PERIOD 30-09-2008 (3RD QUARTER)
TURNOVER N3.279b N2.749b
PROFIT BEFORE TAXATION N374.188m N159.001m
TAXATION (N30.157m) (N18.150m)
PROFIT AFTER TAXATION N344.031m N140.851m
BALANCE SHEET INFORMATION
FIXED ASSETS N3.121b N2.328b
STOCK N118.449m N81.441m
TRADE DEBTORS N1.003b N646.359m
CASH AND BANK BALANCES N251.981m N228.480m
OTHER DEBIT BALANCE N2.573m N2.573m
TRADE CREDITS (N210.299m)(N238.666m)
SHORT TERM BORROWINGS NIL (N863.884m)
OTHER CREDIT BALANCES (N481.946m)(N518.215m)
WORKING CAPITAL N684.094m N1.367b
NET ASSETS N3.805b N961.685m
Sector: Food and beverages EPS: 12K
Current Price: N2.17 Projected EPS (FY): 16K
Shares Outstanding: 2,950,000,000 PE: 18.08x
Market Capitalization: N6.40 billion Forward PE: 13.56x
PAT (3Q 2008): N344 million PBV: 1.60x
Projected PAT (FY): N459 million Fair value: N3.54
Tantalizers is one of the quick service restaurants on the NSE. Others are Mr Biggs under the UAC conglomerate and Barcelos, which just concluded a private placement that was successful and hope to be listed by end 2009.
From the balance sheet, Tantalizers increased its collection days of receivables from 86 days to 111 days from the 3rd quarter of 2007 to 2008, while at the same time increased payment days of payables from 11 days to 26 days, which has created a kind of balance for liquidity, however it should be noted that working capital has reduced from N1.367b to N0.684b. This has also helped the company maximize the use of spare cash although there was a slight increase in cash balance from N228m to N252m within the same period.
The debt to equity ratio dropped massively from 1.69 to 0.18, which of course could be explained by the increase in shareholders’ equity from the private placement that was floated prior to listing. This has helped reduce the financial risk the company faced as short term borrowing, which could adversely affect liquidity had been reduced from N864m to nil.
The return on equity dropped from 0.15 to 0.09, as a result of the increase in shareholders’ equity, while the return on assets doubled from 0.02 to 0.05; there is still room for improvement, though. Net profit margin rose from 5% to 10%, which is attributable to an improvement in turnover and a massive cost control embarked by the company, which was aided by the scale of economies that was achieved by rapid expansion of outlets. The earning per share rose from 5K to 12k, which means that Tantalizers is poised to deliver an EPS of 16K for the financial year, going forward. The company achieved sales per share of N1.11 compared with Barcelos that was able to make N0.17 per share.
Going by the forecasted EPS of 16K and at the current price of N2.17, the forward price earning multiple comes to 13.56x, which is very good for a growth stock, that has the potential to halve the PE with a singular result. The price to book value also comes up to 1.60x, which is also very good.
Using the PE, Tantalizers has an intrinsic value of N3.20, while the PBV reveals a value of N3.88; the average of the two sum up to N3.54. The bears have made Tantalizers a real bargain and barring any upheaval in the stock market Tantalizers is set to hit the N3.54 mark within the short term.