07 June 2014

Hero Moto Corp - Q4FY14 Result Update - Stays on course; retain Buy :: Centrum

Rating: Buy; Target Price: Rs2,850; CMP: Rs2,348; Upside: 21%



Stays on course; retain Buy



We retain Buy with a TP of Rs2,850. While the company continues to
hold strong franchise in the rural market, we believe that improved
consumer sentiments on the urban side should help it register better
than expected growth. Also, unlike Bajaj Auto, it has a strong
presence in the scooter segment and continues to hold on to its market
share in this fast growing segment. Dealer interaction reveals that
brand franchise of Splendor and Passion models was still strong and
Maestro in the scooter segment was doing well. Further, HMCL indicated
that its ongoing margin transformation program can improve margins by
250-300bps by FY17-18E. Though this may seem a tall claim, it at least
gives us confidence on the sustainability of current margins.

$ Results above expectations: HMCL’s results were largely in line on
the revenue front and above estimates on EBITDA and PAT fronts.
Contrary to our expectation, the management indicated that there was
no impact on account of dealer compensation due to excise cut. As a
result, EBITDA margins for the quarter stood at 13.7% compared to our
est. of 12.8%. Better than expected operating performance, marginally
lower tax rate and higher other income led to 17% beat at PAT level
which stood at Rs5.5bn during the quarter. The company indicated that
it raised prices by Rs300/vehicle effective March 2014.

$ HMCL’s cost saving plans playing out:  In 2QFY14, HMCL had announced
that it was looking at annualized savings of Rs15bn by FY17-18E. The
plan seems to be on track with the company achieving savings of
Rs600mn in 4QFY14. Further, it indicated that for April’14, it
achieved savings of Rs250mn through its cost saving program. Cost
saving initiatives covered logistics, raw material consolidation and
e-bidding. Management is targeting to improve margins by 250-300bps by
FY17-FY18E. Though this seems a tall claim, it at least gives us
confidence on the sustainability of current margins.

$ Strong brand franchise helps maintain market share: Dealer
interaction revealed that brand franchise of Splendor and Passion
models continued to be strong (driven by low maintenance and
relatively better re-sale value vs. peers) and Maestro in the scooter
segment was also doing well. This was reflected in the company’s
ability to maintain market share in the domestic motorcycle and
scooter segments at 52% and 19% respectively in FY14.

$ Valuation & Risks: We continue to like HMCL given reasonable
valuations (P/E of 13.2x FY16E), ability to retain its market share
and strong presence in the fast growing scooter segment and rural
markets. We retain Buy with TP of Rs2,850 (based on 16x FY16E EPS).
Key downside risks are 1) Failure of new indigenous products launched
by HMCL and 2) Higher than expected success of Discover models of
Bajaj Auto.



Thanks & Regards

--

Abbott India - Q5FY14 Result Update - Brand driven revenue growth:: Centrum

Rating: Hold; Target Price: Rs1,810; CMP: Rs1,768; Upside: 2.4%



Brand driven revenue growth



We maintain Hold rating on Abbott India (AIL) with a revised target
price of Rs1,810 (earlier Rs1,870) based on 17xFY16 EPS of Rs106.4.
AIL’s revenues were in line with our expectations but EBIDTA and net
profit were lower due to overall increase in costs. The company
reported 18% revenue growth in the domestic market despite the NPPP
effect. We have revised our FY15 and FY16 EPS estimates downwards by
5% and 3% respectively. Key risks to our assumptions include higher
growth of its major brands in the domestic market and increase in
imported raw material prices with the depreciation of rupee.

$ Brand driven revenue growth: AIL’s revenues grew by 18%YoY to
Rs4.94bn from Rs4.20bn despite the NPPP effect. The company’s seven
major brands grew faster than the market growth rate of 6.2%. These
were Duphastone 6.9%, Thyronorm 12.8%, Vertin 13.3%, Duphalac 13.7%
and Digene 8.8%, Pediasure 22.5% and Pediasure Complete 18.8%. We
expect these brands to drive future growth of the company. AIL also
distributes Novo Nordisk’s insulin range of products in the domestic
market and derives marketing margin from them. The insulin range of
products is under price control.

$ Fall in margins may partially reverse: AIL’s EBIDTA margin fell by
70bpsYoY to 10.2% from 10.9% mainly due to the rise in overall costs.
Its material cost grew by 10bps to 57.0% from 56.9%. Personnel cost
increased by 20bps to 13.9% from 13.7% due to the award of annual
increments. Other expenses were up by 60bps to 19.0% from 18.4%. AIL’s
other income grew 47%YoY to Rs94mn from Rs64mn due to Rs7.2mn profit
on sale of residential property during the quarter. We expect AIL’s
margin to improve due to its strong brands and price increase in
April’14.

