New Zealand Professional Investment Services Firm

Forsyth Barr

We are proud to be a New Zealand owned firm, with 21 offices throughout the country and over 300 employees. We assist personal, institutional and corporate clients providing a full range of investment services.

Forsyth Barr is a foundation New Zealand Exchange firm (NZX) and accredited market participant. We have been confirmed by the Financial Markets Authority as a Qualifying Financial Entity (QFE).

Research is the cornerstone of our advice. We have one of New Zealand's leading teams of analysts. Our global affiliations ensure comprehensive research coverage of all major investment markets.

New Zealand Professional Investment Services Firm, Forsyth Barr

Equity Bottom-Up

<h2>Restaurant Brands NZ<br>3Q20 Sales Takeaway</h2>
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<p><strong>NEUTRAL</strong></p>
<p>Restaurant Brands (RBD) delivered another period of robust sales growth in 3Q20, as the company navigates trading restrictions across its operating markets. Strong sales growth, particularly through the takeaway and delivery channels, has more than offset dine-in limitations. RBD offers a more defensive exposure to consumer spend with a track record of performance, and a pipeline of growth opportunities. RBD trades at a premium to the New Zealand market but a discount to international peers. We view the current risk/reward as fair, NEUTRAL.</p>
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<h3>Trading well through disruption, in line with expectations</h3>
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<p>RBD reported 3Q20 sales of NZ$239.8m, up +12.8% on the prior comparable period (+6.5% excluding the acquisition of California).&nbsp;Trading restrictions as a result of COVID-19 remain fluid, with a number of mall stores closed&nbsp;and most of its international portfolio closed to in-store dining. However, this is more than offset by growth in other channels (delivery/takeaway) with positive same store sales (SSS) across all markets. In addition, RBD continues to open new stores, with a number of openings in Australia.&nbsp;Year-to-date (YTD) group sales are up +2.5% (+0.2% excluding California). This is largely consistent with our&nbsp;FY20 forecasts, which&nbsp;assume sales growth of +3.8%&nbsp; (flat excluding California).</p>
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<h3>Positive 3Q20 same store sales across all markets</h3>
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<li><strong>New&nbsp;Zealand&nbsp;(SSS +5.9% on the prior comparable period)&nbsp;</strong>—&nbsp;Strong SSS despite trading restrictions impacting Auckland stores during the period. KFC remains a standout performer, with Carl’s Jr also delivering solid growth — with its availability over delivery platforms during&nbsp;lockdowns&nbsp;likely supporting sales growth. RBD continues to expand its delivery availability across its network,&nbsp;and is trialling offering KFC, Taco Bell, and Pizza Hut across the&nbsp;Uber&nbsp;Eats app (Carl's Jr already available).&nbsp;</li>
<li><strong>Australia (SSS +3.3%)</strong>&nbsp;—&nbsp;Total sales increased +9.1% on the prior year, driven by four new store openings (two KFC, two Taco Bell). This was a key highlight versus our expectations, particularly given trading across most stores remains restricted&nbsp;(with in-store dining unavailable).</li>
<li><strong>Hawaii (SSS +8.7%)&nbsp;</strong>—&nbsp;In-store dining remains restricted and is weighing on Taco Bell performance, with SSS growth muted. However, Pizza Hut has experienced an exceptional uplift in sales&nbsp;as consumers favour delivery options, more than offsetting&nbsp;weakness elsewhere.</li>
<li><strong>California</strong> — Strong start, albeit with only one month of ownership in the period. Trading is “up on the prior year and pre-purchase expectations”.</li>
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<div><strong>Guy Hooper</strong></div>
<div><a href="mailto:guy.hooper@forsythbarr.co.nz" target="_blank" rel="noopener">guy.hooper@forsythbarr.co.nz</a></div>
<div>+64 4 495 5255</div>
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Restaurant Brands NZ 3Q20 Sales Takeaway

NEUTRAL
Restaurant Brands (RBD) delivered another period of robust sales growth in 3Q20, as the company navigates trading restrictions across its operating markets. Strong sales growth, particularly through the takeaway and delivery channels, has more than offset dine-in limitations. RBD offers a more defensive exposure to consumer spend with a track record of performance, and a pipeline of growth opportunities. RBD trades at a premium to the New Zealand market but a discount to international peers. We view the current risk/reward as fair, NEUTRAL.


Trading well through disruption, in line with expectations


RBD reported 3Q20 sales of NZ$239.8m, up +12.8% on the prior comparable period (+6.5% excluding the acquisition of California).&nbsp;Trading restrictions as a result of COVID-19 remain fluid, with a number of mall stores closed&nbsp;and most of its international portfolio closed to in-store dining. However, this is more than offset by growth in other channels (delivery/takeaway) with positive same store sales (SSS) across all markets. In addition, RBD continues to open new stores, with a number of openings in Australia.&nbsp;Year-to-date (YTD) group sales are up +2.5% (+0.2% excluding California). This is largely consistent with our&nbsp;FY20 forecasts, which&nbsp;assume sales growth of +3.8%&nbsp; (flat excluding California).


Positive 3Q20 same store sales across all markets



New&nbsp;Zealand&nbsp;(SSS +5.9% on the prior comparable period)&nbsp;—&nbsp;Strong SSS despite trading restrictions impacting Auckland stores during the period. KFC remains a standout performer, with Carl’s Jr also delivering solid growth — with its availability over delivery platforms during&nbsp;lockdowns&nbsp;likely supporting sales growth. RBD continues to expand its delivery availability across its network,&nbsp;and is trialling offering KFC, Taco Bell, and Pizza Hut across the&nbsp;Uber&nbsp;Eats app (Carl's Jr already available).&nbsp;
Australia (SSS +3.3%)&nbsp;—&nbsp;Total sales increased +9.1% on the prior year, driven by four new store openings (two KFC, two Taco Bell). This was a key highlight versus our expectations, particularly given trading across most stores remains restricted&nbsp;(with in-store dining unavailable).
Hawaii (SSS +8.7%)&nbsp;—&nbsp;In-store dining remains restricted and is weighing on Taco Bell performance, with SSS growth muted. However, Pizza Hut has experienced an exceptional uplift in sales&nbsp;as consumers favour delivery options, more than offsetting&nbsp;weakness elsewhere.
California — Strong start, albeit with only one month of ownership in the period. Trading is “up on the prior year and pre-purchase expectations”.





Guy Hooper
guy.hooper@forsythbarr.co.nz
+64 4 495 5255




Restaurant Brands NZ: 3Q20 Sales Takeaway