RBD - Restaurant Brands

[BRICKS]

WELL we at RBD are right for chickens for the next five years at slightly reduced prices
when they signed a new contract for North and South Islands so you all can now stop
your WORRIES.. as there is plenty to EAT..

[emearg]

WELL we at RBD are right for chickens for the next five years at slightly reduced prices
when they signed a new contract for North and South Islands so you all can now stop
your WORRIES.. as there is plenty to EAT..

Yuck! No thanks. I prefer my arteries uncloggod!!

But plenty of others don't which is great for the RBD shares I own. Buying a whole lot back in June seemed like a good idea. Pasta was new. Pizza Hut was being turned around. YUM were playing nicer.

Glad I went with it. Excellent capital gain since then, and RBD are a good income stock.

So, no KFC for me thanks but I shall certainly encourage others (especially those I don't like) to buy plenty. All I need to do now is invest in a company that benefits from heart disease. Any ideas?

[kizame]

Well no listed funeral homes as yet,but... Ebos now there you have a growth stock,organic growth i.e heart disease victoms spending lots of money at KFC,pizza hut etc. and external growth by acquisition,yum.
Thus you have life totally covered.

[BRICKS]

Well no listed funeral homes as yet,but... Ebos now there you have a growth stock,organic growth i.e heart disease victoms spending lots of money at KFC,pizza hut etc. and external growth by acquisition,yum.
Thus you have life totally covered.

IF you buy your chicken at WOOLWORTHS or PACKNSAVE does that HELP.. ??

[meesham]

Yuck! No thanks. I prefer my arteries uncloggod!!

But plenty of others don't which is great for the RBD shares I own. Buying a whole lot back in June seemed like a good idea. Pasta was new. Pizza Hut was being turned around. YUM were playing nicer.

Glad I went with it. Excellent capital gain since then, and RBD are a good income stock.

So, no KFC for me thanks but I shall certainly encourage others (especially those I don't like) to buy plenty. All I need to do now is invest in a company that benefits from heart disease. Any ideas?

I'm the same, about 20% of my portfolio is RBD but I don't eat KFC or Pizza Hut, and can't stand the Starbucks coffee I first got in earlier this year when it was around 90cents (and accumulating more along the way) and consider it one of my safe holdings, and while I have stops set as usual, it's no where near the current SP.

[Snoopy]

Yuck! No thanks. I prefer my arteries uncloggod!!

But plenty of others don't which is great for the RBD shares I own. Buying a whole lot back in June seemed like a good idea.

I am pleased to see at least someone else on this forum 'gets RBD' Emearg.

The attitude of the detractors here is akin to not buying a share like 'Steel & Tube' because they could never envisage themselves taking their prized SUV down to 'Steel & Tube', folding down the seats and putting a huge steel girder in the back. As long as the target customers -construction companies- are buying the steel it matters not a jot that you as a small shareholder aren't doing it.

Going back to RBD, I doubt if there is very much crossover between the shareholder base, as represented by those on this forum, and where the biggest RBD customers come from. But just because *we* aren't heading down to the local KFC every week, doesn't mean that we shouldn't be buying RBD shares

Pasta was new. Pizza Hut was being turned around. YUM were playing nicer.

I tried out the Tuscani pasta (the meatball one) for the first time last week. I wouldn't recommend it as a stand alone meal it itself. But pick a few lettuce leaves out of the garden, add in a fresh tomato, some radishes and an avacado to complete a salad and you actually get quite a decent feed. And the foccaccia breadsticks were a nice accompaniment.

What is more I don't think my arteries were clogged up one bit by my RBD pasta dining experience!

Glad I went with it. Excellent capital gain since then, and RBD are a good income stock.

Did you see today's First NZ Capital analyst Sarndra Urlich's valuation update on the sister sharechat website?

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Restaurant Brands' latest profit upgrade suggests the recent sales momentum from the KFC business has caught even the company by surprise, says First NZ Capital analyst Sarndra Urlich.

"There is continued evidence that the traction from the already transformed stores is real and long-lasting," Urlich says.


"Add to that a further 30 transformed stores over the next few years and Restaurant Brands could very well enjoy further ‘super growth' from the KFC brand."

Urlich has upgraded her forecast earnings for the year ending February 28 from $16.2 million to $18.2 million and her 2011 forecast from $17.1 million to $19.1 million.

"The reasons for not buying Restaurant Brands in the past are long gone (including no revenue growth, aggressive gearing, ongoing profit warnings etc.)."