$ Decent growth in net profit: AIL’s net profit grew by 21%YoY to
Rs384mn from Rs317mn due to higher other income. Its two brands,
Thyronorm and Eptoin with collective revenues of Rs1.8bn, came under
price control in NPPP. The company has taken 6.3% increase in price
for price controlled products in April’14. AIL is a debt-free, cash
rich company with cash/share of Rs217.

$ Recommendation and key risks: We maintain Hold rating on the stock
with a target price of Rs1,810 based on 17x FY16E EPS of Rs106.4 with
an upside of 2.4% over the CMP. At the CMP of Rs1,768 the stock trades
at 20.3x FY15E EPS of Rs87.0, 16.6x FY16E EPS of Rs106.4 and 13.9x
FY17E EPS of Rs127.1. Key risks to our assumptions include higher
growth of its major brands in the domestic market and increase in
imported raw material prices with the depreciation of rupee.



Thanks & Regards

--

Maharashtra Seamless Ltd. (MSL) - BUY:: Microsec Research

We rate Maharashtra Seamless Ltd. (MSL) a BUY. Our rating underpins the company’s robust business model complimented with increasing exports and other strong client base. MSL is one of the flagship company of D.P. Jindal Group specializes in providing a whole range of high-class, customizable & innovative seamless pipes and tubes. It also diversifies its foray into ERW, coated pipes and power.

At the CMP of INR307.35, the stock is trading at 21.9x its FY15E EPS of INR14.00. We expect that the revival in the company is very much on the cards in the coming days which compel us to assign a higher P/E multiple of 25.00x for FY15E to arrive at a target price of INR350 which shows an upside potential of ~14percent hence making the scrip an attractive buy.


Regards,

Team Microsec Research

J.P. Morgan - Indian Pharmaceuticals

Indian Pharmaceuticals
Domestic growth to see slow and steady recovery but pre-FY14 growth levels unlikely in a hurry

Industry growth in FY14 was impacted by several one-off factors, but players expect recovery in the domestic market in FY15. Our channel checks, conversations with industry association and commentary from players indicated steady recovery post the 1QFY15. While we expect growth to improve from the ~6% in FY14, in our view, the lack of new product introductions and muted price hike in non-DPCO drugs is likely to cap growth at ~8-10% vs. average growth of ~14% before FY14. The key upside risk to our assumption is clarity in approval for new product introductions, while downside risk is increasing the coverage of price control beyond NLEM drugs.
· Domestic industry growth to recover through FY15…: Industry growth is likely to recover for ~6% level in FY14, as the one-off factors like rollout of NLEM, trade destocking, product ban impact are behind the industry and industry growth should improve steadily through the year. The government announced the Drug (Price Control) Order (DPCO) 2013 in mid-May with implementation deadline of end-Jun. The disruption related to rollout of DPCO and subsequent destocking severely impacted industry growth from Jun onwards. Therefore, the low base post July, normalization in distribution and impact from price increase taken from Apr-onwards should help improve growth to 8-10% in FY15, in our view.
· …but limited to 8-10% rather than low-mid teens. While we expect an improvement of growth, the likelihood of achieving 10+% growth witnessed before FY14 remains limited in the current operating environment. The key reasons for a cap in growth trends are a) limited price hikes in non-DPCO drugs given increasing competition in the domestic market; b) the net impact from price hike in DPCO drugs could be lower than the announced price increase as the players are likely to transfer some of the pricing benefit to the trade channel to offset the trade margin reduction; c) changing regulation hurting new drug approvals and product introductions in the market.
· What is required for higher industry growth? The key driver for improvement in growth rate beyond the 8-10% expectation would be ramp up in new product introductions rather than just new brand launches as the later merely shifts prescriptions from existing brands and usually increase price erosion in the category. A key impediment to new product introductions is slowing new drug approvals by regulatory authorities. Further, the product pipeline of companies is also seeing impact for lack of approvals for clinical trials over the last year. As per DRRD 20F filings, new products launched in the preceding 24 months accounted for 6-8% of growth historically and we believe this has declined to low-single digit over the last year. The introduction of new drugs is a key driver for profitable growth for the sector in the domestic market in the medium term, which depends on clarity in the approval process and timeline. (Please see our note “Domestic growth implications from changing regulations on clinical trials and new drug approvals” published on 3rd Mar 2014).
· Scope for price control moving beyond NLEM? Media reports (ET) indicated that the National Pharmaceutical Pricing Authority (NPAA) is considering benchmarking prices of the most expensive brands to the average price of the respective categories in therapies like cancer, HIV, CVS, diabetes, malaria and TB. The article also indicated that the new policy will also stipulate the new medicine prices to not exceed the most expensive brand in the respective category. In our view, such a change in policy will hurt industry growth and more importantly, this would dis-incentivize companies from introducing new product in these critical segments.
Table 1: Indian Pharma companies – Contribution to Revenue and Focus Therapy Areas

