Burger Fuel IPO: Dont buy...yet.

The upcoming BurgerFuel Worldwide [BFW.NZ] IPO poses some interesting questions.

They are asking for 15M for a 25% of the company and value the whole shooting match at 60M. That is steep for a company with only 3M sales and a 250,000 loss.

20 outlets makes the unit sales an average of around $150,000 turnover a unit. Not good at all. You should be looking for at least $500,000 a unit for an outlet like that.

The 15M raised is going to be used on expansion and there is of course the possibility that the majority owners will want continuing cash inputs to keep growing.

I think at $1 a share you could pick up this puppy for less than that once we see continued losses mount.

There is alot of competition in this sector, in NZ and abroad, where BF intend to do business.

Having said that, the long-term future of the company could be worth a punt but I have reservations. I like companies to be making profits from day one and for expansion to be funded from profit.

I would avoid at this stage.

I wont be buying at the IPO, perhaps later.


See press release below

Burger Fuel looks for extra capital filling
NBR staff

Josef Roberts & Chris Mason

Fast-food franchise BurgerFuel is set to list on the NZAX and is looking to raise $15 million in capital.

The company is issuing 15 million shares at $1 each, with the option of purchasing additional shares at the same price in 18-months time.

The issue values the whole company at $60 million with public shareholders owning 26.7 per cent.

The remaining shares will held by staff, associate directors and the promoters of the offer, as well as the founder and managing director of the company Chris Mason and Executive Director, Josef Roberts.

Both Chris Mason and Josef Roberts have entered into stand-still agreements running for 12 months in respect of their shares.

The funds will be used to fund expansion into Australia, Europe and the US. At present, BurgerFuel has 19 outlets in New Zealand, and one in Sydney.

Prospectuses can be viewed at www.burgerfuel.com/shares

The company says it is taking an innovative and irreverent approach to capital raising, including a provision for 70,000 of its "VIB members" ("Very Important Burger Connoisseurs") to get the first chance to purchase shares.



Burger Fuel Worldwide @ Share Investor

Burgerfuel: Dubai Marketing Hype!!!
Burger Fuel 2010 Full Year Profit Analysis
Burger Fuel 2010 Full Year Profit Preview
Burger Fuel Worldwide: 2009 Half Year profit analysis
Stock of the Week: Burger Fuel Worldwide
Download full company analysis from Thomson First-Call
Burger Fuel doesn't rule out capital raising
Burger Fuel Worldwide: Closer look at Company Accounts
Analysis - Burger Fuel Worldwide: FY profit to 31/03/09
Burger Fuel: Running on Empty
Burger Fuel leaves investors hungryBurger Fuel management cagey over company progress
Burger Fuel cooks up Dubai deal
NZX share trades with strings attached
Don't buy Burger Fuel, yet
Burger Fuel: Inside info?
Burger Fool IPO: Burger Fool?
Exclusive Interview with Burger Fuel's Josef Roberts
Burger Fuel's Daytime drama
Burger Fuel share price out of gas
Beefing up store numbers
Director explains share price drop
Burger Fuel slims down in value
Burger Fuel and Coke
Marketing Burger Fuel's future
Pumpkin Patch VS Burger Fuel
Burger Fuel results and commentary

Discuss BFW @ Share Investor Forum - Register free




c Share Investor 2007

Global Warning: Tax Iceberg Ahead

It is like sitting on the bow of the Titanic while watching it hit an iceberg. We know it is coming but we don't yet know how big the iceberg is.

Let me help you out dear reader.

If one thought the budget was a killer to business and the economy and it clearly is: increased compliance costs, contributions to employees' savings and the two headed monster the inflationary petrol tax-the 3c cut to business tax still puts business behind- then you have got another thing coming.

The biggest thing missing from the 2007 budget was an indication of looming carbon taxes and costs associated with Labour's lunacy over Kyoto and the global warming myth.

It wasn't even given the once over lightly, in fact it wasn't mentioned at all.

In what will be New Zealand business' biggest challenge in generations, global warming taxes, Cullen is playing fast and lose with our kiwi companies simply because they cannot plan with certainty of the future.

These costs loom large in board rooms around the country, only the NZX board room is relaxed because they look likely to benefit from implementing so-called "carbon trading."

The costs to business and the economy cannot be overstated. Businesses, and eventually individuals who emit carbon will be taxed on those emissions. How much we don't know but what we do know is that these taxes will flow down to the consumer and put a bite on the economy with such force that we may never recover.

