Retail Food Group Ltd

RFG Details
Strong result with rise in dividend: Retail Food Group Ltd (ASX: RFG) has reported its 1H17 Net Profit After Tax (NPAT) of $33.5m, which is an increase of 17.3% over the previous corresponding period (PCP). There was a 15.9% rise in EBITDA to $56.6m against 1H16 figure of $48.9m. RFG also increased the basic EPS to 19.6cps from 1H16 EPS of 17.5cps. The interim dividend per share was raised by 13.5%. Further, the 1H17 grant of 9 new licences led to 78 international licensed territories while 138 new outlet commissioning extended global footprint to 2,556 outlets. There has been a 19% increase in renewals approved by the group and this represented RFG’s robust appetite for its Brand Systems within the domestic Franchise Partner community. The acquisition of Hudson Pacific Corporation, which got completed in September 2016, is considered to bring long-term growth and is said to drive evolution of RFG into a genuine full service food and beverage company. 

1H17 Results (Source: Company Reports)
 
RFG has also extended $40m to Senior Debt Facility that increased the headroom to c.$120m. The company has attained considerable momentum during the 1H17 and has highlighted a positive FY17 outlook with guidance of c.20% underlying NPAT growth being maintained. RFG is aiming to achieve additional acquisitive growth based on the opportunities available. In the last six months, the stock has fallen 23.93% (as at March 07, 2017). We give a “Speculative buy” at the current price of $ 5.37

 
RFG Daily Chart (Source: Thomson Reuters) 

Domino’s Pizza Enterprises Ltd

DMP Details
Outstanding performance in ANZ and Europe: Domino’s Pizza Enterprises Ltd (ASX: DMP) came out with its H1 17 results wherein network sales rose 26.8% to $1,166.1m while revenue surged 21.1% to $539.4m. DMP witnessed a 33.6% rise in EBITDA to $116.2m and NPAT (after Minority Interest) grew by 30.8% to $59.7m. The result helped the company to raise its EPS by 28.6%, while interim dividend of 48.4 cps (50% franked), up 39.5% on H1 16, was declared. DMP has added about 76 stores to the network in H1 17. DMP’s ANZ segment delivered outstanding EBITDA growth of 23.9%, while underlying EBITDA growth was exceptional in Europe at 99.7%. On the other hand, there has been a material impact on Japan Same Store Sales, SSS (-4.7%), and profits arising from the 27^th week falling into H2 17. The company also reported for high charges in terms of one-off costs in H1 17 owing to Germany conversion and integration, Pizza Sprint conversion and integration, and French Commissary relocation. 

Guidance (Source: Company Reports) 
 
DMP aims to accelerate growth through network expansion, leveraging innovation and acquisitions, and has reaffirmed future outlook of 4,650 stores by 2025. The company has also been positive on its H2 17 trading update with strong group SSS. Although the stock has fallen 25.34% in last six months (as at March 07, 2017), the stock is still trading at a high level. Further, there have been concerns over recent allegations about Domino’s franchisee employees being underpaid. In fact, the company has removed about four franchisees operating seven stores at the back of breach of employment obligations.We maintain an “Expensive” recommendation at the current price of $ 55.89

 
DMP Daily Chart (Source: Thomson Reuters) 

Collins Foods Ltd

CKF Details
Entry into KFC business in Germany: Collins Foods Ltd (ASX: CKF) in December 2016, via its wholly owned subsidiary, Collins Foods Germany Ltd, completed the acquisition of 11 KFC restaurants in Stuttgart and Dusseldorf from Kentucky Fried Chicken. For HY17, the group reported a revenue rise of 4.7% to $282.5m while the same store sales for KFC was down 0.6% against the 5.2% rise in HY16. Underlying Net Profit After Tax surged 17.2% to $16.8m over HY16 NPAT figure of $14.3m. Even the net operating cash flow surged 10.5% due to sale and margin growth in the KFC business. CKF’s Sizzler business delivered improved EBITDA with an increase of 27.3% on HY16 at the ack of improved same store sales growth. The company’s interim dividend was declared at 8 cents per share, indicative of a 33.3% rise. Given the trading conditions, we believe that the stock is “Expensive” at the current price of $ 5.89

 
CKF Daily Chart (Source: Thomson Reuters)

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