India as % of revenue
Focus areas
SUNP
26.0
CVS, Anti-Diabetic, Neuro Psychiatry, GI
LPC
22.3
CVS, Anti-Biotics + Cephs and Anti-Diabetic
DRRD
12.0
Cardiology, GI, Antineoplastics
GNP
25.3
Dermatology, Cardiology and Gynecology
Source: Company reports.
Figure 1: Industry growth in the last year impacted by one-off, but recovery likely from current levels
Source: AIOCD data (PILMAN and Media reports -ET, BS, Express Pharma, Mint).
Figure 2: Quarterly Domestic Revenue YoY Growth for Indian Companies reported so far
Source: Company reports
Figure 3: Domestic Formulation YoY Growth Trend
Source: Company reports and J.P. Morgan estimates. Note: SUNP growth for FY13 -FY14 impacted by one-off adjustments. Adjusted for the extra sales recorded in the Q4FY12 and the change in treatment of expected sales returns and treatment of discounts, the underlying sales growth of domestic formulation business is 19%.

J.P. Morgan - India IT Services

India IT Services
It is déjà vu - but in an opposite direction; mapping out the inverse relationship between P/E and exchange rate

It is déjà vu – but in an opposite direction. Once again, we’re receiving queries from clients as to how FY15/FY16 EPS and margins look for different IT-Services players at various INR-US$ levels (this exercise is similar to what we did in Aug-Sep of last year (2013) when the INR was trending in an opposite direction and substantially weakening; Rs65+ to the US$ then). It is well known that EBIT margins for the larger, Tier-1 Indian IT companies typically move 25-35 bps for every percentage change in the INR/USD equation (or about 1.5-2.0% at the PAT/EPS level). Thus, it is somewhat easy to chart a “what if” sensitivity table highlighting FY15/FY16 margin & EPS at different INR/USD exchange rate levels for various players (see tables 1-5 below). For example, TCS’s FY16 EPS (assuming zero-offset) would stand at ~Rs 110 at Rs 56-57/US$, the same as we/consensus broadly expect in FY15 at Rs60/$; likewise for the other companies - in other words, all it would take is a further 4-5% appreciation of the INR from current levels for TCS’s & peers’ FY16 EPS to adjust at street’s current FY15 EPS at Rs60/US or simply put, no growth over the street’s current FY15 EPS.
· The linearity of such EPS projections for FY15/16 will not hold unless we assume that firms are unable to offset the impact of INR appreciation. This would obviously not be true, as firms do have levers that they can tweak more aggressively when the INR appreciates, be it (a) more discipline on pricing, (b) increased offshorization, (c) much greater intensity of fixed price/managed services projects, (d) increased use of automation, tools and other productivity measures. The degree of offset varies from firm to firm. Sure, we can argue that firms have been pulling these levers for some time now but there’s nothing like forced pressure to bring about such offsets (in this case pressure is forced by the appreciating INR).
· To us, a greater worry from INR appreciation (if indeed the INR stabilizes at stronger levels) is the impact that this has on secular growth of the industry (and thus, the impact on P/E of stocks). The advantages of a weak INR are clear. Besides the short-term boost to EPS, the weak INR will likely accelerate market-share penetration in newer markets/service-lines and in lower-margin contracts/geographies that some vendors might have shied away from (when the INR-USD was at say 50). This hastens the process of expanding the addressable market space and results in potentially higher revenue growth by FY15 (though with differing results among vendors). The reverse is true with a stronger INR. In a stronger INR environment, firms have less investment capacity, have less room for pricing flexibility, cannot afford to take as many major bets, may be warier of entering emerging/newer markets if economics don’t make sense – all of these constraints limit the pace of addressable market expansion and thus, revenue growth; most of these constraints would not hold so strongly in a weaker INR environment. Thus, we see somewhat of an inverse relationship between INR-USD levels and secular growth rate of the industry (though we can’t quantify this or draw the precise nature of this relationship; see Chart 1 for a representation). Correspondingly, this impacts the P/E of the industry and companies therein. Investor expectations of INR-USD also impact P/E of the industry/companies but such expectations are likely to be only temporary if they do not become reality.