Like the 2007 budget, the only winners from carbon taxes will be Governments and an army of bureaucrats who will administer the taxes from yet another acre of new Wellington office space.

The two business sectors with the most to lose will be tourism and agriculture, incidentally the 2 biggest earners of foreign exchange for New Zealand Inc. According to those with a green tinge to their blood, including Sir Richard Branson, airline travel is one of the biggest contributors to Global Warming, with the shipping sector and distance traveled by those ships to get goods to market from this part of the world 2 targets for the highest taxes and red tape due to the perception of their "global carbon footprint."

Already New Zealand's agriculture industry has been given a wake-up call over "food miles" and Tesco in Britain discouraging buying of NZ produce because of the distance it has come. Commentators such as Rod Oram are foisted on their own Global Warming crusades, when they on the one hand advocate for GW and carbon taxes(Oram buys carbon credits to off-set his "carbon footprint")but on the other hand moan when the likes of Tesco actually use the argument he advocates against him.

The tourism industry clearly faces a bleak future if these new taxes take a strangle-hold. The further away a destination, the higher the taxes will be on airfares, airlines and a whole host of industry related business. New Zealand is as far away as one can get from the bulk of the worlds population and it doesn't take Einstein to figure out who the biggest loser will be.

We must not confuse the valid issue of polluting our neighbourhood and planet with the Myth of Global Warming. There has been a turning point in the belief of man-made GW from former believers in the scientific world and the focus should now be to get back to reality and impetus on the real issues around us.

GW associated taxes will kill our already shaky economy and the irony is that the worlds biggest and real polluters will be the beneficiary of our Government's stupidity.


Related Share Investor Reading

Mark Weldon Strikes out on Carbon Trading
Quote of the year
Of Tulip bulbs and Tooth fairies
Global warning: Tax iceberg ahead
Carbon Credit trading puts global markets at extreme risk

Related links

TZ1 Market
Kristen Byrne - 15 year old schoolgirl debunks climate change myth

NZX financial data

• Summary
• Charts
• Dividends
• News
• Announcements
• Price History
• Related Securities

Related Amazon Material

The Great Global Warming Swindle (DVD) Buy new: $14.99 / Used from: $15.99 Usually ships in 24 hours

c Share Investor 2007-2009

The Intelligent Investor: Book Review

If you don’t have this book in your library, then you should not even be contemplating an investment in shares directly, or even indirectly, though a mutual fund.

It is surely not a co-incidence, as Warren Buffett graphically illustrates in his Appendix to this book, that some of the world’s most successful investors learned at the feet of Benjamin Graham and have applied his principles with great success.

This book, like all of Graham’s writings, is easy enough to understand for even lay investors. Graham sets the scene early in the book by explaining the difference between intelligent investing and mere speculation. Using the history of stock market booms and crashes and illustrating them with real life examples, Graham explains how an intelligent investor can stay ahead of the market.

Graham sets out investment principles for both the defensive investor and one who is more enterprising and shows how investor can identify under priced stocks.

As Warren Buffett has said, the two most important chapters in the book are Chapter 8, The Investor and Market Fluctuations, where Graham develops his concept of Mr Market, and Chapter 20, Margin of Safety where he preaches the wisdom of leaving enough room to cover mistakes in judgment of a share’s intrinsic value.

A must buy book, worth every penny, especially during turbulent times.






c Share Investor 2007

Sky City Entertainment Group Ltd: Underperforming

The recent announcement by the CEO of Sky City Entertainment Group Ltd [SKC.NZX], Evan Davies, that management will be looking over "underperforming assets" leaves more questions to ask than it answers.

Decisions

The timing of management for a reassessment of underperforming assets must be questioned.

Indicators that various units of Sky City's business were not cutting the mustard were obvious years ago.

The Sky City Cinema division is the most glaring example of the inability of management to move on from a dumb decision. Even at the time of purchase of the cinemas, it was obvious that they were never going to perform ,even for a moderate return on capital.

Intense competition from other cinema chains and other forms of media coupled with the high capital expense of continued new technology and the roll-out of more screens, made this purchase one of the worst of its time by any company listed on the NZX.

Management ignored these basic facts and shareholders pleas to cut it loose.

Queenstown Casino

For the life of me I cannot understand the rationale of management in keeping an asset that has never returned wealth to shareholders and has yet to make a profit. It appears to this writer that the status of a casino in the prestigious Queenstown tourist mecca and competition with Skylines outlet there(SKCs partner in the Christchurch Casino) is much more important than making a return on capital. Let Barry Thomas have Queenstown, it will never bring much to the bottom line even if the other casino left town.


