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Thursday, August 25, 2011

QSR - Broadly in line; maintain OUTPERFORM (CIMB)

QSR served up its highest-ever 2Q net profit of RM26.5m, taking 1H bottomline to a record RM51.7m. At 41% of our fullyear forecast and 42% of consensus, we consider the performance to be broadly in line with expectations given the anticipated stronger 2H. The interim dividend of 5 sen was also expected. All-time high average ticket prices for Pizza Hut and KFC contributed to QSR’s record performance. Our forecasts and target price of RM7.22 are unchanged. We continue to value the stock at a forward P/E of 17.8x, which is the average valuation of bigger peers, given its consistent growth in an industry that is grappling with pricier raw materials. QSR remains an OUTPERFORM, with the potential re-rating catalysts being 1) further improvement in average ticket prices, 2) success in new markets, and 3) active share buyback.

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