Collins Foods Limited

Decent Outlook: Collins Foods Limited (ASX: CKF) has lately declared that one of its directors, Mr Graham Maxwell has disposed 416,269 shares of the company in an off-market transfer to Maxwell family investments Pty Ltd as trustee for nil consideration as on 29 January 2019. For the HY ended 14 October 2018, the company had reported revenues of $411.0 million, reflecting a rise of 27.6% compared to the previous corresponding period. The underlying EBITDA for the half-year came in at $53.7 million, witnessing a rise of 31.7% on pcp. This growth was well-supported by the rise in total revenues combined with disciplined business controls.
 

CKF’s Financial Highlights (Source: Company Reports)
 
What to Expect From CKF: As regards the priorities for the second half of FY19, KFC Australia will concentrate upon the broadening of the home delivery network along with the expansion of the digital platform.KFC Europe will try to derive benefit from its enhanced value proposition and greater brand awareness. With respect to KFC Europe, the management will also focus on uplifting operational excellence to enhance the customer experience. The company is committed towards establishing and building the Taco Bell brand in Australia & is prepared for the opening of 10 restaurants in the calendar year 2019.
 
The stock price has risen by 13.46% over the past six months and is trading slightly towards a 52-week high level of $7.350. And, the overall liquidity position seems to have improved. This is evidenced by higher cash and cash equivalents as on reporting date than the prior reporting period thus, providing headroom for further growth.
 
Hence, considering the decent growth ahead and looking at its current trading level, we give a “Hold” recommendation on the stock at the current market price of $7.130 per share (up 4.392% on 26 March 2019).
 

Domino's Pizza Enterprises Limited

Online Sales Growth Witnessed: Domino's Pizza Enterprises Limited (ASX: DMP) has recently disclosed that Bennelong Australian Equity Partners Ltdceased to be a substantial holder of DMP since 22 Mar 19. The Bennelong Australian Equity Partners Ltdchanged its relevant interest in the company by selling 136,572 Ordinary sharesof the company.

The company witnessed a double-digit global sales growth for the Half Year ending 30 December 2018. The global food sales rose by more than 14.6% to reach $1.43 billion for the period. This rise was achieved on the back of robust online sales growth of around 16.5% as well as ANZ & Europe – Network Sales growth which was +6.2% & +17.4%, respectively.


DMP’s Global Sales Trajectory (Source: Company Reports)
 
As regards the outlook for H2 19, the management has guided that it expects same store sales for the full year to be within guidance, at the mid-to-lower end of the +3 to 6% range. As a result, EBIT is expected to be at the lower end of guidance of $227m-$247m. As a result of renewed confidence in Japan and updated modelling in Belgium, the company has upgraded its group future store outlook to 4,900 (+250 stores) by 2025-2028. Net Capex is expected to be within guidance of $60-70m, including the benefit from the continued sell-down of the Franchisee loan book.

The net margins for the period ended 30 December 2018 has fallen to 7.5% from 10.5% in the pcp indicating a failure in converting its top line growth into bottom-line. The stock price has fallen by -19.57% over the past six months while delivered 0.99% return in the past three months which indicates that the stock is quite volatile.  Moreover, the DMP’s stock remains shorted share on ASX among peers as per the ASIC report of 20 March 2019. It is indicative of over 9.60% of short position. As a result, we have a wait and watch stance on the stock at the current market priceof $42.070 per share (up 3.113% on 26 March 2019).  

Disclaimer
 
The advice given by Kalkine Pty Ltd and provided on this website is general information only and it does not take into account your investment objectives, financial situation or needs. You should therefore consider whether the advice is appropriate to your investment objectives, financial situation and needs before acting upon it. You should seek advice from a financial adviser, stockbroker or other professional (including taxation and legal advice) as necessary before acting on any advice. Not all investments are appropriate for all people. Kalkine.com.au and associated pages are published by Kalkine Pty Ltd ABN 34 154 808 312 (Australian Financial Services License Number 425376). The information on this website has been prepared from a wide variety of sources, which Kalkine Pty Ltd, to the best of its knowledge and belief, considers accurate. You should make your own enquiries about any investments and we strongly suggest you seek advice before acting upon any recommendation. Kalkine Pty Ltd has made every effort to ensure the reliability of information contained in its newsletters and websites. All information represents our views at the date of publication and may change without notice. To the extent permitted by law, Kalkine Pty Ltd excludes all liability for any loss or damage arising from the use of this website and any information published (including any indirect or consequential loss, any data loss or data corruption). If the law prohibits this exclusion, Kalkine Pty Ltd hereby limits its liability, to the extent permitted by law to the resupply of services. There may be a product disclosure statement or other offer document for the securities and financial products we write about in Kalkine Reports. You should obtain a copy of the product disclosure statement or offer document before making any decision about whether to acquire the security or product. The link to our Terms & Conditions has been provided please go through them and also have a read of the Financial Services Guide. On the date of publishing this report (mentioned on the website), employees and/or associates of Kalkine Pty Ltd do not hold positions in any of the stocks covered on the website. These stocks can change any time and readers of the reports should not consider these stocks as advice or recommendations.