Have to assume that the 9 mill shares odd get shared around a few holders .... no SSH since
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Have to assume that the 9 mill shares odd get shared around a few holders .... no SSH since
JUST read about KFC world wide is going gang busters and back at headquarters in USA stated that in Britain they will build another 300 stores and train 9,000 chicken chef`s
[what ever that is] and happy to do it, now back home NO notice about the AMP sale
but i think they upwards of 12 months to notify so with this all going on and not that many good things to buy that is SAFE "BRICKS" may resume buying RBD..
Bricks whatever is happening in the UK market will not help RBD. If you really want to benefit from the worldwide expansion of KFC, I suggest you buy YUM Brands (NYSX listed).
We won't have to wait twelve months to find out where those AMP RBD shares went because the RBD annual report will be due around May.
Nevertheless you do have to be careful what you buy in this market. I have gone back to the old chesnut of shares with relatively inelastic revenues (like utilities and food companies) who have their debt situation well under control.
I have done a sweep of the NZX listed shares and the share that keeps coming to the top of my buy list is RBD. Perhaps we won't see much growth. But that 15% yield I think is incredible with bank deposit rates now below 5%. RBD is about the only retailer that hasn't made a major profit downgrade. Try as I might to find a better retail investment, I can't do it.
Just to prove I haven't got stars in my eyes I am aware of the ongoing negotiations with YUM regarding Pizza Hut franchise renewals. I know that YUM won't be keen to lose half the Pizza Hut chain which could happen if RBD does not renew the big tranche of franchises in 2010. I guess the big unknown is whether YUM can force RBD into a slow and painful exit from Pizza Hut N.Z. as happened in Victoria. The problem is now, what private operator in sensible mind would lay out big dollars to buy a PH Franchise off RBD? And what bank would lend to them? I believe both Chairman Van Arkel and CEO Russel Creedy are the men to talk tough on these franchise renewal deals. 'Roll over and giggle' is no longer an acceptable renegotiation stance in my view. The latest quarterly sales should be out soon, but really until we know the outcome of these Pizza Hut negotiations the medium term profitability of Pizza Hut is uncertain.
Not uncertain enough to put me off investing though. I bought a few more RBD shares last week when the buy order I handed to my broker seven weeks ago was finally acted on!
SNOOPY
discl: hold RBD, YUM
A profit upgrade! IN this kind of environment? This stock is gonna rock tomorrow?
Watch those tubs of KFC fly out of the door as the economic downturn bites deeper and harder. Best value for money.
Starting to look solid. Awww how cute, Snoopy and Phaedrus could be in the same stock soon.
Well we know one outfit that wasn't a buyer. SSH notice posted today that Tower had reduced their shareholding below 5%. I must admit I hadn't even registered the fact that Tower had a 5%+ stake. Looking back at the SSH announcements I see they only declared their position on September 18th 2008. Still Tower haven't fully sold out yet, retaining 4.2% of RBD shares. Looks like they sold out of RBD at about the price they bought in at.
The price is holding up at around 70c though. And am I right in saying that turnover has been higher than normal since AMP dumped their stake at the start of February?
SNOOPY
I have to admit I got this one wrong. I was sure the share price would stall at the 80c level. But as of this morning a bid of 83c will be needed to dislodge shares from existing shareholder's hands! A gain of 38% in a little over a month while the rest of the market goes down is not a performance any seasoned investor can ignore. It certainly shows the concept of 'investment caution zones' where all investment decisions are put on hold while the broad market slides in a new light. The fact is, there are always shares that are going to do well even in a bear market. It just takes a little more work to find them.
Of course there are other shareholders, like those who have recently added themselves to the Nuplex share register, who have done even better. But from my perspective, investing in Nuplex would have been a huge gamble, and in comparative terms an investment in RBD was near to 'downside risk free'. Why do I say that? RBD has an outlook of strongly growing underlying profits coupled with steadily reducing debt, as the debt is paid down out of those profits. The strongly growing profits would only have been obvious to those who looked behind the headlines which reflected the Pizza Hut problems (that is where doing your homework comes in). Nuplex OTOH, was looking at sharply reduced profits and was crippled with debt and at the mercy of its bankers. A more chalk and cheese situation is something that is difficult to imagine.
I dubbed 2008 'the year of retail', as that is where I saw the best investment opportunities arising. The market hammered retail shares in anticipation of sharply reduced retail profits. What surprised me was that although we have a number of smart retail operators in New Zealand, I couldn't make an investment case that would be better than buying more RBD shares. So my newly allocated 'retail investment capital' all went into buying more RBD shares. Increasing my RBD holding by 40% didn't do anything for diversifying my portfolio. But it sure impacted on my returns. And all this from a company with a culture of management mediocrity!
