denensive and undervalued, page-13

Interesting to note that YUM branks (which owns the KFC master brand in the USA) saw Australian/NZ 3rd qtr sales decline by 1% with YTD growth of only 1%.

Now YUM doesnt break down the divisions in australia so we dont know specifically for KFC, but it does bear watching.

Sales decline if they continue are never good for share prices. Especially when input costs: rent/wages and food input costs are all rising.


This is exactly was i was hanging on the sidelines.
However with the price decline to $1.18, i am now buying more heavily.
Using the lower range of management forecasts (which extrapolate current conditions into 2012) EPS is $0.195, dividends should be around 11c.
There is a sufficient margin of safety to start buying now.

However two words of caution:
(a) this stock will be volatile, people buying now must be able to wear that volatility going into 2012 (its now a case of buying a falling knife, once a knife starts falling, it can fall much lower than fundamentals suggest)
(b) fundamental valuations will only kick in in year 2013, thats pretty far out (because the cost of the IPO will be bourne in year 2012)