Results a bit underwhelming.
Remember that the franchise runs out in 19 years. This is not an ad infinitum business.
Let's be generous and say $20m per annum cashflow. Let's also assume that the growth rate roughly equals the discount rate of 10%. The cashflow is worth roughly $180m over the life of the franchise, assuming everything holds steady.
Market cap is now $120m, debt is $100m, total EV is $220m which is more than cashflow stream of $180m. I suppose you need to value the probability of Yum extending the franchise after 19 years.
Looks very marginal to me.
Results a bit underwhelming.Remember that the franchise runs out...
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