Pizzas & Donuts for thought...., page-34

I agree Spreme and sounds like there is a lot of feeling in the points presented above.

I am new to this platform and mainly an ETF investor. However I became interested in RFG after enquiring about one of their Doughnut King Kiosks in Hurstville Sydney. What drew me to this franchise was the earnings of close to $200K per year (but you need to run it 7 days a week almost 365 per year).

My point is that I don't generally go for direct equities, but this experience made me look deeper into RFG. I am not a qualified financial analyst, only self educated through reading, but the facts (I think) make this look like an attractive option.

Facts:
1. ACCC case has ceased. Therefore, the costs associated with management of these legal preceding's have also ended (about $10mil last FY)
2. All domestic brands (not store level) are profitable - even Michel's Patisserie
3. Domestic closures have decreased and RFG indicate that there is increased enquiries for domestic stores (agree this may not translate into store openings). Can there be increased domestic growth - I think yes, Australia will increase migration by 600k+ in the next two years. This means new housing estates (look at western Sydney) which offer new areas for domestic growth (again increased population doesn't automatically mean new stores, but it does provide the opportunity for growth which we haven't had over the last three years)
4. Positive international store growth has occurred (mid year update).
- The Investor presentation for the capital raise indicates increased effort to focus on RFG stores that make the most money (DK, Crust, Gloria Jeans Drive thru). This to me demonstrates that RFG is becoming a growth orientated company. Go online and do a dummy order on Dominos Vs Crust. Prices are almost the same and the quality of Crust is much better. This indicates that Dominos has had to increase price to maintain profit, where RFG has not. (Dominos down from $140). This leads me to my next point.
- Last years annual report and mid year update suggest that RFG products have an ATV less than $10, meaning they have managed the inflation increase better then most.
- Finally, I think with the removal of legal costs and covid restrictions, this is a profitable business. I think the EBITDA guidance of $26mil to $29mil will result in a NPAT of $15mil plus. There are not many business on the ASX (even some in the ASX 300) that have positive NPAT.

I think the real issue is the 2.4 billion shares on issue. I wouldn't be turned off if RFG used debt for a share buy back at this price.

My question:

Doesn't a business that makes actual profit, with international store growth and a increasing likelihood of domestic store growth (which excludes possible JV or acquisitions) make for a SP greater then what it currently is?