There's no need for introduction for this company, KFC is loved but all generation and regardless any race, Malaysian enjoys eating their product. For me, i do enjoy eating KFC once a month, too much fat and calories..need to watch my weight. :p
Anyway, according to the data from annual report, the number of restaurant especially for KFC has risen year by year. This is important as other than higher same restaurant sales, more new branches at strategic location is vital to fuel their future growth.
KFCH has personally being invited by KFC parent's, YUM brand to operate KFC restaurant in Pune state of India, which i think its a great compliment to current management team. or else, definitely they will no invite them right.With acquisition of Kernel Foods Pte Ltd, KFCH has officially spread their wing to new territory, India which could offer good earning growth potential.
Balance sheet is average but safe, not bad but not at impressive level. Dividend yield also not attractive, but its understandable as they need to retain earning for future expansion(restaurant), but their business is very resilient despite even during crisis in 2007~2008.
5 years revenue CAGR is 9.78% and the profit margin is quite consistence, at range of 5.6~6.5%. The average 5 yeats margin is around 5.9%, but looking at current infaltion rate, i think 5.8% is quite safe already.Total revenue for FY2010/11 and FY2011/12 i think should be around R
M2.53bn and RM2.79bn, while net profit should come around RM146.90m and RM1.61.95m. Total EPS est FY2010/11 & FY2011/12 is 0.185cts and 0.204cts. So, at current price of RM3.49, KFC is trading at forward PE 18.8 and 17.1. I think its quite expensive at current level. I think its safe to buy around RM3.10. However, the estimation is done without factoring in new business in India as the management has not done any earning target from this new acquisation. So, if we factoring in India business and it's growth potential, i think worth to buy > RM3.10~RM3.20.
Despite a recent takeover saga, with or without acquisition, KFC is still a great growth stock to invest in but not at current price..IMO.
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