There will be plenty of my critics who will be wearing an omlette balaclava over RBD. I don't want to dwell on this as even at 82c I am still 20c under my all time average purchase price - even if dividends over the years put me well ahead. But perhaps now you can all see how poorly informed you all were in viewing RBD as a candidate for inevitable bankruptcy. In fact, it is the way that RBD has survived so many years of mismangement that shows how incredibly strong this underlying company is. Let's see what else new train driver Chairman Ted van Arkel can extract from his new charge. Please move right away from the platform while the new conductor, CEO Russel Creedy blows his whistle. We are on a roll. Next stop is $1 per share.
SNOOPY
discl: hold RBD
As a "Buy and Hold" candidate, RBD has performed exceptionally poorly. A quick glance at the long-term chart on page 83 shows the long downtrend in gruesome detail. Regardless of dividends, this stock has been a losing proposition for years.
Take a look at this, though. RBD's average daily volume is about 100,000 shares. Every so often, RBD volume abruptly increases - a lot. For the purposes of this exercise, a Volume spike is defined as any daily volume over about 1.8 million shares. Such spikes are marked by blue bars at the top of the chart. The idea here is to buy when a spike forms after a downtrend and Sell when a spike forms after an uptrend. Because many of you do not have access to the market during the day, the returns and entry/exit points shown here are based on buying or selling the day AFTER the signal. Following these signals would have given a compound return of almost 500% in just 4 trades over 12 years. Plus any dividends, of course! This, on a stock that is worth a mere fraction of what it was way back in 1997!
See how this absurdly simple "system" kept you out of RBD for years at a time as the downtrend ground inexorably on. (There were no volume spikes from mid 2005 right through to the end of 2008, for example). Interesting eh?
The latest huge volume spike flagged an excellent 65 cent entry point into RBD. At well over 9 million, this spike was RBD's third largest ever.
http://h1.ripway.com/78963/RBD41.gif
Phaedrus, this is quite interesting. Looks like I need to look into the volumn a lot more. Waiting to offload the small package I've got.
Well I had KFC last night for the first time in about 7 years and I was actually quite impressed. The cleanliness of the restaurant, the service and the food, were all good.
I was just in for a snack before hitting town and had a snack deal thing....One chicken drum stick and chips for the bargin price of $3.
The only thing that let it down was that the chips didn't have that chicken salt taste I remembered and is so often talked about.
Don't they only have the chicken taste if they've been hanging around too long?! I've never heard of it as an option.
As an aside, the share price has only started going up since I've started buying Pizzas again. I didn't think 6 pizzas at $6 each would make such a difference!
Apparently we have a very simple system here which if followed would have produced a near 500% return just by following three simple 'single indicator' rules.
Volume spike after a downtrend = BUY
Volume spike after an uptrend = SELL
Volume spike when in a trading range= IGNORE
The question of interest here is is not
'How did the hypothetical historical trader do'?
But
'Could the real trader take advantage of this single simple indicator system in real time'?
Take a look at that first trade, where our trader made 63% on his invested money. It is true that large volume spikes in trading volume are often good confirmation statistics for trend traders. It turned out that the first large volume spike marked a new uptrend beginning. But think of the alternative scenario. If the stock price had paused and moved downwards on another leg, that volume jump could equally well be seen as the starting point of a new downtrend, with the 'smart money' bailing out. I think even those with modest mathematical skills will appreciate that a 'pattern' cannot be extrapolated from a single data point.
Even the very simplest pattern (a straight line) requires at least two data points, a beginning point and an end point. Even then such a pattern is tentative until it can be confirmed with a third data point.
Moving back to our example then, our 'volume pattern rule' would only be confirmed as having some value after the third volume spike data point. Don't get me wrong, I am not saying that no real trader could have made trades 1 (63% profit), 2 (56% profit) or 3 (48% profit). Just that no real trader would have made these trades based on the simple three rule system that Phaedrus has outlined. And that it would take until this time to gain sufficient market data to ensure the 'three rule theory' could be verified by back testing.
That leaves the latest and ongoing share price rise in which our trader bought in at 65c and is ongoing as the share price rose to 86c today as the only real time trade that this simple 'three rule system' could take credit for. That gain so far amounts to 36%, which is a far cry from the near 500% that our hypothetical historical trader made.
Still 36% in just a few weeks is a gain not to be sneezed at and is certainly superior to the buy and hold investor who if holding RBD now would have endured the share price slide from the equivalent of $2 to just 86c. This buy and hold negative return has naturally enough been offset by dividends over the years summing to 95cps. IOW the dividends paid per share are higher than the market valuation of the company that is left. Clearly then no serious long term analysis of RBD can ignore dividends, as some who I group as the 'dividend deniers' claim.
