Forum Archive Index - September 2003

["Morgy 40" <morgy40@hotmail.com>]

Snoopy

I believe that you have held this shareholding for quite some time if my 
memory serves me correctly, am I right ?.

Regards

Morgy



>From: "tennyson@caverock.net.nz" <tennyson@caverock.net.nz>
>Reply-To: sharechat@sharechat.co.nz
>To: sharechat@sharechat.co.nz
>Subject: [sharechat] RBD Outlook for FY2004
>Date: Wed, 24 Sep 2003 19:36:02 +1200
>
>The story so far....
>
>Captain Jim Collier has deserted, and has set off in his row-boat
>across the Tasman.   First mate and KFC manager Chris O'Reilly has
>skipped the ship in another direction.   The Domino pirates are
>threatening an all out attack with Pizzas.....
>
>Meanwhile, back on board, interim skipper Vicki Salmon oversees a
>ship 'taking on water' in the form of sharply higher utility prices and
>pre-emptive price promotional strikes.   Salmon is down in the hull
>desperately bailing with a bucket so that the full year results will be
>able to be spun with minimum shabbiness, come announcement date.
>Yet when she returns up on deck to keep the watch and drink coffee,
>gold sovereigns start trickling out from below.  The hold has been
>holed!
>
>Disturbing stuff.   The market does not like turbulence, so it comes as
>no great surprise that the good ship RBD has been sailing south this
>year.   However, as investors we cannot profit by re-running old pirate
>films in our heads.   The only question that matters to us is where the
>good ship RBD will go from here.
>
>''Skipper Salmon''  has told us not to expect too much.   Rising utility
>prices will take their toll she says.   I presume she is principally 
>talking
>about power prices here, given the way all our power bills have gone
>up.
>
>How much power would an RBD restaurant use?   Is 6kWh over 12
>hours a good daily estimate?  That makes 48kWh per day or
>
>365x48kWh=17,520kWh per restaurant per year
>
>If RBD are paying an extra 2c per unit that means the power bill blows
>out by
>
>0.02x 17,520kWh = $350 per year.
>
>Increase that effect over the 262 stores that RBD owns and we are
>talking $90,000 per year.    That boosts costs over the 94.815million
>shares on issue by 0.1c per share (one tenth of a cent).    Compare
>that to the $5m RBD will *save* per year from July 2004 (which
>equates to just over 5c per share)  and the power price rises are put
>into perspective.  A 5c chicken cost saving per share will go straight to
>the bottom line as a 3.3c per share increase in profit.  That won't help
>RBD in FY2004 but it must be confidence inspiring as they go into
>FY2005.
>
>So what does this mean for the shareholders?    Whatever the RBD
>profit decrease is for FY2004,  I don't think you can blame it on utility
>costs.   Competitive pressures and a wrong menu mix seem more
>realistic whipping boys.    I suspect we may see some skeletons of
>sailors that should have been buried long ago brought out of the closet
>(for example: the goodwill issue I have highlighted), and tossed over
>the side.   I am sure the new full time captain, whoever that may be,
>won't take kindly to sailing a boat with old bones on board.   As
>shareholders we should be prepared for some dirty laundry.
>
>Dividend for FY2003 was 10c per share, earnings were 11.8c and cash
>flows a boggling 30c per share.   There is more than enough money in
>that cash flow to maintain the dividend no matter how bad the FY2004
>financial report appears on paper.    And there is more than enough
>flexibility in company debt levels to make such a payout.   If
>management can get PH Australia to not lose quite so much and
>Starbucks is able to break even, then the chicken contract savings
>coming up should mean that there is enough leeway to maintain the
>annual dividend at 10c.    With a share price of $1.25 that gives an
>imputed yield of 12%, which  I believe since the rise of WRI is the
>highest on the market.   Furthermore I believe it to be sustainable for
>all the reasons I have given.
>
>RBD has consistently found support at $1.25.  On a 12% yield, which
>is more than twice the yield you could expect by putting your money in
>the bank,  it is not hard to understand why.    There is a dividend
>payment of 4.5c coming up in a couple of months, so that should
>support the share price in the short term.    Has RBD reached the
>bottom?    I don't make predictions like that.    I don't think we will see
>$2 again in the foreseeable future though.    But at $1.25 on a yield of
>12% with room for some share price movement upward when the fog
>starts to clear, I'm prepared to throw out a challenge.   Can anyone
>construct an argument to show why I *shouldn't* be investing in RBD at
>this price?   I couldn't, which is why I topped up on RBD at $1.25 just
>the other day.
>
>SNOOPY
>
>discl:  hold RBD.  Just added another slice.
>
>
>
>
>--
>Message sent by Snoopy
>on Pegasus Mail version 4.02
>----------------------------------
>"Stay on the upside of the downside,
>Anticipate the anticipation!"
>
>
>
>
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