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Highlights

  • Collins Foods operates franchise for Taco Bell and KFC in Australia and is also a corporate franchisee for KFC in Germany and Netherlands
  • In first six weeks of 2HFY24, KFC same store sales increased by more than 2.9% in Australia
  • Challenger Managed Investments has the maximum stake in CKF with a shareholding of nearly 7.71%

Collins Foods Limited (ASX: CKF) is a franchise operator for KFC and Taco Bell in Australia. Also, it is a corporate franchisee for KFC in the Netherlands and Germany. The company is committed to continuous improvement in all facets of its operations and aims to achieve its mission of "Enhancing Restaurant Experiences."

The ASX-listed company registered more than 14% YoY surge in its revenue from continuing operation in the first half of the financial year 2024 (1HFY24). The growth in revenue from continuing operations was driven by the opening of new restaurants and sales growth in same stores. However, the growth was partially offset by inflationary pressure.

During the reported period, NPAT increased by 28.7% YoY to AUD 31.2 million, operating cash flow jumped 44% YoY and net debt was reduced. The period saw growth across all business units and the restaurant footprint was expanded with the addition of five new units.

The company continued the momentum of positive performance in the 2HFY24 as in the first six weeks of 2HFY24, CKF witnessed sales growth. KFC same store sales increased by more than 2.9% in Australia, 8.1% in the Netherlands and 8.5% in Germany over the previous corresponding period. Taco Bell saw 8.7% YoY growth in same store sales.

Top 10 shareholders of CKF

The top 10 shareholders of CKF have around 41.15% shareholding in the firm, while the top four have nearly 25% shareholding. Challenger Managed Investments Ltd. and Perkins (Kevin William Joseph) have the highest stake in the company with a shareholding of ~7.71% and ~6.16%, respectively.

Recent business update

On 27 March 2024, the company notified that Challenger Limited and related entities, and Apollo Global Management, Inc, and its controlled entities have increased their voting power in CKF from 6.59% to 7.71%.

The company had posted on 5 February 2024 that its MD and CEO, O’Malley took a leave of absence for minimum three months, quoting some personal emergency. Meanwhile, existing non-executive director and former CKF CEO, Kevin Perkins has been appointed as interim CEO.

Outlook

CSK focuses on investments in digitization, designing, opening of new restaurants, innovation and enhancing customer experience. The company is considering initiatives which can handle short-term margin pressure and at the same time strengthening its long-term efficiency and sustainability efforts.

In FY24, KFC Australia expects EBITDA margin to remain same as FY23 and improvement is expected in FY25. Meanwhile, Taco Bell is expected to report positive EBITDA at the restaurant level.

Share performance of CKF

Shares of CKF closed 0.69% higher at AUD 10.15 apiece on 8 April 2024. With this, in the last one year, CKF’s share price surged by 24.54% and in the last three months, it tumbled by 14.85%.

The 52-week high of CKF is AUD 12.55, recorded on 11 January 2024, while the 52-week low is AUD 7.50 apiece, recorded on 20 June 2023.

CKF Daily Technical Chart, Source: REFINITIV

Note 1: Past performance is neither an Indicator nor a guarantee of future performance.

Note 2: The reference date for all price data, and currency, is 08 April 2024. The reference data in this report has been partly sourced from REFINITIV.