Urlich says she doesn't believe the reason for recent growth is purely a function of the ‘buying down' phenomenon during a recession. "Restaurant Brands is also reaping the benefits of effective management and has every chance of further surprising on the upside."

She has upgraded her valuation and 12-month target price for the shares from $1.57 to $1.84 and says she believes "it is not too late to jump on board, notwithstanding the stellar performance of the stock since the beginning of 2009."

BROKER CALL: First NZ Capital rate Restaurant Brands as outperform.

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I have been considering taking some of my capital out of RBD, not because I don't believe in the company, but because I have done so well it is making my NZ portfolio look out of balance. However, when I look at alternative places to put my money, I still haven't found anywhere better than RBD. So I have decided that my RBD capital is staying put. The RBD dividend story on its own is hard to beat and any capital growth we get as a result is just a bonus.

With 97.1m shares on issue and an $18.2m profit in FY2010 now possible, that means earnings per share of 18.7c. At a target share price of $1.84, and with further growth to come, we are still looking at a PE ratio of under 10!

No wonder Sarndra Urlich sees RBD as an outperform with the share price sitting at $1.57! And none of this takes in the possibility of some form of capital return as Pizza Hut outlets are sold off! We know there are better companies than RBD on the NZX. But is there any share on the NZX with better *prospects* than RBD - from an investor perspective at today's prices?

RBD does seem to me the obvious place to put your money. That is why I am overweight in it and intend to remain so.

SNOOPY

discl: hold RBD

[Zito]

Appreciate the analysis Snoopy, reasoned as always and right on the mark from where I'm sitting.

Like you I am overweight in RBD pretty much for the same reason that you are. I have looked around the NZX for a company which is cheaper, with a greater potential to surprise on the upside, and with a better risk profile, and have come up short.

Unlike you I am a recent addition to the share register (this year) but become increasingly confident that it is a good place to park my money for as long as the current direction is maintained.

All three brands have had their challenges over recent years, and I wonder whether investors are a bit gun-shy of RBD given its history of providing unexpected nasty surprises to the market ( for want of a better expression!)
Maybe this could explain the apparently low multiple it is trading on, and given the bullish attitude of management and analysts towards KFC especially, a few more surprises to the upside may see a more deserving PE in time as the stock gains further credibility.

[Snoopy]

Unlike you I am a recent addition to the share register (this year) but become increasingly confident that it is a good place to park my money for as long as the current direction is maintained.

All three brands have had their challenges over recent years, and I wonder whether investors are a bit gun-shy of RBD given its history of providing unexpected nasty surprises to the market (for want of a better expression!)
Maybe this could explain the apparently low multiple it is trading on, and given the bullish attitude of management and analysts towards KFC especially, a few more surprises to the upside may see a more deserving PE in time as the stock gains further credibility.

Welcome aboard the share register Zito. I think the current direction will be maintained until the KFC transformation process is complete, which might take 8 - 10 years. The problem is the NZ market is only so big and we all know what happened when RBD sought to export their pizza expertise (sic) to Victoria!

Once the KFC revamp is bedded down, I will then start to get worried over what hair brained direction the company will take off in next! At least at the moment the board and senior management have plenty to do -thank goodness. It is when board and management start to get itchy and look for other ways to express their err -talents?- that we shareholders should start to worry again.

Because of the constraints of those NZ borders, I think that when KFC is brought back to its revamped 'normal sales level' then the company should trade on a PE of about 10. A PE of 10 is appropriate for a company with modest growth potential I think. I take your comment Zito, about looking around for better value on the NZX and not finding anything. But I am wary that this might mean the PE of the rest of the market might move back towards around 10, rather than the alternative scenario of the PE of RBD being revised upwards to market norms.

I am sure you are right again Zito that there remains plenty of market 'baggage' associated with RBD that is going to be hard to shake. But over recent years they have a new CEO, a new chair on the board and are getting rid of their troublesome assets. How much change do they need to show? I suspect that by the time the sharebuying public wake up to RBD, the full recovery potential will already be built into the share price.

SNOOPY

[Scuffer]

More stores will open as time goes on the population of NZ is increasing at a fair rate for a small country.

[emearg]

More stores will open as time goes on the population of NZ is increasing at a fair rate for a small country.

And a certain ethnic group who tend to like KFC very much, tend to have more children than some other ethnic groups. So given time, the portion of the population who likes KFC will increase. For long term holders of RBD shares that isn't a bad thing...