From sales data yesterday, it looks like FY profit will come in before write-downs at approx $10.4m. ie. underlying P/E about 12 at current price ($1.28). However, write-downs of Pizza Hut and commentary on margin squeeze will not help sentiment. Outlook for 2007 looks to me to be for a similar profit ($10.5m underlying). The hard call is on dividends...still possible they will cut to save cash for investment in KFC transformation. Or perhaps they will try to maintain for now and hope to use cash from sale of underperforming PH Aust outlets. 50:50 call - a dividend cut would certainly undermine the shares for a while.

I believe it would be risky to be in these shares at the moment, as there appear to be several negative threats to shareholder sentiment in the form of lower earnings, write-downs, mention of margin squeeze and a possible risk to dividends, with little short term upside likely (barring another takeover offer!).