QSR hits 52-week high of RM3.64

QSR hits 52-week high of RM3.64

Tags: 52-week high | QSR Brands Bhd

Written by Yong Min Wei
Friday, 09 October 2009 11:04

KUALA LUMPUR: QSR BRANDS BHD [] hit a fresh 52-week high of RM3.64 yesterday, as buying interest in the food and beverage (F&B) retail group continues, premised on the defensive nature of its businesses.

The counter rose to an intra-day high of RM3.72 before closing at RM3.64, with 225,100 shares done. A check with Bloomberg data showed that QSR has been rising daily since the beginning of this week from its close of RM3.25 last Friday.

In a research report yesterday, CIMB Research reiterated its outperform call on the stock, its top pick in the F&B sector, with a target price of RM5.94 from RM5.30.

CIMB said its revised price target yielded a 61% upside, as the research house rolled over its valuation horizon to calendar year 2011.

“QSR remains an attractive growth story with a three-year earnings per share compounded annual growth rate of 11.9%,” it said.

The research house said QSR offered a cheaper entry into the KFC business with the added attraction of the growing Pizza Hut business and higher dividend yields.

QSR owns 50.25% of KFC Holdings Bhd (KFCH), which runs both the KFC and Pizza Hut dine-in and fast-food restaurant chain in the country and overseas, including Singapore and Cambodia. CIMB said QSR commanded 70% of the country’s pizza market and 11% of the Western quick-service restaurant.

“But, investors are paying an undeservedly low price earnings of 3.2 times for the Pizza Hut business when it deserves to trade at a premium given its growth potential,” it said. CIMB added that QSR might open its first KFC outlet in India by year-end.

Under a deal with the global Yum! Group, KFCH would invest US$5 million (RM17 million) in Mumbai and US$1 million in Pune, with the target of opening 10 KFC outlets in Mumbai and two in Pune, with one slated for opening in Mumbai by year-end, it said. CIMB added that the Indian outlets were expected to be profitable in three years.

“KFCH’s entry into India is expected to provide the company with an opportunity to diversify its earnings base and reduce its dependence on Malaysia and Singapore.

“We understand that there are four existing KFC outlets in Mumbai, operated by three franchise holders which have done little to grow the franchise.

There are only about 40 KFC outlets in India while there are 35 McDonald’s outlets in Mumbai alone,” CIMB said. Meanwhile, QSR’s expansion in Cambodia was on track, with its Pizza Hut operations set to break even next year, the research house said.


This article appeared in The Edge Financial Daily, October 9, 2009.