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>4Q Sales Takeaway</h2>
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<p><strong>NEUTRAL</strong></p>
<p>Restaurant Brands (RBD) 4Q21 trading update showed resilience, with same store sales (SSS) growth recorded across all geographies. 4Q21 sales rounds out FY21 with store revenue of $1.07b, an increase of ~+20% on FY20, in-line with our expectations. We make minor tweaks to our FY21 estimates, with cost pressures dampening the impact of revenue growth.&nbsp; Trading on a one-year forward PE of ~25x, we continue to view the stock as fairly valued and remain NEUTRAL rated.&nbsp;RBD is due to report its full FY21 results on 28 February 2022.&nbsp;</p>
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<h3>What's changed?&nbsp;</h3>
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<li><strong>Earnings</strong>:&nbsp; FY21 and FY22 NPAT estimates lifted by ~+1% and ~+0.5%&nbsp;</li>
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<h3>Full year sales target of NZ$1b reached for the first time, in line with expectations</h3>
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<p>Despite the impact of COVID-19 restrictions RBD has reported a solid FY21 sales result&nbsp;of NZ$1.07b (~+20% on FY20)&nbsp;achieving&nbsp;its&nbsp;long-<wbr>standing goal of sales &gt;NZ$1b. Same store sales (SSS) for all four geographies was positive with New Zealand and Hawaii both achieving ~+9%, California ~+2%, and Australia ~+1%. This also represented the first full year of trading for the California division, management estimated that ~NZ$100m of the FY21 sales increase was from an additional eight&nbsp;months of trading for this division.&nbsp;&nbsp;RBD's&nbsp;store numbers increased by 11 through the year, bringing the total store count to 359.&nbsp;</p>
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<h3>Cost inflation the key question at the upcoming FY21 result</h3>
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<p>The key issue going into the FY21 result will be&nbsp;cost pressures, with both ingredient&nbsp;inflation and the costs of staff absenteeism likely to feature.</p>
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<h3>Positive 4Q21 same store sales (SSS) growth across all markets&nbsp;</h3>
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<li><strong>New Zealand</strong>&nbsp;(SSS ~+4%)&nbsp;—&nbsp;4Q21 sales were up ~+5% on the prior year, with Carl's Jr. and Pizza Hut performing strongly. Store numbers increased by&nbsp;four during the quarter with three new Taco Bell stores and a new KFC in Sylvia Park. In addition, two Carl's Jr.&nbsp;stores were converted (one to a KFC and the other to a Taco Bell) bringing the total store count to 137.</li>
<li><strong>Australia</strong> (SSS ~+1%)&nbsp;—&nbsp;4Q21 sales were up ~+14% on the prior year. Mall and in-line city stores continued to be negatively impacted by the pandemic. Two additional Taco Bell stores were added during the quarter bringing the store count to 79.</li>
<li><strong>Hawaii</strong> (SSS ~+8%)&nbsp;—&nbsp;Taco Bell showed strong growth from the ongoing removal of COVID-19 restrictions and Pizza Hut continues to respond well to the increased demand from home delivery. Store numbers remained unchanged at 73.</li>
<li><strong>California</strong> (SSS ~+2%)&nbsp;—&nbsp;4Q21 sales were up ~+3% overall compared to the prior period. An additional KFC store was added during the period, bringing the total store count to 70.</li>
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Restaurant Brands NZ 4Q Sales Takeaway

NEUTRAL
Restaurant Brands (RBD) 4Q21 trading update showed resilience, with same store sales (SSS) growth recorded across all geographies. 4Q21 sales rounds out FY21 with store revenue of $1.07b, an increase of ~+20% on FY20, in-line with our expectations. We make minor tweaks to our FY21 estimates, with cost pressures dampening the impact of revenue growth.&nbsp; Trading on a one-year forward PE of ~25x, we continue to view the stock as fairly valued and remain NEUTRAL rated.&nbsp;RBD is due to report its full FY21 results on 28 February 2022.&nbsp;


What's changed?&nbsp;



Earnings:&nbsp; FY21 and FY22 NPAT estimates lifted by ~+1% and ~+0.5%&nbsp;



Full year sales target of NZ$1b reached for the first time, in line with expectations


Despite the impact of COVID-19 restrictions RBD has reported a solid FY21 sales result&nbsp;of NZ$1.07b (~+20% on FY20)&nbsp;achieving&nbsp;its&nbsp;long-standing goal of sales &gt;NZ$1b. Same store sales (SSS) for all four geographies was positive with New Zealand and Hawaii both achieving ~+9%, California ~+2%, and Australia ~+1%. This also represented the first full year of trading for the California division, management estimated that ~NZ$100m of the FY21 sales increase was from an additional eight&nbsp;months of trading for this division.&nbsp;&nbsp;RBD's&nbsp;store numbers increased by 11 through the year, bringing the total store count to 359.&nbsp;


Cost inflation the key question at the upcoming FY21 result


The key issue going into the FY21 result will be&nbsp;cost pressures, with both ingredient&nbsp;inflation and the costs of staff absenteeism likely to feature.


Positive 4Q21 same store sales (SSS) growth across all markets&nbsp;



New Zealand&nbsp;(SSS ~+4%)&nbsp;—&nbsp;4Q21 sales were up ~+5% on the prior year, with Carl's Jr. and Pizza Hut performing strongly. Store numbers increased by&nbsp;four during the quarter with three new Taco Bell stores and a new KFC in Sylvia Park. In addition, two Carl's Jr.&nbsp;stores were converted (one to a KFC and the other to a Taco Bell) bringing the total store count to 137.
Australia (SSS ~+1%)&nbsp;—&nbsp;4Q21 sales were up ~+14% on the prior year. Mall and in-line city stores continued to be negatively impacted by the pandemic. Two additional Taco Bell stores were added during the quarter bringing the store count to 79.
Hawaii (SSS ~+8%)&nbsp;—&nbsp;Taco Bell showed strong growth from the ongoing removal of COVID-19 restrictions and Pizza Hut continues to respond well to the increased demand from home delivery. Store numbers remained unchanged at 73.
California (SSS ~+2%)&nbsp;—&nbsp;4Q21 sales were up ~+3% overall compared to the prior period. An additional KFC store was added during the period, bringing the total store count to 70.



Restaurant Brands NZ

Restaurant Brands NZ: 4Q Sales Takeaway