· The volatility of the INR will test the strategic decision-making skills of Indian IT companies. It can play testing psychological games with companies. How often should companies change their currency assumptions in their regular contracting, planning & analysis and capital budgeting tasks? Should it be an annual once a year exercise or should it be more tactical like once a quarter? The former gives stability & predictability but the firm would end up missing/passing up good profitable opportunities if the INR depreciates in the course of the year. On the other hand, frequently revising the INR-USD (and other forex) assumptions in planning & budgeting likely leads to confusion & instability over time (an equivalent dilemma for us analysts/investment managers would be how frequently should/do we change Cost of Equity assumptions in response to volatility in interest rates – if anything, INR-USD is far more volatile by comparison). Large firms with established, disciplined processes generally tend to re-appraise such parameters/variables only if they can see some stability around the new assumptions and calculations.
· Investment view. We are not changing our INR-USD estimates yet and continue to factor in average level of INR-USD of ~59-60 for FY15/16 (consensus is broadly about the same or marginally higher). There could be bouts of near-term appreciation of the INR as we’re witnessing today but whether the INR-USD will stay structurally stable beyond the near-term at stronger than Rs 58/US$ levels is not our call (the stated preference of the RBI would be for the INR not to strengthen from current levels). That said, given low-to-mid teen % growth of the sector, even a 5% INR appreciation could substantially negate EPS growth in FY15/16 (different from impact in 2007/08 when the INR was appreciating during a phase of much stronger industry growth of 20%+). A stronger INR impacts sector P/E. But even investor expectations of a stronger INR impact P/Es in addition to sector rotation, both of which we’re seeing today. That said, if the INR does not stabilize at a reasonably stronger level, then current investor concerns impacting P/E are also likely to be temporary. We keep OW ratings on Tech Mahindra, Infosys and HCLT.
Figure 1: The industry’s secular growth varies inversely with the INR’s strength with consequences for industry/company P/E – a weaker INR regime gives firms substantial leeway on investments, pricing, and ability to take multiple bets - all of which help pace of addressable market expansion resulting in more robust top-line growth – room for pulling such growth levers gets squeezed by a stronger INR – this is a bigger worry than near-term EPS impact (representative curve only)
Source: J.P. Morgan
Table 1: TCS’s FY15/FY16 EPS sensitivity to exchange rate movement at different degree of offsets (i.e. recouping some of the margin loss from exchange rate movement); assuming zero offset, TCS’s FY16 EPS (at INR/US$ 57) broadly stays the same as consensus FY15 EPS (at INR 60/US$) – the yellow cell is our base-case
Source: J.P. Morgan estimates; Note: Shaded line shows our base case scenario i.e. USDINR exchange rate at 60.
Table 2: Infosys’s FY15/FY16 EPS sensitivity to exchange rate movement at different degree of offset (i.e. recouping some of the margin loss from exchange rate movement); assuming zero offset, Infosys’s FY16 EPS (at INR/US$ 56) broadly stays the same as consensus FY15 EPS (at INR 60/US$) – the yellow cell is our base-case
Source: J.P. Morgan estimates; Note: Shaded line shows our base case scenario i.e. USDINR exchange rate at 60.
Table 3: Wipro’s FY15/FY16 EPS sensitivity to exchange rate movement at different level of margin pull-back (i.e. recouping some of the margin loss from exchange rate movement) – assuming zero offset, Wipro’s FY16 EPS (at INR/US$ 56-57) broadly stays the same as consensus FY15 EPS (at INR 60/US$) – the yellow cell is our base-case
Source: J.P. Morgan estimates; Note: Shaded line shows our base case scenario i.e. USDINR exchange rate at 60.
Table 4: HCL Technologies’ FY15/FY16 EPS sensitivity to exchange rate movement at different level of margin pull-back (i.e. recouping some of the margin loss from exchange rate movement) – assuming zero offset, HCLT’s ’s FY16 EPS (at INR/US$ 56-57) broadly stays the same as consensus FY15 EPS (at INR 60/US$) – the yellow cell is our base-case
Source: J.P. Morgan estimates; Note: Shaded line shows our base case scenario i.e. USDINR exchange rate at 60.
Table 5: Tech Mahindra’s FY15/FY16 EPS sensitivity to exchange rate movement at different level of margin pull-back (i.e. recouping some of the margin loss from exchange rate movement) - assuming zero offset, Tech Mahindra’s ’s FY16 EPS (at INR/US$ 56) broadly stays the same as consensus FY15 EPS (at INR 60/US$) – the yellow cell is our base-case
Source: J.P. Morgan estimates; Note: Shaded line shows our base case scenario i.e. USDINR exchange rate at 60.

