Collins Foods: FY23 result - Better margins on the menu
About the author:
- Author name:
- By Alexander Mees
- Job title:
- Co-Head of Research and Senior Analyst
- Date posted:
- 28 June 2023, 7:30 AM
- Sectors Covered:
- Gaming and Retail
- Collins Foods' (ASX:CKF) FY23 earnings were moderately above our estimates, which were at the upper end of consensus. Group EBITDA of $205m was 3% above our estimate. Margins were better than forecast in Europe and in line with our expectations at the group level.
- CKF guided to a more resilient margin performance in FY24 than previously anticipated, indicating that commodity input prices appear to have peaked. Positive sales momentum in KFC has been driven mainly by higher prices, but CKF has been restrained in pushing ticket to ensure it retains its value credentials. Taco Bell remains in limbo. The carrying value of its assets has now been fully impaired and the rollout of new restaurants remains on hold. Sizzler Asia has been sold.
- We have increased our EBITDA estimates by 0.3% in FY24 and 4.3% in FY25. We reiterate our ADD rating with an increased target price of (login to view).
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