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RBD - RESTAURANT BRANDS NEW ZEALAND LIMITED


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This looks to me like a strong result for Restaurant Brands, particularly in the area of free cashflow - appears to be running ahead of reported NPAT. NPAT was slightly ahead of my expectations. Overall, the company now appears to be in a position to support it's continue capex requirements and continue to pay dividends at a reasonable level while continuing to reduced debt. Running into some headwinds as far as ingredient prices and minimum wages, but then so is the "competition" i.e. the cost of ingredients for home cooking and how people value their own time spent preparing meals.

 

Could be a tentative "buy" at this point for a short term re-rate in P/E - maybe 20% gain in a flat market? Given their polarised history of "good year, bad year" stuff and ongoing negativity regarding service, it doesn't yet have the feel of a "buy and hold".

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  • 5 months later...

Didn't get the 20% gain on RBD that my last post predicted - the most that ended up being available was a quick 10.8% from 82cps to 92cps before the plummet continued and now only 63cps.

 

Not a great half year in some respects, but the accounts are still solid with cash flow remaining steady. Dividend retained giving a total dividend of 6.5cps, franked to 30%. At 63cps, gross yield is therefore 14.7%.

 

At this point, the company looks to be in a sustainable position. Short term, they have the ability to slow capex to maintain cashflow, but I would be wary if investment was reduced below depreciation for more than 12-18 months.

 

Worth keeping on the watchlist for a possible TA entry.

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