Jun 2006 Financial News

Prestige Holdings Limited Releases Half Year Results

Jun 28, 2006

Prestige Holdings Limited (PHL) in the unaudited results for the half year ended May 31, 2006 reported a diluted EPS of 13.44 cents. This represents a fall in earnings on the prior half year period ended May 31, 2005 of 32 % or 6.45 cents.

The Chairman attributes this fall in performance to the impact of the media coverage in January 2006 of the Aspergillosis fungus at a small poultry farm in Cumuto, Trinidad which impacted the Sales of KFC Trinidad and Tobago. Since March 2006 however, Sales have began to recover and are currently at around prior year levels.

Although Sales are improving, KFC Trinidad and Tobago is currently suffering from a severe labour shortage, primarily in North Trinidad.

Also attributable to this negative performance is the loss in Sales in T.G.I Fridays in San Juan, Puerto Rico, due to a shut down in the island for two weeks in May 2006. Additionally, the Company is experiencing significant cost increases at the Pizza Hut restaurants in Trinidad and is exploring alternative supply channels to address this issue.

Group Sales increased marginally by 4% to $281 million but Profit before Taxation from Operating Restaurants decreased by 39 % from $21.9 million to $13.3 million. Profit Attributable to Shareholders decreased by 32% to $8.4 million. This is from an average number of 76 restaurants compared with 74 in the comparable half year of 2005.

The current share price of PHL is $7.11. At this share price and running EPS of 39.99 cents, the shares are trading at a P/E multiple of 17.78 times.

Though we expect the second half year to be a little stronger and while it may be an improvement on the first half, we do not expect it to reach the prior year’s level. Based on this analysis, we forecast a year end EPS of 30 cents and at the current share price, the P/E multiple will be 23.7 times, which is high for the sector. Thus we recommend a SELL on this share.


Gia Singh
WISE Research Team