Collins Foods Limited

Section 1: Company Overview and Fundamentals Insights

Company Overview: Collins Foods Limited (ASX: CKF) operates as a franchisee for KFC and Taco Bell in Australia, as well as a corporate franchisee for KFC in the Netherlands and Germany. The company is dedicated to ongoing enhancement across all aspects of its business and strives to fulfill its mission of "Elevating Restaurant Experiences." Kalkine’s Investor Report covers the Investment Highlights, Management Insights, Key Financial Metrics, Risks, Technical Analysis along with the Valuation, Target Price, and Recommendation on the stock.  

1.2 The Key Positives, Negatives, Investment Highlights, and Risks

1.3 Top 10 Shareholders:

The top 10 shareholders together form ~41.24% of the total shareholding. Challenger Managed Investments Ltd and Perkins (Kevin William Joseph) are holding maximum stakes of 7.71% and 6.16%, respectively. 

1.4 Key Metrics: CKF’s fixed asset turnover ratio improved to 1.0x in 1HFY24 from 0.94x in 1HFY23. Below is captured other metrics:

Section 2: Business Updates, Financial and Operational Highlights

2.1 Recent Business Updates:

2.2 1HFY24 Results Highlights (for the 6 months ended 31 December 2023): Below mentioned are some key financial highlights:   

2.3 Historical Financial Trend

Section 3: Key Risks and Outlook:

Section 4: Stock Recommendation Summary

4.1 Price Performance and Technical Summary

The stock has declined by ~20.40% in the last three months, and over the last nine months, it decreased by ~10.58%. The stock has a 52-week low and 52-week high of AUD 7.500 and AUD 12.550, respectively, and is currently trading below the 52-week high-low average. CKF was last covered in a report dated ‘08 April 2024’.

4.2 Fundamental Valuation

Valuation Methodology: Price/Earnings Multiple Based Relative Valuation (Illustrative)

Markets are trading in a highly volatile zone currently due to certain macro-economic issues and geopolitical tensions prevailing. Therefore, it is prudent to follow a cautious approach while investing.

Note 1: Past performance is neither an indicator nor a guarantee of future performance.

Note 2: The reference date for all price data, currency, technical indicators, support, and resistance levels is 6 May 2024. The reference data in this report has been partly sourced from REFINITIV.

Note 3: Investment decisions should be made depending on an individual's appetite for upside potential, risks, holding duration, and any previous holdings. An 'Exit' from the stock can be considered if the Target Price mentioned as per the Valuation and or the technical levels provided has been achieved and is subject to the factors discussed above.

Technical Indicators Defined: -

Support: A level at which the stock prices tend to find support if they are falling, and a downtrend may take a pause backed by demand or buying interest. Support 1 refers to the nearby support level for the stock and if the price breaches the level, then Support 2 may act as the crucial support level for the stock.

Resistance: A level at which the stock prices tend to find resistance when they are rising, and an uptrend may take a pause due to profit booking or selling interest. Resistance 1 refers to the nearby resistance level for the stock and if the price surpasses the level, then Resistance 2 may act as the crucial resistance level for the stock.

Stop-loss: It is a level to protect further losses in case of unfavourable movement in the stock prices.

Disclaimer

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