Fast FoodsCollins Foods (CKF) is one company that has definitely...

Fast Foods

Collins Foods (CKF) is one company that has definitely disappointed. The KFC and Sizzler franchisee delivered a profit downgrade just three months after listing and raising in excess of $200 million, $60 million of which went to its private equity vendor Pacific Equity Partners.

At $1.23 its shares are half the listing price of $2.50 and below its $2 price when we first covered it.

On its register are many of the biggest Aussie small cap fund managers: MLC, AMP, BT, Aviva, Pengana and Colonial.

When this column wrote two Fridays ago about their pain, one fundie said that maybe the falls represented a buying opportunity: “Buy the fear, buy the fear,” he kept repeating.

Well one institution has, but it wasn't a fund manager.

Yesterday an ASX release announced that the Copulos Group, “a private investment company with significant interests in the Australian KFC fast food industry” had purchased 5.4 per cent of Collins Foods. It was signed by Stephen Copulos.

The last time the Copulos name was associated with KFC was in March 2009. Stephen and his father Peter were directors of QSR, the second-biggest franchisee of KFC in Australia (Collins Foods is the biggest).
The KFC outlets in Miranda and West Hurstville, over which QSR held the franchise, were prosecuted and fined more than $73,000 by food authorities for filthy premises and pest infestation, after a 10-month investigation.
We are confident they have cleaned up their act.

Radar can't help but notice that only one day prior to Collins Foods' profit downgrade on November 2, there was a rate cut, and it wouldn't be surprising if more came along.

This should be good news for KFC sales. We would also note that looking through the details of the downgrade, management seemed to panic. It extrapolated the poor sales figures of September and October into its full-year results. And summer hasn't even hit! KFC is a “must have” apparently for cricket fans and schools.

Possibly the Copulos family is seeing in their own stores that things aren't as bad as the Collins Foods' downgrade suggested. Finger lickin' food for thought.


Read more: http://www.theage.com.au/business/the-winners-circle-for-2011-so-far-20111118-1nm0d.html#ixzz1e4myRFTO