Westlife Foodworld Ltd. share price target

Annual store expansion to be 25-30 stores with Experience of The Future (EOTF) the key focus: Management highlighted that it targets to add 25-30 stores annually (no change in plans amidst slowdown) with focus on expanding in existing core cities.

Near-perfect; positive surprise on both revenue and margin Westlife's 1QFY19 earnings report is a testimony that the business is well-placed to deliver the targets that management had set for itself, viz. 7-9% comps every year and doubling of margin by 2022 (see our earlier report for details). The near double-digit margin delivery during the quarter (9.9% - up 431bps YoY) was a positive surprise to us, led by a more favourable demand environment, the successful revamp of its value platform and further scale-up of brand extensions that helped drive a 30% growth in revenue and more-thandoubling of EBITDA. We expect this strength to sustain in the coming quarters - earnings growth trajectory would accordingly remain strong and could help drive further stock...

Westlife Development Limited(WDL) is operating Quick Service Restaurants (QSR) in India through its subsidiary Hardcastle Restaurants Pvt. Ltd. (HRPL). The Company operates a chain of McDonald's restaurants in west and south India, having a master franchisee relationship with McDonald's Corporation USA. Hardcastle Restaurants Pvt. Ltd. (HRPL) is a McDonald's franchisee with rights to own and operate McDonald's restaurants in India's west and south markets. HRPL has been a franchisee in this part of India since its inception in 1996. The...

We see Westlife to benefit from its continued focus on innovation and improving customer experience in anticipation of an eventual uptick in consumer sentiment. We estimate 17% sales growth over FY17-22E on high-single digit SSSg.

Q1 sales grew 14% YoY with SSSg at 8.7% the highest in past four years. Gross margin was stable at 60.1%, but EBITDA margin improved 90 bps YoY at 5.6%, as higher staff costs (up 90 bps YoY) were more than offset by operational efficiencies (increasing restaurants under ROP2.0 platform)

Q4 sales grew 7.5% YoY.SSSg grew modest 1% YoY on lower footfalls at high street and mallsdue to an early end to EoSS. Gross margin improved 40bps YoY to 61.3% but EBITDA margin declined 60bps YoY on higher staff costs (up 140bps YoY).