RBD - Restaurant Brands

[Snoopy]

.... and if Taco Bell was bought to NZ you would have to add that to the share price

Winner, I predict that if Taco Bell comes to NZ it will be loss making for at least five years. There will be huge set up costs, with the associated extra office overhead while the buisiness builds to a size to justify that TV advertising. I think RBD has another 5 years of KFC growth left in it. After that, where will the growth come from? Taco Bell could be the answer as by 2015 that critical mass needed to go into profit could well be there. But Taco Bell is a long term development strategy, not an instant money press.

SNOOPY

[BRICKS]

RBD has just turned the corner from Austarlia with Pizza and made profits for the shareholders so WHY put your head back in the noose stop all your stupit chit chat talk about BELL and count the KFC money..

Snoopy you said the other day a 16 cent div headed next year very interesting you are higher than what BRICKS
thought...

[h2so4]

Acid man .... another variant of owners earnings is MVA ... Market Value Added where MVA is the NPV of future economic value added

I reckon RBD will make $23m over and above its cost of capital this year (economic value added) and using this would give a MVA of about $240m which implies a share price of just under $3

Good one eh .... and if Taco Bell was bought to NZ you would have to add that to the share price

As a matter of interest RBD is one of very few companies in NZ that has always (even when it was only making $10m) made more than its cost of capital .... not a bad feat

yEAH i'D be happy with $3.

Price follows value. Then see what happens after that. The value I mean not the share price.

If $3 happened real quick I'd be out, even if it meant leaving money on the table.

[Snoopy]

Snoopy you said the other day a 16 cent div headed next year very interesting you are higher than what BRICKS thought...

I said 16c because the last half was 8c and the expectation that current levels of profitability will continue is out there. Traditionally the 1st half dividend is lower that the second half. So I would guess 7c for the next interim dividend followed by a final divvie of 9c. Even at the low end of profitability forecasts, $24m NPAT equates to more than 24cps. a 16c divvie still leaves 8c of retained earnings to speed up the KFC refurbishment, pay down some debt and (groan) splash some cash on Taco Bell.

SNOOPY

[Snoopy]

so WHY put your head back in the noose stop all your stupit chit chat talk about BELL and count the KFC money..

I'm not the one chit chatting on Taco Bell Bricks.

"The key driver for us is to take the money that's sitting in Pizza Hut stores and cash that up and use it in KFC or other brands, Taco Bell could be another brand for example," (Creedy) said. (from NZ Herald 10th May)

"the board and management will need to turn their attention to the next brand opportunities. We have, however, learnt from past mistakes and any new concepts will be very carefully evaluated before any significant investments are undertaken. " (Chairman's Address, AGM 2010) (Yeah right!)

SNOOPY

[voltage]

read the report in the herald today about KFC inroads into China. Snoopy would YUMS be a better bet, the parent company.

[Snoopy]

read the report in the herald today about KFC inroads into China. Snoopy would YUM be a better bet, the parent company.

I hold shares in both YUM and RBD. YUM is more of growth investment. RBD more for income. Ironically due to purchase timing, I have probably made more capital growth and income out of RBD. YUM gets franchise fees no matter what the profitability of the downstream retail outlet. I think it better to be the franchisor rather than the franchisee. YUM trades on a PE of around 14, while RBD has a PE of around 10. Is YUM a better company that RBD? Yes. Is YUM 40% better than RBD? A more difficult call.

Then with YUM you may have manager holding charges, Foreign Investment Fund tax, no imputation credits. It is a close call. You don't have to make that call if you hold shares in both.

SNOOPY

[voltage]

thanks SNOOPY are there any other global giant companies one should have in a long term hold portfolio. I have a number of UK investment trusts but like to now focus on direct global giant share holdings

[winner69]

I see PWC currently have WACC for RBD at 7.6%

I was using a higher value when I mentioned a $3 shareprice earlier .... at a 8% cost of capital you get a valuation of $3.40-$3.50

Obviously the market (gurus) have doubts about these record margins being maintained into the future

[winner69]

Maybe acid man and sauce need not worry about growth .... its dividends that make people rich

http://www.smh.com.au/business/borin...716-10e60.html