Restaurant Brands Asia Ltd. share price target

Restaurant Brand Asia (RBA) saw SSSG improve sequentially in Q3FY25, with the India business’ SSSG falling 0.5% (versus a 3% decline in Q2FY25) and the Indonesia business’ SSSG declining 4.1% (versus 15% decline in Q2FY25).

Restaurant Brand Asia’s (RBA’s) Q2FY2025 performance was affected by negative SSSG in the India business and sustained weakness in Indonesia; EBITDA margins rose y-o-y aided by better profitability of the India delivery business and multiple initiatives in Indonesia.

Restaurant Brand Asia’s (RBA’s) Q4FY2024 operating performance beat expectations, mainly led by
higher-than-expected consolidated EBIDTA margins of 11.6% versus expectations of 9.6%; consolidated revenues grew by 16%.

Restaurant Brands Asia (RBA) India revenue growth performance of 23% YoY was relatively healthy with 4% SSSG. SSSG was led by good execution on value proposition (Tasty meals starting at INR 99) driving dine-in traffic. Retail expansion has been decent (added 8 stores) with plans of significant acceleration in H2FY24.

Restaurant Brands Asia (RBA) India revenue performance was healthy (at 4% SSSG vs 7% / 0% / -1% / -9% for Westlife/KFC/Dominos/PH). However, flat YoY ADS despite accelerated penetration of BK Café (now available at 72% BK India stores vs 26% in Q1FY23) is unexciting.

4Q result continues to be unexciting. ADS growth was just 4%YoY (flat 3Y CAGR) despite accelerated penetration of BK Café (now available at 70% BK India stores vs 11% in 4QFY22) and incremental premium launches. Moderate expansion in gross margin is comforting (albeit lower than Westlife).

3Q result has been unexciting. Tapering down of SSSG in India business over last three quarters despite accelerated penetration of BK Café (now available at 66% BK stores) and incremental premium launches has been concerning. In Indonesia, early success in Popeye’s looks promising.