of the New Zealand business on its own, taking into account expected earnings from the completion of the KFC transformation programme, at multiples which are characteristic of the sector, would yield share values of $1.65-75 a share."

I think there are a few qualifications there.

A clean exit from Australia is needed.

The 'KFC transformation project' has to deliver. My observation of the Riccarton Road branch since transformation (I go past it most days) is that the business has improved a bit but not incrementally. What works in Auckland may not work nationwide.

I think there is also the implication that things won't get any worse for Pizza Hut in New Zealand. I would say PH is under intense pressure. I wouldn't dismiss $1.65-$1.75 for RBD as impossible, but I think it more likely that any recovery will be to a lower level than that. I would guess $1.35 max,but then again that is still 40% above today's trading prices!

If old Chairman Falconer was being optimistic, I think that new Chairman Van Arkel is clearing skeletons out of the closet before he begins his watch. IMO, if anything, Van Arkel is being unnecessarily negative with his latest profit warning announcement.

quote:
market valuation ...nearly half

Disc: getting interested

I do believe the upside is decent and the downside is not much. That kind of risk return payoff pushes my value investor buttons as well.

SNOOPY

discl: hold RBD

PS Dividend paid out over the last seven years has been 10cps. At a share price of 95c, the gross yield is 15.7%.

A 15.7% yield depends on the dividend being maintained. While short term there is no doubt they could do that, in the medium term perhaps new Chairman Van Arkel will have a different policy when he sees the amount of one off capital expenditure coming up in FY2007.

[Pennywise]

maybe you could add to my simple look at div vs earnings

if we are looking at around $6m full year now?
then we are looking at earnings around 6.5cps?

surely the div of 10c must be cut.

this is my real concern going forward, cutting the div surely MUST happen with the capex even on KFC alone 06-07

market reaction to div cut may still take it lower, actually will take it lower imo.

that may be the time I enter.

[duncan macgregor]

What exactly does RBD own to sell other than goodwill and a few kitchen utencils. If the worst comes to the worst they have sold the buildings spending $830k according to SNOOPY doing each store up. I bet the landlords have the fingers crossed that they go under.
They will all be sitting hoping like hell that they cant pay the rent. macdunk

[Pennywise]

Macdrunk, you are now getting beside yourself

say hello

[Snoopy]

quote:Originally posted by Pennywise

maybe you could add to my simple look at div vs earnings

if we are looking at around $6m full year now?
then we are looking at earnings around 6.5cps?

surely the div of 10c must be cut.

Not necessarily. That underlying half year ongoing profit could be boosted by asset sales from Australia. That could allow the dividend to be maintained without eating into company equity.

Let's suppose the interim dividend is cut from last years 5.5cps to 3cps. That would save RBD about $2.4m: Chicken feed compared to the amount of capital spending they are doing. Van Arkel could decide to not annoy shareholders and keep the dividend the same, because saving the dividend wouldn't make much difference to the company. Borrowing to pay the dividend? RBD has done it before.

A third possibility is that RBD might 'do a Sky City' and declare their dividend in 'bonus shares' with an opt in cash option. A good way to save capital while keeping your dividend apparently unchanged.

quote:
this is my real concern going forward, cutting the div surely MUST happen with the capex even on KFC alone 06-07

market reaction to div cut may still take it lower, actually will take it lower imo.

that may be the time I enter.

At 7cps annual dividend (Van Arkel has hinted the second half will be better) RBD would still be yielding 11% (gross) based on a share price of 95c. Are there any shares on the NZ market paying more than that? How cheap does it have to get?

You are right Pennywise in that the RBD share price *might* go lower if the dividend is cut. But it might not go lower, and the dividend might not even be cut. The share is so cheap anyway IMO, you can't afford to miss your buy chance completely can you? It is a delicate balancing act, this optimization of risk and return.

SNOOPY

[winner69]

Snoopy says '...the business has improved a bit but not incrementally.'

Almost as good as Yogi Berra

If incremental means 'something added or gained' do you mean that business hasn't grown .... but it has improved .... from an experience point of view or something?

Sorry mate .... bit bored today

[moimoi]

i suspect the landlords are on their knees praying RB doesn't fall over....Having witnessed the auctioning off of the properties...and watching the punters climb over each other to buy them on a 4.5%-7% yield...they'll need the rent.

dunno quite who you would lease an empty KFC store too.?
[]moi.

[Snoopy]

quote:Originally posted by winner69

Snoopy says '...the business has improved a bit but not incrementally.'

Almost as good as Yogi Berra

If incremental means 'something added or gained' do you mean that business hasn't grown .... but it has improved .... from an experience point of view or something?

I mean the business hasn't taken a 'big step forward' in being very obviouly busy all the time. I don't regard dribs and drabs of business as adding up to a 'step increment'.

My very superficial unscientific glances at the place mean that I have never seen it full since opening night. No problem getting a park (all car parks are now out the front so you can easily see them.) I haven't seen the drive through spilling out cars into the street as was a regular occurence BR (before renovation). But then again the driveway up to the order window is now longer due to the redesign. I should add that I've never seen the place empty either.

Hope that clarifies things.

SNOOPY