But where does this simple 'three rule RBD system' leave us? So far it stacks up quite well against 'buy and hold', even if real returns are likely far less than the 500% claimed. But then who is advocating buy and hold at all costs? In fact such a strategy is just another, albeit very crude, market timing strategy where at some point in the future you assume the company will be worth more than at float time.
Alternatively, the strategy that I use can be best summed up as a 'value averaging strategy'. In simple terms this means ignoring the market completely, but having an investment budget so that you feed in smallish equal dollar amounts into your favourite share(s) every six months (for example). When the share price is low your fixed dollar investment will buy more shares. When the share price is high those fixed dollars will buy less. Thus over time most of your shares will be bought at lower prices without having to predict or rely on the direction of the market.
SNOOPY
SNOOPY, There is none as blind as those that refuse to see. You have a lot of learning to do my friend, open your mind to reality before you go under. Why you persist in your fundamental stupidity blind to the reality of an ever changing market is beyond me. If your analysis was worth anything surely you should have got rid of this dog whose share price is still playing catch up over the last decade. Macdunk
I'm not a holder of this stock and never have been but duncan's post prompted me to have a quick look at recent performance, check a few ratios etc. Current reality is that this stock has been one of the strongest performers on the NZ market! Both in FA & TA terms it's not a dog at the moment and hasn't been in the recent past.
Company bringing forward its reporting date.
Yet another great sign are things are 'clucking' along.
Restaurant Brands result out today. Usually it is a question of 'buy the rumour sell the fact' with these upbeat profit results. Yet with Restaurant Brands the share price continues to climb on the announcement!
The dividend increase in a climate of dividend cuts was I think the unexpected bonus. On an ongoing basis an annual dividend of 7cps represents a gross yield of 12% based on an RBD share price of 87c. That makes the share still cheap, or does it?
Both the Starbucks and Pizza Hut results were worse than I expected. Also no detail about this deal with YUM regarding the future of Pizza Hut. There has been a full year impairment write off of Pizza Hut goodwill totalling $3.7m. But that still leaves $16.4m of PH goodwill on the books. That doesn't gel with a business unit that I have calculated is losing nearly $9m per year, once all of those extraneous overheads are apportioned.
As for 'evaluating some (Pizza Hut store) sales to independent franchisees', does that sound realistic in this business climate? Master franchiser YUM are known for playing hard ball, so how well will tough talking Ted and 'Rocky' Russel stand up to them? According to today's release, in a month we will know the result of this bout.
Staying on the sidelines for now, but may be back with my cheque book in a month or so.
SNOOPY
discl: hold RBD
WE will call it a draw we posted at the exact time, Right a 12% yield try getting that at a bank or finance company just before it goes broke but not RBD people will not stop eating
and drinking coffee even if its only to wash the chicken down the way a head is clear so if the mob don't buy that's there fault as long as they keep sending the div`s the better..
Don'T forget you cant BUY this type of stock in Australia this a NZ special..
Bad news Bricks. The yield just dropped to 11%.
The good news is that is because the share price is now 91c! I always expected RBD to 'come right', but not as fast as this. At 91c the market capitalisation of the company is now $88.4m.
Question: How high does the market cap have to go before RBD is once again back into the NZX50? At that point we should see another round of buying, this time from the index fund managers.
SNOOPY
and hes baaaack :eek:
http://www.*************forum.com/
http://www.*************nz.blogspot.com/
Is Macdunk advocating the sale of an uptrending share? On of the few uptrending shares in the NZ market.
http://ichart.europe.yahoo.com/c/6m/r/rbd.nz
Duncan, once a dog doesn't necessarily mean always a dog! Circumstances change and no uptrend or downtrend lasts forever. RBD's recent enormous volume spike gave us all a "heads-up" for this stock. Some would have bought RBD on that alone, although it is not good practice to act on the basis of a single indicator. Not long after, however, the former resistance at 69 cents was overcome and RBD was in an uptrend. Then came the break of a trendline that had been unbroken for years. The long OBV trendline was next to be broken and a day later longterm oscillators fired off "Buy" signals - again, for the first time in literally years.
There is money to be made in this market, Dunc. Some really good short-term opportunities have been presenting themselves - regardless of what the long-term outlook may be. With due caution and a defined exit strategy there is no reason not to be dabbling. There is such a thing as being too cautious!
http://h1.ripway.com/78963/RBD414.gif
THAT large spike was the AMP 9% and as yet not been answered to the market what a
situation no one except the owners , KNOWS so why don't the PUBLIC..