J.P. Morgan -India Jewellery Retail

India Jewellery Retail
WGC estimates Q114 gold jewellery demand dips -9%; expects easing of regulatory restrictions to improve demand

World Gold Council (WGC) released gold demand trends for Q1CY14. India Gold demand in the first quarter was adversely impacted by uncertainty regarding gold import curbs and electoral restrictions. Local premiums declined from the previous quarter after reaching a high of over US$150/oz (in the December quarter).
Q1CY14 trends – India gold jewellery demand (in volume terms) declined -9% in Q1CY14 to 145.6T. But this demand was at par with past five year average. Investment demand (bar and coin) also remained restrained and below five year quarterly average declining -54% y/y in Q1CY14 (in tonnage terms).
India Jewelry Demand Quarterly Volume Trend (Tonne)
Source: WGC (World Gold Council)
India Jewelry Demand Quarterly Value Trend (US$ Mn)

Source: WGC
India Investment Demand Quarterly Volume Trend (Tonne)
Source: WGC
India Investment Demand Quarterly Value Trend (US$ Mn)
Source: WGC
Easing of regulatory restrictions could lead to higher gold demand – According to WGC, in addition to uncertainty surrounding import curbs (whether these will be lifted in 2H which led to some reluctance among consumers to buy), gold demand in Q1 (and to some extent in Q2) was impacted by restrictions imposed on free movement of cash and other assets which dampened genuine purchases of gold. WGC noted that “India is a source of strong latent demand, which will be unleashed as and when the government restrictions on gold are eased. Indicative of this is the strength of demand in the UAE, which can be taken as a proxy for Indian demand given the prevalence of non-resident Indians among the gold-buying populace”. UAE saw demand of 22.1 T which was the highest quarterly total since Q32008 as per WGC aided by lower gold prices.
Decline in premiums QoQ - Local premiums, after reaching ~US$150/oz in the December quarter, declined due to subdued demand and marginal easing on the supply front (import licenses were granted to five additional banks to import gold).
Local gold price premiums (weekly) US$/oz
Source: WGC
India gold supply estimates


J.P. Morgan - Westlife Development

Westlife Development
Weak SSG trends (-10.5% in Q4) sustain; focus on cost mgmt/new formats remains

