Spur (SUR) financial results for the year ending 30 June 2018
Date: 7 September 2018 Category: Stock Market Price per share: R26.25 |
Related Topics |
We take a quick look at the financial results for the Spur coporation's financial year end which ended in June 2018. Spur owns the Spur steak ranches, Rocomamas, Panarotti's, Casa Bella's and the Hussar Grill and John Dory's
|
Background on Spur (SUR)
Allen Ambor, the founder and executive chairman of Spur Corporation, founded Spur Steak Ranches in 1967, when he invested R4 000 to open the Golden Spur in Newlands, Cape Town. He soon opened the second Spur restaurant in South Africa, Seven Spur in Sea Point. With the immense popularity of these branches, Ambor decided that franchising was the best option to grow the Spur business, while enabling others to become part of the Spur Family as franchisees.
The group was first listed on the travel and leisure sector of the JSE in 1986. A major restructuring of the group was undertaken in 1999, which resulted in the formation and listing of Spur Corporation, as we know it today.
In December 1990 a second restaurant brand, Panarottis Pizza Pasta, was developed by the group. Applying the same principles that made Spur Steak Ranches a household name, Panarottis soon capitalised on the growing popularity of pizza and pasta.
In November 2004, the group acquired a 60% shareholding in John Dory’s Fish, Grill & Sushi, a KwaZulu-Natal based franchise comprising seven outlets. Founded eight years earlier as a predominantly seafood restaurant, John Dory’s has a distinctly Mediterranean culture and charisma. A further 5% interest was purchased in October 2006, and the remaining 35% was acquired on 25 January 2012, with the group now owning 100% of the business.
With effect from 1 March 2012, the group acquired the Captain DoRegos franchise and distribution center businesses as going concerns. Captain DoRegos is a value-oriented takeaway chain offering a combination of chicken, seafood and burgers to consumers in the Free State, Gauteng and Eastern Cape. The brand, which dates back to the 1960s, has over 45 franchised outlets across South Africa and internationally.
In December 2013 Spur Corporation bought The Hussar Grill, an upmarket steakhouse chain comprising multiple restaurants in the Western Cape. The franchise, which was started in 1964, is widely regarded as one of the premier grill rooms in Cape Town. The brand has expanded rapidly, with locations in Johannesburg, Durban, Port Elizabeth, as well as Lusaka, Zambia to add to the cornerstone restaurants in the Cape.
The group continued to acquire brands, and in March 2015 acquired a 51% stake in RocoMamas, the fast-casual smashburger chain with its origins in Johannesburg. Comprising 9 restaurants at the time of acquisition, the brand enjoyed phenomenal growth to exceed 40 restaurants locally and internationally by mid 2016.
With the fast-casual trend catching on worldwide, Spur Steak Ranches launched Grill & Go, in mid 2015. Focussing on locations in smaller towns and on commuter routes, Grill & Go took the great taste of Spur to a new environment, satisfying the need for core Spur menu items on the go. 2016 saw the birth of Casa Bella, the first brand created in-house since Panarottis in 1990. A celebration of Italian pizza and pasta heritage, the brand fills the need for an upmarket, authentic Italian dining experience. With the first restaurant launched at GrandWest in Cape Town, Casa Bella has opened further restaurants in Western Cape as well as Gauteng and KwaZulu-Natal.
The group acquired the Monterey Seafood brand in 2017, an upmarket seafood restaurant located in Midrand, Gauteng. From humble beginnings 50 years ago, Spur Corporation is now the proud home of 9 world-class restaurant brands, and still a cherished South African business icon.
Number of stores open for each brand in South Africa:
Spur Steak Ranches: 284
Panarotti's Pizza Pasta: 84
Rocomamas: 65
John Dory's Fish Grill and Sushi: 49
The Hussar Grill: 17
Casa Bella: 8
The pie chart below shows the contribution to revenue of the various Spur brands/divisions,
The group was first listed on the travel and leisure sector of the JSE in 1986. A major restructuring of the group was undertaken in 1999, which resulted in the formation and listing of Spur Corporation, as we know it today.
In December 1990 a second restaurant brand, Panarottis Pizza Pasta, was developed by the group. Applying the same principles that made Spur Steak Ranches a household name, Panarottis soon capitalised on the growing popularity of pizza and pasta.
In November 2004, the group acquired a 60% shareholding in John Dory’s Fish, Grill & Sushi, a KwaZulu-Natal based franchise comprising seven outlets. Founded eight years earlier as a predominantly seafood restaurant, John Dory’s has a distinctly Mediterranean culture and charisma. A further 5% interest was purchased in October 2006, and the remaining 35% was acquired on 25 January 2012, with the group now owning 100% of the business.