Maybe a partial answer here Bricks?
---------
Number, class, and type of securities: 166,198 ordinary shares
(119,798 on 15th April 2009;
46,400 on 17th April 2009) :
Owner Name of registered holder of those securities: Diab Investments NZ Limited D.
4: Consideration paid for acquisition:5:
15th April 2009 88 cents
17th April 2009 91 cents
---------
Interesting to see Diab buying *after* the big share price run up. He must consider that for those in for the long term, RBD is still a a good buy at 90c. Of course being a director, he would have been forbidden from buying shares until after the formal announcement of the RBD annual results on April 8th 2009.
On an associated subject, anyone catch 'the Independent' article during the week about the transformation of Pizza Hut in Australia with the intoduction of pasta to the menu? A couple of the stores were even rebranded 'Pasta Hut' for a while. Market leader Dominos in Australia are now struggling to catch up with their own range of pasta products. A solution for the New Zealand Pizza Hut business as well perhaps?
SNOOPY
discl: hold RBD
AMP shares in RBD were sold down to a number of investors, including one of NZ's shrewdest investors. Just need to get a shareholding register to see the before and after placement shareholders.
Directors get criticized for selling shares but when they buy, they are accused of insider trading? Investors shopuld consider following them.
I did, at 63 cents.
Watch next announcement from RBD in next 2 weeks - it will be a goody! A biggie!
The announcement in the next two weeks relates to renegotiation of the franchise fees for half of the Pizza Hut chain, Balance. That has already been well signalled.
Van Arkel has already signalled they might look at selling away some of that network to independent franchisees. But the NZ market is already saturated with Hell Pizza and Domino franchisees wanting to get out. So where are the buyers for all those Pizza Hut stores going to come from? Since we are putting all of the wild cards on the table how about this? YUM are to buy back the Pizza Hut franchise from RBD and operate it in house! A similar thing happened in the UK, in calendar year 2006. From the YUM annual report of that year, page 4:
"I was particularly pleased to announnce that we purchased the remaining 50% interest in 544 Pizza Hut Restaurants in the United Kingdom from Whitbread plc. Pizza Hut is the leader in casual dining in the U.K., which has historically been one of our strongest markets. While KFC is very strong and profitable in the UK, Pizza Hut has had some challenges in recent years with our joint venture structure, and we are confident we will be able to right the ship. We have already established a new management team that's bringing new energy to the business."
Right, we have established that YUM taking a whole swag of Pizza Hut restaurants back in house is not unprecedented. But equally well I think they would only do that if Pizza Hut was in desperate trouble. Arguably in New Zealand Pizza Hut is in this position. We will never know what goes on behind closed doors in these franchise negotiations. But did Creedy/Van Arkel threaten to pull the plug on half of the Pizza Hut chain if YUM wouldn't come to the party in some way? I certainly hope they did play hard ball. For although Creedy and Van Arkel may be tough negotiators, so are YUM.
We long term shareholders remember well the 'great deal' that YUM did selling the Victorian Pizza Hut deal to RBD a few years ago, sweetened as it came out years later with a commitment to more advertising support for RBD. RBD definitely came out second best there. So I will be watching any new deal that RBD has come to with YUM very closely.
The problem as I see it is that if RBD do get out of Pizza Hut, they will have to write off some $20m in goodwill. That will approximately halve their total net assets to something like $20m, while doing nothing for their debt which remains at around $100m. I know such an asset write off would be 'on paper' and not affect the cashflows of the company. But even so, secured bank loans are up for review again in 2010 - which suddenly is next year! So I think a capital raising for RBD might be on the cards, before they 'need' to do something about it.
I bring this up because amidst the euphoria of RBD being one of the best performing shares on the NZ market, some forget about the downside risks. And in the interests of 'Balance', I haven't.
SNOOPY
discl: hold RBD
Snoopy, matey, not sure where you got your numbers from.
Balance sheet from latest report show - net debt at $33.6m (not $100m). Banks are now falling over themselves to lend to RBD. Goodwill totals $23.6m. No breakdown but PH cannot be more than half that. Meanwhile, goodwill on KFC can be restated higher if allowed as the chooks are definitely flying out the door.
Announcement is imminent and imvho, will also show PH turning a profit and that's why insiders (legally) have been buying.
Happy holder and buying more.
I have to admit to being lazy balance by just pulling last years annual report off the shelf and pulling out some rough numbers. So I will have another (closer) look at my figures.
Fair call on my bluster Balance!
