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Value.able: KFC

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Value.able: KFC

Roger Montgomery breaks out the calculator and assesses the merits of the $280 million IPO of Collins Food Group, owner of more than 200 fast food franchises, including KFC. Read Roger’s article at www.eurekareport.com.au.

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Roger Montgomery is the Founder and Chairman of Montgomery Investment Management. Roger has over three decades of experience in funds management and related activities, including equities analysis, equity and derivatives strategy, trading and stockbroking. Prior to establishing Montgomery, Roger held positions at Ord Minnett Jardine Fleming, BT (Australia) Limited and Merrill Lynch.

This post was contributed by a representative of Montgomery Investment Management Pty Limited (AFSL No. 354564). The principal purpose of this post is to provide factual information and not provide financial product advice. Additionally, the information provided is not intended to provide any recommendation or opinion about any financial product. Any commentary and statements of opinion however may contain general advice only that is prepared without taking into account your personal objectives, financial circumstances or needs. Because of this, before acting on any of the information provided, you should always consider its appropriateness in light of your personal objectives, financial circumstances and needs and should consider seeking independent advice from a financial advisor if necessary before making any decisions. This post specifically excludes personal advice.

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17 Comments

  1. carl j
    :

    Hi roger, i noted with interest your choice in gold stock SLR. I was interested in your thoughts in RMS. Perhaps you could pick 5-10 gold stocks whose intrinsic values are now worth investigating.
    Regards

  2. Brian
    :

    They have the KFC franchise in Queensland only, and as for Sizzler …..I thought they all went broke. They certainly don’t exist in Victoria anymore. This would be a good one to stay away from. I assume Roger said the same. (I haven’t read his article.)

      • Chris
        :

        On of the dangers that companies and investors in Australia probably underestimate about ‘moving into Asia’ is ‘different’ legal regimes/atmospheres. “I’ve been told” that Sizzler Indonesia is but one excellent example of this – Sizzler Australia franchised their name etc to some Indonesian investors, provided senior management and did a lot of training and setting up of local branches. After about one year, the local ‘allegedly’ kicked out the expat management and took over running it themselves. “I gather” they never paid any franchise fees, or at least not all of them, for that first year or subsequently.

        Caveat venditor.

        This is not the only story like this I’ve heard and there is often little to no legal recourse available.

    • Greg Mc
      :

      I generally don’t bother to look at floats from private equity. They’ve normally had the guts sucked out of them and expenditure deferred to make the profits more impressive. In other words, a fresh coat of paint put on a crappy old fibro house (….like my house….) to tart it up to sell to mugs. Who in their right mind would buy into this sort of thing and think that the private equity group is going to leave them anything?

      • William
        :

        I personally think floats by private equity are not always bad, there will always be good cases (JBH for example) and bad cases (Myer).

        It’s up to us as investors to separate these and we cant generally assume floating by private equity are bad.

      • Greg Mc
        :

        That is fair enough, William. I consider JBH to be the exception to the rule among a long list of private equity floated duds, however. It is not particularly fertile ground for finding outstanding businesses at substantial discounts.

        You’ll note though that I said “I generally don’t bother to look…” rather than “I never look”…..

      • Andrew
        :

        I agree Greg, last time i checked Private Equity were not charitable organisations and are in the business of making money. It logically then leads to it only floating the business when it has the best chance of making the most money by floating it back onto the market, making a quiet escape and then moving on to another business.

        I wonder if the Myer investors feel that the float was a good for them.

    • Nic Arena
      :

      I think a B1 is better than an A5 watching Roger’s posts over the last year or so. Correct me if I’m wrong Roger.

      • Ash Little
        :

        This is just my Take on it,

        A5 are terrible businesses but are not going broke anytime soon (Your return will probably be less than a bank account though)…….B1 are good businesses with high returns on equity but interest cover and debt levels are not as good as an A1.

        Rogers Ratings changes with the reporting season but I think a B1 has a better chance of moving to A2 or A1 than an A5. It would be very had for an industrial company to move from A5 to A1

        That said a resource company in it’s initial stages of production may have a very good chance of going from A5 to A1 or A2

        This is just how i understand it and it may be completely wrong

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