IPO - Craveable Brands, page-3

Couple developments with this one. So according to a previous article here from a couple days ago, Morgans has jumped on board as a co lead manager. Today another article (below), detailing pretty lofty yield on offer (have highlighted in bold). Not so sure about the spread in the share price window...in fact, wondering if it might even be a typo.

Anyone looking into this closer for a defensive (long term) play?

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Source: http://www.copyright link/street-ta...iced-at-up-to-125times-profit-20170614-gwreld
Red Rooster IPO priced at up to 12.5-times profit

Craveable Brands, which owns Red Rooster and Oporto, has kicked off its institutional initial public offering roadshow with what it hopes will prove a tasty price range.

Craveable Brands' brokers Goldman Sachs and Morgan Stanley told fund managers the float would come to market at 11.5-times to 12.5-times profit, on a 2018 financial year P/E basis.

It's expected to seek to raise more than $200 million, although the final price and size of the IPO is unlikely to be determined until the institutional bookbuild on June 27.  

The 11.5-times to 12.5-times NPATA range equates to an 8.6 per cent 9.3 per cent dividend yield.

It also equates to $2.09 to $3.07 a share, for a $368.7 million to $400.8 million market capitalisation.

The brokers told clients that owner Archer Capital would retain at least a 30 per cent stake on listing, which would be escrowed until the 2018 financial year results.

The price range is at a slight discount to the already listed fast food company Collins Foods, which makes most of its money from KFC franchises in Queensland and NSW.

Collins is trading at 13.2-times forecast profit.

However, as Craveable Brands chief executive officer Brett Houldin has been at pains to point out to fundies, there is a significant difference between his company and the ASX-listed incumbent.

Collins Foods is a franchisee business of KFC, while Archer Capital's Craveable Brands is the franchisor of about 570 restaurants across its Red Rooster, Oporto, and Chicken Treat brands.

The IPO contender has been pitched as a high EBITDA margin, capital light and strong cash flow comparative.

Houldin is in front of fund managers in Sydney on Thursday and Friday, before travelling to Melbourne and Hong Kong next week.

The price range is at a discount to where the company was valued by its sponsor brokers. Goldman Sachs analysts told clients it was worth 14.8-times to 17.7-times forecast profit, which would have put a $448 million to $534 million equity value on the business, while Morgan Stanley analysts said it was worth $410 million to $528 million.

Craveable Brands expects $52.5 million earnings before interest, tax, depreciation and amortisation in the 2018 financial year, increasing from $46.4 million in the year to June 2017.