Not sure what report you mean Balance. The April 8th 2009 stock exchange profit announcement for FY2009 does not contain a balance sheet.Quote:
Balance sheet from latest report show - net debt at $33.6m (not $100m).
However, it does say:
"Bank debt was down by $8.2 million with closing bank debt of $34.3 million."
which is down from last year's $42.5m (note 16, FY2008 report).
However there will be other liabilities as well. Other liabilities include trade creditors, other creditors and accruals, employee entitlements and indirect and other taxes. Last year that lot amounted to an extra $27.4m.
When a company is evaluated by banks they look at *all* the company's debts, not just the bank loans. So total liabilities as at 28-02-2009 look to me to be close to $61.7m. Further Balance, you should note that eventually *all* of these liabilities have to be paid or refinanced, not just the 'net liabilities'.
We also learn that total assets are now valued at $101.3m. So if we take my figure of total liabilities as correct and your figure, Balance, of goodwill as being correct, that leaves total net tangible assets of:Quote:
Banks are now falling over themselves to lend to RBD. Goodwill totals $23.6m.
$101.3m - $23.6m - $61.7 = $16m
If the goodwill is written off, $16m becomes the net total assets. Stacked up against debts of $61.7m, that would not put RBD in a strong capital position.
There *is* a breakdown of goodwill Balance, on p49 of the FY2008 Annual Report. There you can see total goodwill listed at $21.49m, of which 98.3% relates to Pizza Hut. Furthermore that $20.14m relates only to that part of the Pizza Hut business on which the franchise agreements are being renegotiated right now, because *those* Pizza Huts are the Pizza Huts that once formed the Eagle Boys chain in New Zealand that was purchased lock stock and barrel by Restaurant Brands.Quote:
No breakdown (of goodwill) but PH cannot be more than half that. Meanwhile, goodwill on KFC can be restated higher if allowed as the chooks are definitely flying out the door.
From your comments Balance, I think you have a fundamental misunderstanding of what goodwill is. Goodwill appears on the balance sheet of a company when that company purchases an asset at a higher price than the building blocks of that asset would sell for on the open market. That sounds a bit technical, so let's try a more real example.
Suppose I open "Snoopy's Fast Fouls" fried chicken shop. I spend $500,000 on a block of land and build a dine in restaurant for $1m. A couple of years down the track RBD decides to buy me out to turn it into a KFC and pays me $2m. The difference between the value of my business on the books -$1.5m- and what RBD paid me - $2m- is goodwill that will appear on the purchaser's books. In this case $0.5m.
You might rightly ask, why would RBD pay me $2m when they could build their own equivalent restaurant for $1.5m? Several reasons. First of all good sites, on busy streets with good access are not always easy to get. In buying an existing restaurant RBD would circumvent any planning issues plus obtain the good site thay wanted. RBD would also be buying my customer base, those regulars who come in week after week. That would negate the need to spend lots of promotional money battling it out in a highly competitive market to win customers from other businesses. Thus while the $0.5m in goodwill is intangible in a techical sense, it is very real to RBD because as a result of purchasing my business, RBD are purchasing an income stream over and above the bricks and mortar that I built.
Goodwill can only appear on the books of a business as a result of one business buying another. Thus your statement, Balance, that:
"goodwill on KFC can be restated higher if allowed as the chooks are definitely flying out the door."
could not be more wrong. It is absolutely 100% incorrect.
Of course this may be a moot point because banks are more concerned with cashflows, and goodwill does not affect cashflow. But generally banks will consider a company's cashflow *and* its capital position. There is no argument from me on RBD's cashflow position Balance - it is good. But I do think my point about RBD's capital position - if that goodwill is written off - is valid.
Balance, RBD have already announced their FY2009 annual results (to 29th February) and Pizza Hut is not only making losses, it is making EBIT losses. So your assertion that the upcoming announcement will show Pizza Hut making a profit means that RBD will have to declare that serious mistakes were made in last months announcement. Furthermore for current year guidance, we will have to wait until the end of May before the first quarter of the new year's sales figures are recorded, let alone released. It is impossible for me to conceive that Pizza Hut will be trumpeted as making a profit within the next fortnight in these circumstances. In fact the retired George Bush announcing he is now going to live on Mars is IMO more likely than what you are predicting. Are you sure you are not suffering from a little irrational exhuberance, Balance, as regards your shareholding in RBD?Quote:
Announcement is imminent and imvho, will also show PH turning a profit and that's why insiders (legally) have been buying.
Don't get me wrong, I think you will do well. But I don't think the sky is a blue as you make it out to be.
SNOOPY
discl: a fellow RBD shareholder, but not willing to buy more until after 'the announcement'.
