Covid has got nothing to do with it. If anything they benefited from it.
From what I can gather, they took a gamble with debt funded expansion(more than normal). It backfired as in short their margins are being squeezed for many reasons and the company needs to be repriced due to int rates. Leverage only works when there are favourable factors.
NZTX do you have access to the article. I would be interested to read it.
Anyway I thought I would give myself a exercise to figure out the current fair value. I was going through the previous reports, I noted the following.
"KFC New Zealand acquisition
In September 2020 the Group acquired a KFC store in New Zealand for $3.2 million. The store contributed sales of $0.9 millionand net profit after tax of $0.1 million in the consolidated statement of comprehensive income. The acquisition gives rise to$2.7 million of goodwill."
I accept interest rates have gone up significantly since. But they paid $3.2mill for npat of $100K. Seems abit excessive even back in that period. Am I missing something here??.
I don't know whether it was intentional or not to structure it with $2.7mill of goodwill (amortise large sums down the line).
Originally Posted by winner69
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