NZ Hospitality Sector- 3 Stocks to Look at Considering Alert Level 1

  • Jun 08, 2020 NZST
  • Team Kalkine
NZ Hospitality Sector- 3 Stocks to Look at Considering Alert Level 1

Summary

  • New Zealand has reported no new cases in the past 15 days
  • The second quarter results of Restaurant Brands New Zealand Limited might get impacted by lockdown measures
  • Moving to Alert Level 1 might support the confidence of consumers which could help the performance of food and hospitality stocks

As per the New Zealand Ministry of Health (media release dated June 6, 2020), the country reported no new cases of COVID-19 in the last 15 days. The total number of confirmed cases now stands at 1,154 and the combined sum of probable and confirmed cases stayed at 1,504. The total number of recovered cases stands unchanged at 1,481. Because of no cases, the country is planning to move to Alert Level 1, and this is a very optimistic news for NZ hospitality sector.

Let us look at three stocks under food and hospitality sector which may benefit from the Government’s move.

Restaurant Brands New Zealand Limited (NZX: RBD)

RBD’s Sales Growth Continues in the First Quarter

In the first quarter of FY20, the company reported total sales of $200.1 million, an increase of 5.3 per cent or $10.0 million as compared to previous year. The operating segments of the company (New Zealand, Australia, and United States) retained same store sales growth with increases in sales of +1.7%, +2.0% and +7.9%, respectively. The company’s store numbers increased by four to 288 as compared to the equivalent period last year.

Divisional Performance

  • New Zealand: First quarter sales for New Zealand stood at $98.0 million, down by 1.5% due to the Government-mandated full store closures as the country moved to COVID-19 Alert Level 4 from 25 March;
  • Australia: First quarter sales for Australia stood at $A48.7 million, up by 13.3% on a total basis after the opening of two KFC and two Taco Bell stores during last year coupled with a lower level of temporary store closures for refurbishments;
  • United States: First quarter sales stood at $US33.2 million, up by 6.3% on a total basis and 7.9% on a same store basis (local currency) after the continued successful local promotions with the Taco Bell and Pizza Hut brands showing robust growth.

 

The first quarter was marginally affected by the COVID-19 crisis. The second quarter is witnessing a major impact as all stores in New Zealand were closed for most of the April 2020 month.

Stock Performance

The stock of RBD closed the day’s trading at NZ$12.800 per share on 5th June 2020, up by 1.43% on an intraday basis. The stock’s 52-week low and high is $6.47 and $16.00, respectively.

Burger Fuel Group Ltd (NZX: BFG)

Burger Fuel Group Limited possesses experience in the restaurant sector of around 20 years, and it operates 3 brands: ShakeOut, BurgerFuel and Winner Winner.

For 6 months ended 30th September 2019, the total system sales stood at $50.2 million, down by 1.85% over the same period last year. The decrease in sales was mainly due to the company’s exit from Australian market as well as fall in sales in Middle East region. The net profit after tax stood at $548,092 as compared to $646,373, down by 15.20%.

The total operating revenue grew by 2.69% to $11.3 million, mainly because of the opening of the company-owned Shake Out store. BFG possesses no debt and, as at September 30, 2019, it had cash reserves of $5.2 Mn.

 

Summary of Results (Source: Company Reports)

Summary of Results (Source: Company Reports)

 

Impact of COVID-19

Due to the government’s announcement of both stage 3 and 4 COVID-19 measures, the company anticipated that its earnings will be substantially affected. All company owned, as well as franchised restaurants in NZ were closed for 4 weeks. This would be impacting the year end results as at March 31, 2020 and FY 2021.

Stock Performance

The stock of BFG closed the day’s trading at NZ$0.440 per share on 5th June 2020. The stock’s 52-week low and high is $0.25 and $0.61, respectively. The stock price has corrected ~16.98% in the time period of one month.

Moa Group Limited (NZX: MOA)

Moa Group Limited’s renounceable rights issue was strongly assisted by shareholders. Therefore, it has closed oversubscribed.

  • The rights issue managed to garner $5.8 Mn and there was an issue of 41,215,594 new ordinary fully paid shares;
  • The company stated that it has accepted approximately $600,000 in excess of the aimed $5.2 Mn.
  • MOA has agreed to place those acceptances to accommodate the additional demand.

 

Trading Amid COVID-19

Moa Hospitality segment continues to make substantial progress in lowering its major fixed costs and managing all variable costs to make sure that maximum levels of cash are maintained to align its costs with the latest operating environment. The Moa Beverage segment has eliminated about $1.0 million from its operating cost base (on an annualized basis), while continuing to gain from the strength of present customer behaviour in the market.

Stock Performance

The stock of MOA closed the day’s trading at NZ$0.174 per share on 5th June 2020, up by 1.16% on an intraday basis. The stock’s 52-week low and high is $0.09 and $0.38, respectively. The stock price has witnessed an increase of 10.13% in the time period of one month.

 


Disclaimer
The website has been prepared for informational purposes only and is not intended to be used as a complete source of information on any particular company. The above article is NOT a solicitation or recommendation to buy, sell or hold the stock of the company (or companies) under discussion. Kalkine does not in any way endorse or recommend individuals, products or services that may be discussed on this site.

 

   
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