Snoopy ..... all half year stuff including financial accounts are on NZX website ..... not part of the public announcement but as attachments
You can view for free if you sign up to My NZX at nzx.com
balance sheet looks like this
Group
Note 2009
$'000
Non-current assets
Property, plant and equipment 71,794
Investments in subsidiaries -
Intangible assets 24,689
Total non-current assets 96,483
Current assets
Inventories 2,098
Other receivables 1,689
Income tax receivable -
Cash and cash equivalents 787
Assets classified as held for sale -
Total current assets 574
Total assets 101,057
Equity
Share capital 25,622
Reserves 148
Retained earnings 11,292
Total equity 37,062
Non-current liabilities
Provisions and deferred income 4,091
Loans and finance leases 34,414
Deferred tax liability 359
Total non-current liabilities 38,864
Current liabilities
Bank overdraft -
Income tax payable 751
Loans and finance leases 285
Creditors and accruals 22,121
Provisions and deferred income 1,617
Amounts payable to subsidiary companies -
Liabilities associated with assets classified as held for sale 7 357
Total current liabilities 131
Total liabilities 63,995
Total equity and liabilities 101,057
Better still, simply go to RBD''s website. All the infor is there.
Cheers.
Balance .... just the NZX filing appear quicker than waiting for RBD to put them up on their website
Thanks Winner for ferreting out those updated 2009 figures for me. I use stocknessmonster as my main internet source of company news and generally wait until the printed report hits my hot little paws before diving into the real nitty gritty. Obviously stockness are a bit shy on NZX detail. Incidentally those latest results are the *full* year results for RBD, the end of year balance date having changed to the end of February some years ago.
Actual liabilities $64.0mQuote:
Liabilities as at 28-02-2009 look to me to be close to $61.7m.
"Bank debt was down by $8.2 million with closing bank debt of $34.3 million." is still right
Correcting the figuresQuote:
So if we take my figure of total liabilities as correct and your figure, Balance, of goodwill as being correct, that leaves total net tangible assets of:
$101.3m-$23.6m-$61.7m = $16m
If the goodwill is written off, $16m becomes the net total assets. Stacked up against debts of $61.7m, that would not put RBD in a strong capital position.
$101.3m-$24.7m-$64.0m= $12.6m of tangible assets. That is compared to $64m in liabilities. So the updated 2009 figures show that the net debt to tangible asset ratios are even worse than I thought!
Updated results have not changed my opinion on RBD capital risk Balance. In fact they have strengthened it. From p49 of the FY2008 annual report, here is the bit that has me particularly worried when calculating the value of that goodwill of Pizza Hut New Zealand on the books:Quote:
There *is* a breakdown of goodwill Balance, on p49 of the FY2008 Annual Report. There you can see total goodwill listed at $21.49m, of which 98.3% relates to Pizza Hut. Furthermore that $20.14m relates only to that part of the Pizza Hut business on which the franchise agreements are being renegotiated right now.,
I do think my point about RBD's capital position - if that goodwill is written off - is valid.
"Cashflows were projected on a three year strategic business plan as approved by the board of directors. The cash flows were based on sales growth remaining flat year on year for 2008/2009 (actual result was revenue*down* 9.5%), a decrease of 2.9% in 2009/2010 due to store closures (actual result needed will be *growth* of 7.3% to maintain those FY2008 balance sheet goodwill values) and a further 4.5% increase in sales in 2010/2011."
Of course, RBD have already admitted that they won't meet these targets. That is why a further write down of Pizza Hut goodwill totalling nearly $5m in FY2008/2009 has been made.
But I think that even with the current year write downs, RBD are budgeting on strong sales growth for Pizza Hut. Can they deliver? My guess is that they can't and we shareholderrs are looking at more goodwill writedowns this financial year. The announcement on the future outlook of Pizza Hut in the next couple of weeks is going to have to be very bullish, just to 'break even' in accounting terms. In short, I am still worried.
SNOOPY
discl: hold RBD
Director keep buying and moping up stock.
$1.00 very soon.
Dis. Bought some more.
The chickens sure are tasty!
96 cents and 4 cents away from $1.00. Director buying with ears pinned back. Expecting good news?
Director Danny Diab continues to mope up stock - buying shares at over 90 cents probably from institutions who got their shares from AMP at 57 cents - a huge 61% premium.
Who will prove to the clever one then?
Buy when insiders buy and sell out very fast when insiders are trying to get out - refer APX.
This is part of the RBD results release on 8th April
"Franchise Renewals
The company is close to finalising an agreement with Yum that will provide a positive way forward for the Pizza Hut business. An announcement is expected to be made within the next month."
