Domino's Pizza Enterprises Ltd.

DPM Details
 
During H1FY17, Domino's Pizza Enterprises Ltd (ASX: DPM) reported 9.4% yoy growth in Same Store Sales (SSS) revenue driven by business improvement across Australia, New Zealand, Belgium, France, Netherlands, Japan and Germany. Further, growth was led by increased customer counts due to the launch of Taste the Colour menu in Australia and New Zealand and improved technology across all markets.  Notably, 26.8% yoy growth in Network Sales to more than $1 billion ($1,166.1m) for the first time in the company’s history, driving a +21.1% increase in group revenue to $539.4m.  Domino’s ANZ network delivered again in H1 17, with +23.9% growth in underlying EBITDA to $55.2 million, with 17.2% growth in revenue to $150.1m. Trading results following the introduction of a Sunday surcharge to allow for higher wages for employees working on Sunday also aided the growth. The Sunday surcharge followed extensive testing of the new pricing model in multiple markets saw stable or increasing sales, prior to a national roll-out.  The company has upgraded both underlying EBITDA and NPAT guidance for FY17 to be in the region of +32.5% growth, following a +33.6% lift on the prior corresponding period (pcp) in underlying EBITDA to $116.2m, and a +30.8% increase (pcp) in NPAT to $59.7m.

Recommendation: DMP stock fell over 15% in the last six months, while it was down 21.2% in the last one year (as on June 16, 2017). Despite the modest performance in H1FY17, given the rising competition and margin pressure in the industry, we give an “Expensive” recommendation on the stock at the current price of $54.88


DMP Daily chart; (Source: Thomson Reuters) 

Retail Food Group Limited

RFG details
 
Acquisition of Hudson Pacific to expand the RFG’s foot print: For H1FY17, Retail Food Group Ltd (ASX: RFG) has reported 9.2% yoy growth in revenue at $161.9 million and 17.3% growth in Net Profit after Tax (NPAT) to $33.5 million, while affirming the FY17 underlying NPAT guidance of 20% growth. Notably, RFG has finished the transformative Hudson Pacific Corporation (HPC) acquisition and granted nine new licenses in H1FY17. Further, with the acquisition of Hudson Pacific, RFG evolves as a full-service food and beverage company, possessed of a diversified and global operating platform. The company has commissioned 138 new outlets across its domestic and international networks and closed H1FY17 with a global footprint of 2,556 outlets. A 19% increase in renewals approved by the Group (118 vs PCP:99) also demonstrated robust appetite for the company’s brand systems within the domestic franchise partner community.  International franchising operations have become a key ingredient of the company’s success, driving growth across an increasingly diverse network of territories. During the H1FY17, RFG granted an additional 9 licenses, increasing its network of international licensed territories to 78 across 10 brand systems.

Although, the stock has fallen 24% over the last six months (as on June 16, 2017), there seems to be some room for growth led by latest developments.We give a “Buy” recommendation on the stock at the current market price of $ 5.16
 

RFG Daily chart; (Source: Thomson Reuters)

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