Value.able: KFC

17 Comments

1. 

   carl j
   July 21, 2011 at 2:11 pm:

   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

   • 

     Roger Montgomery
     July 21, 2011 at 11:43 pm:

     thanks for the suggestion Carl.

2. 

   Brian
   July 18, 2011 at 6:10 pm:

   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.)

   • 

     Roger Montgomery
     July 19, 2011 at 12:30 pm:

     Thanks Brian,

     One does need to assess whether the Sizzler Asia franchise has been received more sustainably than in Oz.

     • 

       Chris
       July 21, 2011 at 4:41 pm:

       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.

     • 

       Roger Montgomery
       July 21, 2011 at 11:49 pm:

       I too have some (much more horrific) stories about the requirement to pay police to make a call for an ambulance…

3. 

   Ash Little
   July 14, 2011 at 4:12 pm:

   Hi Roger,

   I had a chuckle at your last sentence

   • 

     Greg Mc
     July 15, 2011 at 6:59 am:

     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?

     • 

       Ash Little
       July 16, 2011 at 11:21 pm:

       Not so quitely chuckling at that one Greg Mc

       Nice one

     • 

       William
       July 17, 2011 at 12:47 pm:

       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.

     • 

       Roger Montgomery
       July 19, 2011 at 12:02 pm:

       Absolutely agree. Each float should be judged on its merits; Quality and price.

     • 

       Greg Mc
       July 20, 2011 at 8:07 am:

       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
       July 18, 2011 at 1:04 pm:

       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.

4. 

   stephen mc
   July 14, 2011 at 2:15 pm:

   Is an A5 comp. better than a B1 comp.

   • 

     Nic Arena
     July 15, 2011 at 12:24 pm:

     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
       July 21, 2011 at 8:09 pm:

       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

     • 

       Roger Montgomery
       July 21, 2011 at 11:51 pm:

       A1s can have bad things happen but it will much rarer. never believe that low probability means no probability.