It is now 9th May (more than a month later) and no announcement, so my worry has increased! Unless something comes through within the next few days I predict that tough tackling Ted and rucker Russel have gone down in the scrum and will shortly be escorted off the field by their Mum (or is that YUM?) to have their bloodied noses attended to.
They will have been taught the same lesson that other Pizza Hut franchisees the world over have learned.
"When the negotiations get tough, don't think you can outsmart your Mum (YUM)."
SNOOPY
MY spies tell me the new 4 square pizza is going great guns and has put more customers back into the Kapiti Road shop , Paraparaumu been one off the worst but now back to LIFE..
Well, it happens tomorrow ... pastahut.
Will be a real winner in times like now - variety, tasty and above all, filling.
Bring it on!
if New Lynn KFC is any guide,they are creaming it...cars backed up thru the drive in every evening!
Sadly, it is the staple food of the lower socio-economic groups and KFC is not exactly healthy. High fat content however means it's very filling and very tasty.
Was told by an airport staff that the latest export from NZ to the Islands is KFC - frozen in polythene boxes to be warmed up on the other side. $250 per pack and they cannot get enough of it over there ... now why didn't I think of that as a business idea!
Pasta to the Islands next?
I don't think it's all that new. I used to work in Otahuhu until a couple of years ago and boxes were flying (excuse the pun) out the door to the Islands from the KFC there. And when lining up to check in at the airport half the luggage on the plane to Rarotonga is KFC. And why not? A nice piece of KFC is great.
Sounds like the trend has accelerated as I am told it's unbelievable the quantity being 'exported'. That Ted Van Arkle is a good operator and know how to maximise an opportunity. He made a huge success of Foodtown/Countdown and looks like he is going to do the same with RBD. Amazing what a difference good management can do. Lucky it wasn't sold to private equity a couple of years ago.
Here's to having pasta this week!
Looks like Hell is going to get back to being proper competition for Pizza Hutt.....
Warren Powell, Callum Davies and Stu McMullin, who first opened Hell Pizza in 2003, have bought the New Zealand franchise back from the local owners of Burger King.
Hell Pizza operates in a different market segment from PH.
Watch PH take back market share when the stores are franchised out.
Just tried one of the pasta dishes. Only two available at the moment. Chicken and mushroom or meatballs and cheese and only in the $17.99, serves four, size.
VERY nice! Prefer it to pizza. Should be a goer I'd say, and my local store said last night there seemed to be a bit of 'pasta for the ladies and pizza for the blokes' going on. Hopefully the result will be increased sales all round.
Nice one Mr Diab. I Hope the shares he continues to buy look cheap from further down the road.
Hello from London, where I have sampled the UK 'Pasta Hut'. Obviously a very different product as all the Pizzza Huts here seem to be restaurants. Ordered a salmon pasta, which was penne pasta in a white sauce with a layer of grilled cheese on top served with a small side salad and bread. Not bad and two out of the ten customers who came in while I was there ordered the pasta and no pizza.
SNOOPY
From todays Herald article about the Hell lads and why they think things went wrong at Hell/what they are going to do to get back on top.
http://www.nzherald.co.nz/business/n...ectid=10572743
From Australia.
http://www.smh.com.au/lifestyle/life...0518-bcpb.html
Would you like pizza with your salt?
MORE than 90 per cent of pizzas sold by takeaway chains and supermarkets contain levels of salt so high they are a danger to health, a report has found.
A survey of salt levels in 115 takeaway pizzas produced by Pizza Hut, Domino's and Eagle Boys found more than two-thirds contained double the daily recommended amount of salt for an adult.
The pizza with the highest sodium was Pizza Hut's BBQ Meat Lovers, which contained 13 grams of salt - 327 per cent of an adult's recommended daily amount.
the salt makes ya wanna buy a bottle of coke to go with ya pizza :eek:
Tried their pasta last night, not too bad. In fact, it is quite nice for a fast food joint.
i think that it would be best to buy shares in fast food restaurants as they will probably recover the fastest and people are buying more of them because they do not wanna spend at expensive places
$1.06 and stock has dried up.
Next target - $2.00.
And it will reach there.
Aah yes, I remember the talk of here comes $3.00 - many years ago (when it was at $2.20). If only I'd sold then.................
It will take the market to wake up to the massive turnaround happening in RBD as the market has been disappointed so often in the past. The market and RBD's sp hav been reacting to ever improving results as they are announced.
The smart money has been buying before the results.
WELL with a notice out today it appears that RBD will run PH for another 10 + 10 years
Sell any thing that`s not making a profit get a smaller chain to boot this is profit talk
and good to hear after all these years of down hill so the wheel has turned for the better
even W69 mite even BUY ,yet..