With effect from 1 March 2012, the group acquired the Captain DoRegos franchise and distribution center businesses as going concerns. Captain DoRegos is a value-oriented takeaway chain offering a combination of chicken, seafood and burgers to consumers in the Free State, Gauteng and Eastern Cape. The brand, which dates back to the 1960s, has over 45 franchised outlets across South Africa and internationally.
In December 2013 Spur Corporation bought The Hussar Grill, an upmarket steakhouse chain comprising multiple restaurants in the Western Cape. The franchise, which was started in 1964, is widely regarded as one of the premier grill rooms in Cape Town. The brand has expanded rapidly, with locations in Johannesburg, Durban, Port Elizabeth, as well as Lusaka, Zambia to add to the cornerstone restaurants in the Cape.
The group continued to acquire brands, and in March 2015 acquired a 51% stake in RocoMamas, the fast-casual smashburger chain with its origins in Johannesburg. Comprising 9 restaurants at the time of acquisition, the brand enjoyed phenomenal growth to exceed 40 restaurants locally and internationally by mid 2016.
With the fast-casual trend catching on worldwide, Spur Steak Ranches launched Grill & Go, in mid 2015. Focussing on locations in smaller towns and on commuter routes, Grill & Go took the great taste of Spur to a new environment, satisfying the need for core Spur menu items on the go. 2016 saw the birth of Casa Bella, the first brand created in-house since Panarottis in 1990. A celebration of Italian pizza and pasta heritage, the brand fills the need for an upmarket, authentic Italian dining experience. With the first restaurant launched at GrandWest in Cape Town, Casa Bella has opened further restaurants in Western Cape as well as Gauteng and KwaZulu-Natal.
The group acquired the Monterey Seafood brand in 2017, an upmarket seafood restaurant located in Midrand, Gauteng. From humble beginnings 50 years ago, Spur Corporation is now the proud home of 9 world-class restaurant brands, and still a cherished South African business icon.
Number of stores open for each brand in South Africa:
Spur Steak Ranches: 284
Panarotti's Pizza Pasta: 84
Rocomamas: 65
John Dory's Fish Grill and Sushi: 49
The Hussar Grill: 17
Casa Bella: 8
The pie chart below shows the contribution to revenue of the various Spur brands/divisions,
The majority of Spur Corp's revenue comes from manufacturing and distribution and the Spur Steak ranches. With these two divisions making up around 80% of the group's revenue. The one we are keeping our eye on is Rocomamas. The fast growing smashburger franchise group now has 64 stores open in South Africa and makes up just under 6.7% of the group's revenue. Almost as much as well set brand Panarotti's and new brand Casa Bella makes up together. And Rocomamas already bigger than Spur's seafood brand John Dory's. The pie chart below shows the contribution per division to pre tax profits.
While the contribution to operating profits are very similar to the contribution to revenue, it is interesting to note that while Rocomamas makes up 6.7% of revenue, it makes up 7.7% of pre tax profits. Showing the brand has very strong profit margins.
Looking at a few of Spur Corporations numbers:
Revenue came in at R667.2million (up 3%)
Profit for the year: R163.2 million up 18.2% from R138.1 million in 2017
Diluted headline earnings per share: R1.65 per share, up 18.4% from R1.39 per share.
PE ratio 15.9
Dividend yield: 4.7%
Cash generated per share: R1.08 per share
Cash on balance sheet per share: R2.39 per share.
Looking at a few of Spur Corporations numbers:
Revenue came in at R667.2million (up 3%)
Profit for the year: R163.2 million up 18.2% from R138.1 million in 2017
Diluted headline earnings per share: R1.65 per share, up 18.4% from R1.39 per share.
PE ratio 15.9
Dividend yield: 4.7%
Cash generated per share: R1.08 per share
Cash on balance sheet per share: R2.39 per share.
Valuation
Based on SURs current financial results we value them at between R29.21 and R29.40 a share. This will place SUR on a pretty steep PE ratio of 17.7 and a dividend yield of 4.2% So while the PE might be seen as a little high, the dividend yield is strong. And Spur owns one of the fastest, of not the fastest growing franchise store in South Africa, namely Rocomamas. And its growth has been phenomenal and it seems its success is set to continue with even more stores planned for roll out.
We use our Share Valuation Calculator as guide to valuing shares. We believe in value investing and our above mentioned share valuation is based on the underlying fundamentals and financial statements of the stock in question.
We use our Share Valuation Calculator as guide to valuing shares. We believe in value investing and our above mentioned share valuation is based on the underlying fundamentals and financial statements of the stock in question.
We use our Share Valuation Calculator as guide to valuing shares. We believe in value investing and our above mentioned share valuation is based on the underlying fundamentals and financial statements of the stock in question.