This report is an updated version of the report published on 15 August 2025 at 3:44 PM AEST.  

Retail Food Group Limited (ASX: RFG)

Retail Food Group Limited is a food and beverage company based in Australia. It owns and operates brands, like Gloria Jean’s, Crust Gourmet Pizza, Pizza Capers, Donut King, Brumby’s Bakery, Michel’s Patisserie, Cafe2U and The Coffee Guy. RFG operates through four segments: Bakery/Cafe Division, QSR Division, Coffee Retail Division and Di Bella Coffee.

Recommendation Rationale – SELL at AUD 2.18

• Trading Around Resistance: The stock has crossed its first resistance (R1) of AUD 2.069 mentioned in the report dated 7 July 2025. However, its 14-day RSI is showing a reading of ~71.23, indicating that the stock has entered over-bought zone; hence, the stock may face some consolidation before scaling further upside.
• Overvalued Multiples: On a forward 12-month basis - key valuation multiple (EV/Sales) is higher than median of the Food & Tobacco industry.
• Underlying NPAT Declined: While RFG’s statutory NPAT grew ~74% year-on-year to AUD 7.3mn in H1FY25, its underlying NPAT declined 19% annually to AUD 6.6mn because of higher cost of goods sold in the reported period (up 29.3% YoY).
• Dilution Risk: Historically, RFG has diluted shareholders heavily, especially following financial strains and recapitalization. Any future unexpected financial shocks could necessitate further dilution.
• Ongoing QSR Competitive Pressures: The quick-service restaurant (QSR) segment is under intense price competition. Brands like Crust and others have seen customer counts and sales drop due to discounting by competitors.

RFG Daily Chart

Valuation Methodology: EV/Sales Approach (FY Jun'26E) (Illustrative)

The stock might trade at a slight premium to its peers, considering the revenue and underlying EBITDA growth in 1HFY25, increase in network sales in CCB, strategic outlet expansion, successful integration of Beefy's acquisition, IT investment plan and other factors.

For conducting valuation, the following peers have been considered: Propel Funeral Partners Ltd (ASX: PFP), Universal Store Holdings Ltd (ASX: UNI), Accent Group Ltd (ASX: AX1) and others.

Considering the rally in share price movement, current trading level, and risks associated, the share price can witness resistance at the current levels. Hence, a ‘Sell’ recommendation is given on the stock at the current market price of AUD 2.18, as of 15 August 2025 at 3:18 PM AEST.

Markets are trading in a highly volatile zone currently due to certain macro-economic issues and geopolitical issues prevailing geopolitical tensions. 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 15 August 2025. 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.    

Note 4: Kalkine reports are prepared based on the stock prices captured either from REFINITIV or Trading View. Typically, REFINITIV or Trading View may reflect stock prices with a delay which could be a lag of 25-30 minutes. There can be no assurance that future results or events will be consistent with the information provided in the report. The information is subject to change without any prior notice. 

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.