Buying demand by index mangers as they scramble for shares as RBD rockets back into the NZX50? 1st July was the RBD index inclusion date.
This change was notified some time in advance, but how long do index mangers have to get their house in order? Anyone know?
To put some 'balance' back into this thread, a few brokers are now listing RBD as an 'outperform'. But where were they when the share was trading at 80c and below?Quote:
Next target - $2.00.
And it will reach there.
I have just updated my Warren Buffet style overview of RBD on the other channel. The unfortunate trend is the better KFC looks, the worse Pizza Hut looks. Pizza Hut's real (after administrative overhead) performance was a $9m loss in FY2009, or nearly $7m if you ignore the goodwill writedowns. Whichever way you look at things though, Pizza Hut losses are running at record highs.
My 'divisional analysis' requires certain assumptions about the way head office expenses and interest charges are allocated inside head office across the three opearting divisions. One way of checking how good my allocation assumptions are is to compare the tax that the company really pays to what I calculate it pays. I was in close agreement with the official figures up until FY2006. In 2007 I was out by $2m and by 2009 I was out by $5m (estimated tax paid $8m, actul tax paid $3.3m). One explanation is that the KFC rebuild program began in earnest from FY2006 and that more human and capital resources have been allocated to the KFC rebuild than I have assumed. Nevertheless I believe that my underlying assumption over the long term, that resources allocated should be proportional to business unit turnover, is sound.
An 'underlying profitability' of $6.5m, or 6.7cps gives PE of 15 using a share price of $1.04.
$1.04 is probably fair given the improvements that should be possible within the business.
Eliminating Pizza Hut losses would boost underlying earnings to around $12.6m (13cps) - say five years out. At that point, given the poor record of this company's growth into other markets in the past, I would pick real growth to stop dead.
I would think KFC NZ alone would justify a 'long term' PE ratio of 11 to 13. So in five years time we might expect a 'fair value' RBD share price of $1.43 to $1.69. That's a nice improvement on today's share price, but still some way short of $2.
Like you Balance I do believe the RBD share price will get to $2. However there my not be anyone who currently posts on this forum still alive to see that day.
SNOOPY
discl: hold RBD 'long term', and now showing a capital profit on my holdings (at long last)
Chairman expects profit to be around $12m this year. That puts stock on a PER of 8.4 times.
Turnaround of PH should boost profit to at least $15m year after. Then, there's a couple of new businesses RBD is exploring to launch into the market - bought on EBITDA multiple of 5 times.
Market will get excited and put stock on PER of 14 times to price in growth prospects, strong cash flow and defensive profile. Stock is at $2.00 plus.
Heck, nobody gave the stock a chance of seeing $1.00 again last year.
That is $12m *excluding one off items* Balance. Now ordinarily I would agree with you and forget about these 'one off items' as not being relevant to the ongoing business plan. However, in 2007 there was a one off Pizza Hut NZ goodwill write off of $1.142m.
In 2008 there was a 'one off' Pizza Hut NZ goodwill write off of $1.187m.
In 2009 there was a 'one off' Pizza Hut NZ goodwill write off of $3.698m.
No further 'one off' write offs are anticpated, provided total PH sales grow between 2.8 and 4% per year for 2010-2012. Management are assuming reduced operating expenses going forwards. Total first quarterly sales for 1Q2010 Pizza Hut were up 2.4% on the prior year to $15.5 million. But annualise that figure and you get sales of $62m which is down another 4% on last years absolutely disastrous figures!
The projected growth figures take into account the closing of 8 red roof restaurants and 3 delcos. So with Pizza Hut outlets dropping from 93 to 82 over the next three years, same store outlet sales will need to grow between 3.2 and 4.5 percent per year every year for the next three years.
Balance, do you still want to bet against there being another 'one off' write off Pizza Hut NZ goodwill in FY2010?
The 'turnround' has been going to happen since June 2006 after returns first dropped. For FY2005, EDITDA for Pizza Hut ws $13.63m. For FY2009 $2.77m. Pizza Hut has a huge mountain to climb.Quote:
Turnaround of PH should boost profit to at least $15m year after.
Please tell us more! What new businesses?Quote:
Then, there's a couple of new businesses RBD is exploring to launch into the market - bought on EBITDA multiple of 5 times.
Bricks and I were buying, even if no-one else was.Quote:
nobody gave the stock a chance of seeing $1.00 again last year.
SNOOPY
RBD can write-off all the goodwill of KFC and PH for all the market cares.
What's the real value of goodwill?
As for other businesses - plenty out there now that RBD is rid of its problem child. I guess the risk is that RBD does another PH Victoria.