On Friday, Famous Brands gained 2.14% to settle at R148.00 per share, helped along by a cautionary announcement released via SENS early on in the session. Although light on details, the group advised shareholders that they should exercise caution when dealing in the group’s securities until a further announcement is made. During the past year, FBR has made a number of smaller deals which have not required the group to trade under a cautionary. The group has performed extremely well over the last 6 months, up 30.97%, while gaining 14.91% over the past year. Lastly, as it stands, Famous Brands is currently trading at a PE ratio of 25.69, with a dividend yield of 2.91%.
In Famous Brands’ results for the year ended 29 February 2016, the group reported a 31% increase in revenue to R4.3bn, from R3.3bn previously. This increase can be partly attributed to the opening of 184 new restaurants across the brand portfolio, bringing the total restaurant network to 2,614 stores. Operating profit rose by 18% R792mn, from R672mn in 2015, while the operating profit margin declined to 18.4%, from 20.5% previously. As a result, headline earnings per share came in at 541 cents, 16% higher than the 467 cents per share in the previous period. The net asset value per share also increased during the period, up 9.4% to 1,554 cents per share. The board declared a final dividend of 215 cents per share, up from 200 cents in 2015, bringing the total dividend for the year to 405 cents per share. Famous Brands is now up 9.72% over the last four trading sessions as the share moved sharply higher on the back of these results. The counter is now very close to our short-term target price and we will begin reducing exposure today.
Famous Brands ended marginally higher yesterday, up 1.39% at R115.59, helped along by news it had completed the acquisition of Lamberts Bay Foods. Lamberts Bay Foods, which was acquired from Oceana Group for an undisclosed amount, focuses on the processing of french fries and other value-added potato products. The business has been a supplier to Famous Brands for the past 20 years and was originally set up by Oceana in 1995 as a social responsibility project in order to offset job losses from the resulting decline in fishing opportunities in the region. This acquisition marks another step in Famous Brands goal of building capacity across its Logistics and Manufacturing Supply Chain operations.
Spur Corporation is a growing multi-brand restaurant franchisor, head-quartered in Cape Town, and listed in the travel and leisure sector of the JSE Ltd. Spur Group consists of Spur International, Spur Steak Ranches, Panarottis Pizza Pasta, John Dory’s Fish, Grill & Sushi, Captain DoRegos and The Hussar Grill.
It currently has 490 outlets worldwide, with restaurants in various parts of Africa, Mauritius, the UK and Australia. These can be broken down into 318 Spur Steak Ranches, 79 Panarottis Pizza Pasta outlets, 33 John Dory’s restaurants, 63 Captain DoRegos outlets and 8 franchises of The Hussar Grill.
The group has demonstrated consistently strong organic revenue and operating profit growth, efficient capital management and a stable, generous dividend policy.
Although the company has a broad base of shareholders, in excess of 70% of shares are held by institutional shareholders.