Forum Archive Index - June 2001

["tennyson@caverock.net.nz" <tennyson@caverock.net.nz>]

> 
>We need an update on RBD. Some of us may want to buy in while there
>is a lull.
> 
>
What lull Gerry?   The share price has been on a steady upward curve 
for months ;-) 
>
>
>Snoopy, you are the recognized expert on this stock, could you
>please give us an update on profits and dividends for the years
>ending: 30/11/2001 and ditto, 2002.
>
>
I don't have any news that is new to the market.   RBD are currently 
digesting the Eagle Boys Pizza chain.  Pizza has long been the weak 
link in the company's food chain and by swallowing their most 
dangerous competitor they hope to change this.

The danger for this company, as I see it is, debt.  The Eagle 
Boy banquet was funded by debt.

If we look at Buffet's debt measure: (Long Term Liabilities/Net 
Earnings), then the 2000 year RBD results gives us a figure of:

$79.4m/$9.8m= 8.1 years

Buffet likes a figure of 3 years or less for this, so on the 
surface, debt looks a little high.  Of course, this is assuming 
basically no contribution or economies of scale from the acquisition 
of Eagle Boys, which may be a little conservative.

Profit last year was 9.8million vs a dividend payout of 9.2million.  
So that doesn't leave much money left over to pay down their debt.

My prediction, no dividend increase for many years to come!.

Nevertheless 10c per share on $1.50 with no more tax to pay is an 
equivalent to a term deposit yield of 10.1% (based on a tax rate of 
33%)!   Try to get that from a bank!   This is a pretty powerful 
argument to at least have some RBD in your portfolio, I think.

Because RBD is an interest rate sensitive share, if there was 
evidence their debt was coming down, and interest rates stay down, 
you might expect their yield to drop to 8% or so, which implies a 
share price of $1.88.   But I would see this sort of price as pretty 
well tops in the medium term.

For more information on RBD please refer back to my posting on the 
focus investment group on or about March 5th 2001.   I think it is 
still current. 
>
> 
>How about giving it a go please- it will keep your mind of Air!
> 
>
Done, and with Air NZs Freedom Air cutting out in flight meals there 
is more potential profit for RBD when the hungry passengers arrive 
at their destination.   As you predicted Gerry, I'm still an AIRhead.
SNOOPY



---------------------------------
Message sent by Snoopy 
e-mail  tennyson@caverock.net.nz
on Pegasus Mail version 2.55
----------------------------------
"Dogs have big tongues, so you can bet they don't 
bite them by accident"


----------------------------------------------------------------------------
http://www.sharechat.co.nz/          New Zealand's home for market investors
----------------------------------------------------------------------------
To remove yourself from this list, please use the form at
http://www.sharechat.co.nz/forum.shtml.