On 4 October 2018, Collins Foods Limited (ASX: CKF) announced that the company has entered into a Development Agreement with Taco Bell (a subsidiary of Yum! Brands Inc.) that will govern the roll-out of more than 50 new Taco Bell restaurants across different states in Australia over next three years. Following this news, the share price of the company increased by 5.237 percent as on 4 October 2018 (AEST 2:10 PM).
The Development Agreement will be covering three states of Australia including Queensland. It specifies an annual new build restaurant number and provides Collins Foods with the right of first offer in relation to the establishment of new Taco Bell restaurants across the relevant states. The internally generated funds will be used to fund the roll-out.
Collins Foods started its first Taco Bell in Annerley, Brisbane in the year 2017 and it has performed very well which has prompted the company to expand their business. The company is planning to open three more restaurants in Robina, North Lakes and Cleveland by the end of calendar year 2018.
The company also released its investor presentation on 4 October 2018 in which the company informed that it has delivered consistent and significant growth over the past 5 years. In the last five years, the revenue of the company increased by 12.7% and the operating cash flow of the company increased by 80% in five years. In five years, the dividend payment is up by 125 percent. In the last five years, the company has acquired 83 restaurants and built 31 new restaurants. It is expected that the company will build further 8 to 9 restaurants each year for next five years. The KFC Australia has also delivered consistently strong revenue and EBITDA growth. Revenue of KFC Australia has increased by 96% in the past 5 years and the EBITDA has increased by 122% in five years.
CKF’s shares traded at $6.43 with a market capitalization of $711.89 million as on 4 October 2018 (AEST 2:10 PM). The stock has been up 17% in last six months and is trying to reach new highs.
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