Famous Brands (HOLD, TP ZAR 167/share) - H2 17A result review: EBIT margin 100bps below estimate; HEPS impacted by higher interest costs and effective tax rate
​Solid double digit sales growth for FY 17A and H2 17A aided by GBK acquisition.
GBK consolidation weights on operating margins driving miss to AC est.
A hike in financing costs and an increase in the effective tax rate added to the margin pressure caused by the GBK consolidation seeing HEPS miss ACe.
Outlook remains glum: limited catalysts for local market while the outcome of Brexit creates uncertainty for international operations. Maintain Hold.
Famous Brands is a holding company. Through its subsidiaries, Co. is engaged as branded food services franchisor. Co.'s business model comprises a portfolio of 25 brands represented by a franchise network of 2 545 restaurants. and the Middle East. Co. operates in three operating divisions namely, Franchising and Development, Manufacturing, and Logistics. Co.'s operations are divided into two geographical areas, South Africa and International. The South African segment houses the South African operations of Co. and the International segment houses the operations in the U.K. and the Rest of Africa. The International segment only represents franchising operations.
Established in 2007, Arqaam Capital is a specialist emerging markets investment bank, bringing regional and international product offerings to the emerging markets. Arqaam Capital combines international best practice with expertise in the markets in which we operate. Our primary role is to provide financial intermediation and create investment opportunities for frontier and emerging markets investors looking to invest in their own markets and abroad, as well as international investors seeking opportunities in target frontier and emerging markets. Arqaam Capital is headquartered in the Dubai International Financial Centre (DIFC), with additional offices in Libya, Lebanon, Egypt, and South Africa.
Arqaam Capital's research platform provides the largest coverage footprint of MENA equities and one of the largest on the African continent with a total of 300 stocks under coverage. Arqaam Capital is ranked as one of the leading research providers in the region - a reflection of its broad coverage universe, its in-depth and high quality research, as well the compelling investment ideas that the team generates. The analysts closely analyze their sectors and issue in-depth company and sector research while the strategy team connects the micro with the macro, focusing on index analysis, macroeconomics and strategy research.
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