Research archive for FBR

As ever, we appreciate your feedback. In response to the Famous Brands piece from yesterday in which Byron did a fabulous write up, in case you missed it, here it is: Famous Brands results are great. Sorry, that lame heading was mine, not enough coffee! Well, here is a great piece sent to us from a friend of Vestact!

Yesterday I went to the Famous Brands results presentation for the full year ending 28 February 2013. It's hard not to be impressed with a business that has managed to grow earnings on an average annual basis of 21% over the last five years. Of course the share price has followed suit, now trading at R94, up 482% from the R16 it was trading at 5 years ago.

This morning we had a trading update in respect of the full year ended 28 February 2013 from Famous Brands. Now these guys have had a very busy year where they have bought a 60% controlling stake in Java Lava Beverage manufacturers, entered a JV with Coega Dairy company, bought the franchise rights to Europa and Fego Caffe and bought stakes in Turn and Tender and The Bread Basket.

This morning we received another trading update from one of our retailers, this time fast food franchisee Famous Brands. The update was only for the month of December which is nice because it gives us some important information about what kind of month December was, especially for holiday makers.

One company which is certainly not hanging around is Famous Brands. They released two expansion announcements in the last week which we look into now.

Famous Brands released results yesterday morning, and as luck would have it, I actually got to meet the CEO Kevin Hedderwick on CNBC's Power Lunch and then we chatted a little in the corridors afterwards. Now we don't own many of these shares for clients, but we have enough to warrant more than just a keen interest. He seems like a good guy, has energy and has a handle on the business that he runs. The only question that I should have asked is what are the main shareholders thinking, what are their plans? Darn, that one would have been the one to ask. More on that chat a little later, let us dive into the numbers.

This morning the high flying Famous Brands came out with a trading update leading up to its results for the 6 months ended 31 August 2012.

This morning we had results from Famous Brands which came pretty much in line with the trading update they released on the 7th of May. Revenue was up 15% to R2.15bn while operating profits also increased 15% to R423mil. Headline earnings per share were up 15% to 278c while a very handsome dividend of 200c is being paid. Wow that is a cover of 1.39. With a share price of R52.46 we get a historic valuation of 18.8 and a dividend yield of 3.8%. That is a great yield for a stock that is actually quite 'expensive'.

Famous Brands, another one of those over achievers, released a trading update which indicated headline earnings per share growth of 14%-16%. On a diluted basis this will come in between 270c-275c per share. The company is not cheap but in recent memory, it never has been. Trading at R52.90 the stock trades at 19.3 times earnings. But the fundamentals look very strong for this extremely well managed business to carry on growing.

Yesterday we had a voluntary sales update from Famous Brands. Maybe they were feeling left out because all the other retailers were throwing all sorts of numbers in our direction. At the face, it looked fairly good, not brilliant, but good. The company managed to grow turnover by 10% for the three months leading up to the end of December while same store sales increased by 6.8%.

Famous Brands released results for the six months to end August, revenue increased 12 percent to 1.013 billion ZAR, with operating profits up 8 percent to 184 million ZAR. Fairly muted I guess is what you could say, no trade in the stock as of yet (at the time of writing this), the bids look a little weak though. This translates to headline earnings per share of 125 cents, which is 9 percent better than last time and an interim dividend of 80 cents, up 14 percent from the corresponding period last year. Hey, remember the other day, last week when they were excited about finally having opened their 2000th store, that is worth celebrating too.

One of my favourite companies with full year results out this morning. Famous Brands, I like their products and I like their business model. Revenue was up 11% to R1.87bn while operating profits were up 16% to R358 million. Those don't sound like fantastic margins but there is a reason for that, more on it later. Headline earnings per share increased 17% to 242 cents while dividends were up 36% to a generous 155c a share.

This morning Famous Brands announced the acquisition of well known outlets Milky Lane and Juicy Lucy from Java Brands for a price of R30.95 million.

Famous Brands this morning in which they say that they have finally entered the chicken market. Sounds interesting of course, read on. Chief Kevin Hedderwick is quoted in the SENS as saying "Filling the gap in our brand portfolio with a mainstream chicken offering has been a major priority for the Group over many years." Many would agree, you have fish, burgers, pizzas and coffees and breakfast delights, but never any chicken.

Famous Brands, no sense in flipping these guys off. The burger and fries guys in the local arena, who can boast a portfolio of Steers, Wimpy, Debonairs, Brazilian, Fish Aways and more recently cyclists favourite weekend hang out Mugg & Bean. These guys, a bunch of the most solid Greek guys you might want to meet have no debt problems. The price has proved recession proof. Trading statement from the group yesterday The group expects that headline earnings per share (HEPS), diluted HEPS and earnings per share (EPS) (calculated on an IFRS basis) for the year ended 28 February 2010, are likely to be between 199 cents per share and 207 cents per share, 25% and 30% higher than the comparable period in 2009.