A Look At The Consumer Discretionary Space – CKF, LOV, JIN, GEM, RBD

Collins Foods Limited

The consumer discretionary sector is represented by companies which address the requirements of retail consumers, other than those meant for subsistence. The demand by consumer makes the manufacturer increase the production and supply of required products and associated services. This leads to a rise in top line and bottom line of the producing company. In the below article, we would be looking at the consumer discretionary space in Australia. In most of the companies discussed below, the key managerial personnel have recently addressed the shareholders.

Collins Foods Limited

Collins Foods Limited (ASX: CKF) is involved in the operation, management  as well as administration of restaurants in Australia, Europe and Asia.  On 2nd October 2019, the company has issued 267,536 performance rights. The performance rights have been granted as equity compensation benefit in accordance with the company’s executive and employee incentive plan.

Refinance of Debt Facility

The company through a release dated 26th September 2019 announced that it has entered binding agreement for refinancing its existing syndicated debt facilities.

  • It was mentioned in the release that the facility amounting to $270 million and €60 million would be refinanced under a new syndicated facility agreement, which comprises of $265 million and €80 million revolving facilities.
  • Out of the new facility an amount of $210 million and €52 million would be drawn on financial closure, with enough funding headroom having been provided by the undrawn amounts.
  • When it comes to tenor of facilities, the new facilities are a mix of 3 years and 5 years, with $180 million and €50 million maturing on 31st October 2022 and the balance $85 million and €30 million maturing on 31st October 2024.

The stock of CKF closed at $10.000, down 1.768% as on 4th November 2019. CKF has generated return of 19.76% and 36.28% during the last three-months and six-months, respectively.

Lovisa Holdings Limited

Lovisa Holdings Limited (ASX: LOV) is in retail sale of fashion jewelry and accessories. The company was listed on Australian Stock Exchange in 2014. The company has recently issued 1,174,531 options with an exercise price of $10.60. The company has granted options in accordance with the terms of the Equity Incentive Plan of the company.

Chairman’s Address
  • The company has recently conducted its 2019 Annual General Meeting on 29th October 2019, wherein the Chairman of the company has addressed the shareholders and stated that its key to success has been the capability to spot quality retail store sites in locations with high pedestrian traffic. This generally involves leases in AA, A or B grade rated shopping centers as well as malls ideally with 50 to 70 sq metre store spaces along with harmonised layout.
  • The Chairman added that the company would continue to maintain its focus on the right balance between the speed of its new store launch, and diligence in site selection in order to ensure every new store meets its investment criteria.
  • The Managing Director of the company also addressed the shareholders and communicated that during the year gross profit of the company for FY 2019 amounted to $201.4 million, reflecting a rise of 16% at a margin of 80.5%, an improvement of 50 basis points as compared to last year. This has been possible as the company continues to benefit from the tail end of higher USD hedge rates for this period.

The stock of LOV closed at $13.550, up 0.37% as on 4th November 2019. LOV has generated return of 22.73% and 33.40% during the last three-months and six-months, respectively.

Jumbo Interactive Limited

Jumbo Interactive Limited (ASX: JIN) is in the business of retailing of lottery tickets via internet and mobile devices. These are sold in Australia and eligible overseas jurisdictions.

CEO Address
  • Recently, the company has conducted its 2019 Annual General Meeting on 24th October 2019, wherein CEO and Founder Mike Veverka has addressed the shareholders. The CEO first outlined the highlights of financial year 2019; the revenue from continuing operations stood at $65.2 million, with a rise of 64% as compared to previous year.
  • The total transaction value witnessed a rise of 75% on prior corresponding period and the figure reached to $321 million. However, the net profit after tax from continuing operations reached to $26.4 million.
  • In FY19, the company declared an ordinary dividend amounting to 36.5 cents, fully franked, which reflects a rise of 97% as compared to previous year.
  • The company possesses a vision of ticket sales of $1 Billion on the Jumbo platform by FY22, which revolves around initiatives such as OzLotteries.com, – Powered by Jumbo SaaS in USA, UK and Canada.

The stock of JIN closed at $20.510, up 0.342% as on 4th November 2019. LOV has generated return of 6.96% and 16.11% during the last three-months and six-months, respectively.

G8 Education Limited

G8 Education Limited (ASX: GEM) is engaged in the operation of early education centers owned by the Group as well as ownership of early education center franchises.

Issue of Securities
  • The company has recently announced that it has issued 1,779,533 fully paid ordinary shares at the consideration of $2.4472 per share on 3rd October 2019.
  • The shares have been issued pursuant to dividend reinvestment plan – October 2019.

A Look at Half-Year Results for the period ended 30 June 2019

  • The company reported revenues amounting to $430.6 million, reflecting a rise of 9% as compared to previous year, which have been fueled by growth in occupancy, higher fees and acquired centers.
  • In the half-year, the net profit after tax of the company has contracted by 20% against prior corresponding period to $19 million. It added that the profit of the company has been adversely impacted by the implementation of new accounting standard, i.e. AASB 16 Leases standard.
  • The company experienced a solid progress in delivery of its strategic program in accordance with the expectations, which include successful launch of Customer Engagement Centre at all 500 centers as well as the development of national curriculum and education programs.

The stock of GEM closed at $2.610, up 1.556% as on 4th November 2019. GEM has generated return of -9.82% and -16.83% during the last three-months and six-months, respectively.

Restaurant Brands New Zealand Limited

Restaurant Brands New Zealand Limited (ASX: RBD) is involved in the management of multi-site, branded food retail chains.

Change of Balance Date
  • The company through a release dated 30th October 2019, announced that post recent acquisition by Finaccess Group of controlling interest in the company, the of Board of Directors of the company has approved the change of annual balance date for company and its subsidiaries to December from February.
  • It added that the change will come into effect on 31st December 2019.
  • In accordance with the changes, the company would now be releasing its third quarter sales announcement on or about 12th December 2019.
  • It will be preparing its financial statements for the current financial year and announce these results in February 2020.

The stock of RBD was placed at $8.800 as on 4th November 2019. RBD has generated return of 12.10% and 12.82% during the last three-months and six-months, respectively.


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