McDonalds’ Malaysia (McD) recently unveiled ‘McValue Dinner’
combo meals, targeted at dinner crowds. Essentially, ‘McValue Dinner’ is
an extension of McD’s long-running ‘McValue
Lunch’ promotion.
We note that both promotions offer same discounts of up to
36% off the respective standard combo prices. The difference is that the 10
selected combo meals are now also available from 6pm-9pm, daily, albeit for a
limited time only.
While ‘McValue Dinner’ is not new, we observed that the
promotion is normally conducted in conjunction with the Hari Raya Puasa period.
We are not too concerned about this latest development.
Marketing push by operators via new product launches and value propositions is
in line with industry practice, especially during 1H given the lack of major
festivities.
We expect an insignificant impact on KFC restaurant sales
over the long run, though dinner sales volume could soften in the short term.
We take comfort that KFC Holdings (KFC) retains a dominant market share of dinner
ticket sales among the operators. Dinner sales constitute an estimated 30%-35%
of KFC’s group turnover.
We are keeping our earnings forecast unchanged, underpinned
by our assumption of 36 additional KFC stores for FY12F. The group opened
equivalent new KFC stores across Malaysia, Singapore, Brunei and India last
year.
Maintain BUY with an unchanged fair value of RM4.15/share,
based on a fair PE of 18x FY13F earnings. We like the group’s high cash
generative food business model on the back of an established global brand
equity, with stable restaurant sales in Malaysia and exciting growth prospects
in India.
Source: AmeSecurities
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