Westlife Development (WLDL, not covered) primarily focuses on operating quick service restaurants (QSR) through its subsidiary Hardcastle Restaurants (HRPL). HRPL is master franchisee for McDonald’s for India’s southern and western regions, and operates 184 restaurants with an employee strength of over 8,000. Current store split: Maharashtra (47%), Karnataka (23%), Gujarat (12%), Andhra Pradesh (8%), Tamil Nadu (7%), Kerala (2%) and Madhya Pradesh (2%).
WLDL’s results highlighted continued weak demand trends being faced by the QSR industry. Same store sales growth (SSSG) continued to worsen, with WLDL registering SSSG of -10.5% in Q4 (vs -9.8% in Q3, -5.5% in Q2 and 0.5% in Q1).
Figure 1: WLDL SSSG trends
Source: Company
Figure 2: WLDL - Quarterly restaurant additions
Source: Company
WLDL registered a revenue decline of -1% in Q4FY14. However, it did well on gross margins (+320bp y/y) due to efficiency in product management, better mix and menu pricing. Despite the decline in SSSG, new restaurant openings and higher staff (+180bps y/y) and occupancy costs (+520bps y/y) led to a -410bp y/y contraction in EBITDA margins. WLDL added five new restaurants in Q4FY14 (three in Karnataka and two in Gujarat).
Key takeaways from the management call:
Consumer demand worsened in 2HFY14; expect muted consumer sentiment over next the 6-12 months– The company noted that consumer sentiment remains weak and will take some time to revive. Mgmt highlighted that sentiment worsened in 2HFY14 relative to the first half. Given the impulse purchase nature of the QSR category, higher footfall in malls and the high street generally translate into higher sales. However, barring the discount season, footfall at present in malls and the high street remains under pressure.
Expansion plans maintained – Despite a challenging environment, WLDL guided for 70-100 McDonald’s store openings every two years. It also plans to take the McCafe (in-store café) count to 75-150 over the next three to five years.
Focus on improving gross margins – WLDL highlighted its focus on improving gross margins over the medium term driven by better product mix (premium burgers, beverages), supply chain efficiencies (increasing farm productivity) and pricing.
Focus on loyalty not discounting – Mgmt categorically stated that it does not intend to use discounting as a means of attracting customers (which is the strategy currently being employed by most other QSR players to drive sales in a challenging environment) and would instead focus on loyalty programs (loyalty cards, etc.) in order to reward and incentivize repeat customers.
McCafe progressing well; lower payback period – Mgmt highlighted that the McCafe brand extension has received a healthy response since its launch in Oct’13. Payback period here is lower relative to McDonalds’s stores, as the in-store café is not only able to benefit from existing customer traffic, but it also draws customers during lean time periods (lunch, etc.). Also, higher margins for the beverage category benefit the overall margin profile.
Drive-through format provides a competitive advantage – WLDL opened stores under the drive-through format in Rajkot in Gujarat and Palakkad in Kerala. Mgmt highlighted that the response to this format has been encouraging, and provides WLDL with a first-mover competitive advantage. The store size here is ~3,500-4,000sq ft.
Online delivery format – The online delivery format serves as a brand extension and has been progressing well since its launch. Since consumers are in control of their order, ticket size generally tends to be larger. The format is seeing healthy growth and mgmt sees this becoming a significant contributor to sales over the medium term.
Current stores ramping up slowly – Given the subdued environment, current stores are seeing relatively slower initial sales. New stores generally reach sales of Rs40-50mn by the third year and the payback period is around four years.
Higher openings in larger cities – Some 70-75% of store openings will continue to be in the larger cities with smaller towns accounting for the remainder.
Store shutdown/relocation – Six stores were closed/relocated in FY14 and 10-12 stores over the last 15 years.
Price hikes in the region of ~5-6% are expected annually.
Re-imaging stores – Mgmt highlighted that they have been re-imaging stores in order to drive better customer experience and satisfaction. Re-imaging/refreshing of a store generally takes place once in five years.
Limited threat from El Nino – Given a well developed supply chain (irrigated farms) the threat to raw material prices from a potential El Nino does not seem material at this point, as per management.
Royalty set to increase by 1% in FY15.
Table 1: WLDL – Consolidated quarterly financial summary (Rs mn)

Mar'13
Jun'13
Sep'13
Dec'13
Mar'14
Sales
1,767
1,971
1,818
1,777
1,762
Other operating income
24
17
16
18
14
Total income
1,792
1,989
1,834
1,795
1,776






Operating costs & expenses





Food and Paper
797
870
806
779
738
Purchase of traded goods

4
-
-

Employee benefit expense
158
162
157
152
191
Royalty
57
62
58
57
55
Occupancy & other operating expenses
515
667
584
550
605
General & admin expenses
127
106
104
106
121
Total
1,654
1,871
1,709
1,643
1,711






EBITDA
138
118
125
151
65
Margin %
7.8%
6.0%
6.9%
8.5%
3.7%






Other operating income/(expense), (net)
41
4
10
9
36






Extraordinary expense
3

12

15
Net Financial expense
4
5
11
13
17
Depreciation
98
94
106
107
127






PBT
75
23
6
40
(57)






Income tax
(0)
1
(4)
(0)
1






PAT
75
22
10
40
(59)






Gross Margin
54.9%
55.7%
55.7%
56.2%
58.1%
SSSG
7.2%
0.5%
-5.5%
-9.8%
-10.5%






Restaurant operating margin


12.5%
14.3%
11.3%






% of Sales





Food and Paper
45.1%
44.1%
44.3%
43.8%
41.9%
Purchase of traded goods
0.0%
0.2%
0.0%
0.0%
0.0%
Employee benefit expense
9.0%
8.2%
8.7%
8.6%
10.8%
Royalty
3.2%
3.2%
3.2%
3.2%
3.1%
Occupancy & other operating expenses
29.1%
33.8%
32.1%
31.0%
34.3%
General & admin expenses
7.2%
5.4%
5.7%
6.0%
6.9%
Growth y/y





Sales

20%
11%
4%
-1%
EBITDA

-20%
-16%
-1%
-53%
PAT

-72%
-88%
-76%
-178%