RBD - Restaurant Brands

[BRICKS]

Snoopy RBD hits $2.31 today not far of your $2.40 call with showing a profit of 156% have the feeling to reduce 25% to enjoy current PROFITS..

[ENP]

The biggest
risk IMO is being so tied up in the timing detail that the share price
jumps and you end up not investing at all

How do you overcome this problem Snoopy?

Thanks.

[mr.needs]

How do you overcome this problem Snoopy?

Thanks.

Well the easiest way would be to not worry about timing the market at all, and instead purchase a fixed dollar amount of shares at regular intervals.

Its called dollar cost averaging. With the fixed $$ investment, you end up purchasing more shares when the SP is lower. Hence reducing your average cost.

[Snoopy]

Snoopy RBD hits $2.31 today not far of your $2.40 call with showing a profit of 156% have the feeling to reduce 25% to enjoy current PROFITS..

Am having similar feeling Bricks. However I will hang out for $2.40 myself, as this is only a PE of 12 with half the KFC refurbishment growth still in the pipeline, excluding any capital repaymentrs from Pizza Hut sales. Also that big 8c divvy is coming up!

SNOOPY

[h2so4]

Snoopy Hi I would be interested to know, if you could please explain how you arrived at a fair value of $2.40 for RBD.

[Snoopy]

Snoopy Hi I would be interested to know, if you could please explain how you arrived at a fair value of $2.40 for RBD.

My valuation is a bit 'back of the envelope' h2so4.

$2.40 represents a PE of 12. With a utility type company (Yes I regard food as a quasi-utility) and low to no growth prospects I think a PE of 10 is about right (look at Telecom). With almost all of RBDs profits coming from KFC and the restaurant transformation program only half done I think there is plenty of growth left. However I do expect the growth to be steady not spectacular. I think a PE of 12 is appropriate for steady growth.

SNOOPY

[Snoopy]

$2.40 represents a PE of 12.

There is a bit of an upside to my valuation if various Pizza Huts are sold at a good price. So I won't be selling out at $2.40. Just reducing my holding as my spectacular success with RBD means my portfolio is looking a little unbalanced. All I am saying is that I find it hard to conceive of a situation going forwards where RBD shares are worth less than $2.40. $2.40 is in effect my fair 'bottom of the barrel' valuation.

SNOOPY

[h2so4]

Just reducing my holding as my spectacular success with RBD means my portfolio is looking a little unbalanced.

SNOOPY

..................hey things could be worse
Rbd has had a spectacular year, more money this year than the last 3 combined, and it appears to me to be business as usual. How much growth do you expect going forward 6%,9% maybe 12%?

[ENP]

So Snoopy, if you invest in companies such as Restaurant Brands/KFC for their dividend (and capital gain also, but primarily for their dividend) what % dividend yield would you expect as a minimum? Or don't you work that way and instead focus on the earnings ratio?

I'm very interested in your investing strategy as you seem to have your head screwed on when it comes to long term.

ENP

[Snoopy]

Rbd has had a spectacular year, more money this year than the last 3 combined, and it appears to me to be business as usual. How much growth do you expect going forward 6%,9% maybe 12%?

I think that going forward from here, RBD might get 5% earnings growth on average compounding over the next eight to ten years. By that stage I expect the PE to reduce to around 10, so we could be looking -long term- at an RBD share price of around $3.10. If you ask me what will happen specifically in FY2011 or FY2012, that is much harder to predict. 5% average doesn't mean 5% every year! Considering what happened during the last Lions tour we could hit 5% in FY2011, 10% the year after and a flattening off after that.

SNOOPY