RBD - Restaurant Brands

[duncan macgregor]

Unlike you, Macdunk, we don't all have crystal balls. One can't always know in advance whether a new business is going to make sufficient profits to cover interest, but that doesn't mean it's not worthwhile taking a risk. Similarly, property doesn't always increase by 10% pa. It has been known to drop in value.
At any rate, it's still prudent to maintain a reasonble ratio between equity and debt for purposes of risk management. Also, while a company needs a roof over it's head, it's by no means certain that it has to own rather than lease that roof. Owning may simply be tying up capital unnecessarily. As for the $800k per outlet they are spending on upgrades, this doesn't seem a lot given that the upgrades are likely to last 10-20 years.
hiawatha

You dont require a crystal ball to recognise stupidity when you see it. It is much cheaper to borrow money on property than it is to borrow it any other way. Everything runs in cycles property included but to sell property to lease back then spend a fortune doing it up is the height of utter stupidity. I argued this point with SNOOPY at the time. Anyone that is so blinded to reality that they think that was a good decision before or after the event is a sitting duck in the business community. To own the roof over your head is an insurance policy if the market turns against you. RBD are in the position of the market that has turned against them. Macdunk

[BRICKS]

[You dont require a crystal ball to recognise stupidity when you see it.]

Agreed. Nor ignorance either for that matter.
hiawatha

ENOUGH of the past you both don't know, lets get that bargain RBD and look NORTH..

[JMKC]

BRICKS, you keep calling RBD a bargain. Can you please explain to me exactly why you think the stock is cheap? I'm not necessarily saying it's not but I am interested to know your thoughts...it isn't cheap on an NTA basis, and isn't glaringly cheap on a P/E basis but maybe I am missing something.

By the way I do agree with you on SCY.

[BRICKS]

BRICKS, you keep calling RBD a bargain. Can you please explain to me exactly why you think the stock is cheap? I'm not necessarily saying it's not but I am interested to know your thoughts...it isn't cheap on an NTA basis, and isn't glaringly cheap on a P/E basis but maybe I am missing something.

By the way I do agree with you on SCY.

THERE is enough talk on this thread to last a life time so just do your BEST..

Regards..

[JMKC]

Yeah, I'm certainly not saying it's a raging sell, I just like to know why people call stocks a bargain. The stock is basically ex-growth, but offers an excellent yield and is not expensive on an earnings basis, but for an ex-growth stock it's not exactly cheap either. So then you look at the asset base, and that isn't that attractive, nor is the stock priced cheaply relative to net tangible assets.

It SEEMS you cant ask PERTINENT questions without someone BRUSHING you off with ill-PLACED capitals.

[BRICKS]

WELL put hiawatha and covers most about RBD, and JMKC you seem to be the type of person that would never be happy with any answer given and would love to talk on & on,
so where does it leave the rest of us either your a buyer or a talker but the people on this site really have NO influence any stock and nothing to do with the turnover of the NZX..

[keepitsimple]

[I appreciate someone might think "Capital Management" is bollocks but this company's gearing ratio would have been just fine if it's long term cash flow exceeded dividends.]

Well, may be it would have. However, I was thinking of what the company's gearing would have looked like after it had borrowed large amounts from the the bank, as Macdunk suggested, to finance the Victorian purchases.

hiawatha

Most likely banks wouldent lend on Victorian purchases seeing them as a poor risk.However looking to the future perhaps adding more profitable food brands to the mix may help, it is a brands businuss as others have pointed out.

[JMKC]

WELL put hiawatha and covers most about RBD, and JMKC you seem to be the type of person that would never be happy with any answer given and would love to talk on & on,
so where does it leave the rest of us either your a buyer or a talker but the people on this site really have NO influence any stock and nothing to do with the turnover of the NZX..

you haven't given me any answer, that's the problem. But just forget about it. If you can't justify your stock ideas I can deal with it...

[duncan macgregor]

Most likely banks wouldent lend on Victorian purchases seeing them as a poor risk.However looking to the future perhaps adding more profitable food brands to the mix may help, it is a brands businuss as others have pointed out.

You seem to have missed the point completely. RBD could have borrowed money from the bank using their property as security at a much cheaper rate than any other means. They sold the property to lease back which is much more costly in the end which was a great mistake. They then spent millions renovating those properties which only highlighted the first mistake. If i want to borrow money for any reason at all i borrow it from the bank using property as security. The bank couldnt care less what the reason is for me borrowing. When you see glaring blunders like that unless management gets changed RBD remains a high risk company. Macdunk

[BRICKS]

you haven't given me any answer, that's the problem. But just forget about it. If you can't justify your stock ideas I can deal with it...

AND now never will, from experience have you type of talkers rattle on about nothing and where never a buyer of stock just like Mc duck who rattles on about the past with nothing to do about today's market and tells us he is an off shore "Full time trader" BOLLICKS..