Business / Companies
Robust performance from Innscor
28 Sep 2011 at 08:09hrs | Views
Innscor posted a strong set of its financial year 2011 results. Attributable earnings grew 74% to $26.1 million in line with our expectations of $25.9 million.
Strong cash generationDue to its orientation towards FMCGs, Innscor's business is generally not capital intensive. As a result, cash generation is strong and return on assets and capital employed high. EBITDA / OCF conversion is above 100%, implying capex can be funded from operating cash flow, which will enable Innscor to increase its dividend payout ratio over time.
Earnings leverage from franchise systemFast Foods and retail outlets operate as franchise units, although the majority are owned by Innscor. Earnings leveraged on a strong franchise system can provide significant earnings momentum as franchise income outstrips the fixed nature of the franchise support system.
Addmore T. Chakurira of Imara Stockbrokers says that in their view, Innscor's valuation is attractive considering the impressive growth prospects and defensive nature of the earnings. Innscor is dominant in its businesses and we expect the earnings growth rate to improve substantially with any improvement economic climate. They advice investors to Buy the stock.
Strong cash generationDue to its orientation towards FMCGs, Innscor's business is generally not capital intensive. As a result, cash generation is strong and return on assets and capital employed high. EBITDA / OCF conversion is above 100%, implying capex can be funded from operating cash flow, which will enable Innscor to increase its dividend payout ratio over time.
Earnings leverage from franchise systemFast Foods and retail outlets operate as franchise units, although the majority are owned by Innscor. Earnings leveraged on a strong franchise system can provide significant earnings momentum as franchise income outstrips the fixed nature of the franchise support system.
Addmore T. Chakurira of Imara Stockbrokers says that in their view, Innscor's valuation is attractive considering the impressive growth prospects and defensive nature of the earnings. Innscor is dominant in its businesses and we expect the earnings growth rate to improve substantially with any improvement economic climate. They advice investors to Buy the stock.
Source - Imara Stockbrokers