Adelaide Casino

The Adelaide Casino has much going for it but it is taking far too long for it to deliver an acceptable return to its owners.

There has been much shareholder money pumped into this gaming den and they have been waiting patiently for the cherries to come up in a set of three. So far only 2 keep appearing.

It doesn't look like management can turn this one around. They have been given ample time and money but still keep shareholders with baited breath that spending millions more on this or that improvement will get more punters in the door and spending. It clearly isn't going to work any time soon.

Why now? Timing.

The most curious question left unanswered is that why, after many long years do Evan Davies and management see fit to look at these and other assets again with a view to remove them perhaps from the Sky City portfolio?

Pressure from shareholders hasn't worked in the past. I'm postulating here that Davies has been pressured by the more astute members of the board to do the honest thing and face up to the reality that some of Sky City's assets just do not belong alongside the good ones : Auckland, Hamilton, Darwin and Christchurch Casinos.

I'm guessing that Davies was given an ultimatum, that he either do something and get rid of the losers or ending up being cut himself.

If Davies only listens to board members and not shareholders do they deserve his leadership at the helm?

The question shareholders must ask themselves is, do we still want Evan Davies as our chief decision maker or do we need to put Sky City in the hands of a CEO who can make decisions, when it is appropriate and timely to do so.

What now? Proceeds of a sell-off

Shareholders have seen the Sky City share price become stagnant over the last 4 years, that is because the market hasn't had confidence in management to do the right thing with the assets and shareholders capital that they have at their disposal.

It is clear that high interest rates and business costs have continued to rise across the entertainment sector and other areas of the economy and Sky City Management have racked up over $NZ 1B of debt with some of the recent acquisitions that they have made on behalf of owners.

The proceeds of a sale of Queenstown Casino, a 40% share of Christchurch Casino(this writer doesn't believe it should be sold)Sky City Cinemas and Adelaide Casino seem to start at around $NZ 600M or there abouts.

75% of the proceeds $450M must go towards paying down debt but the rest $150M must be returned to shareholders via a capital return in the form of a special dividend. Shareholders need some payback for years of average returns.

To leave the proceeds of a asset sale in current managements hands will only encourage another burning hole in the pocket approach to investing and that is the last thing that Sky City needs for a good long term future.

A question still remains.

Who is Evan Davies successor and why isn't he in his chair?


Disc: I own SKC shares in the Share Investor Portfolio


Sky City Convention Centre @ Share Investor

Share Investor discusses Convention Centre proposal with CEO Nigel Morrison
Sky City Convention Centre Expansion a Money Loser: Part Two
Sky City Convention Centre Expansion a Money loser
SKC Convention Centre power-point slide illustrations & SKC submission to Auckland City Council

Sky City Entertainment Group @ Share Investor

Share Investor's Total Returns: Sky City Entertainment Group Ltd
Sky City Entertainment Group Ltd: Presentation to Macquarie Group
Morningstar Revalues Sky City Entertainment Group
Guest Post - Michele Hewitson Interview: Nigel Morrison
Failed Sky City bid for Christchurch Casino good news for Shareholders
Sky City Entertainment Group Ltd: Christchurch Casino bid falls short of Investment Criteria
Sky City Entertainment Group Ltd: Never mind the width feel the volume
Sky City Annual Meeting & 2011 - 2012 Profit Forecast
Stock of the Week: Sky City Entertainment Group Ltd
Sky City set to lose National Convention Centre bid
Sky City Entertainment Group: Australian Acquisition on the Cards?
Sky City Entertainment Group Ltd: 2010 Full Year Profit Analysis
Sky City Entertainment Group 2010 Full Year Profit Preview
Chart of the Week: Sky City Entertainment Group Ltd
Share Investor discusses Convention Centre proposal with CEO Nigel Morrison
Share Investor Q & A: Sky City CEO, Nigel Morrison
Sky City Entertainment: CEO Nigel Morrison discusses 2010 HY
Sky City Convention Centre Expansion a Money Loser: Part Two
Sky City Convention Centre Expansion a Money loser
Sky City Entertainment Group Ltd: Download full Company analysis
Sky City 2010 full year profit looking good
Long Term View: Sky City Entertainment Group Ltd
Sky City Entertainment: CEO Nigel Morrison discusses 2010 Half Year
Sky City Entertainment Group 2010 Interim Profit Review
Sky City to focus on Gaming
Sky City debts levels now more manageable
Insider Trading on Sky City shares
Sky City Profit Upgrade: Always on the Cards
Sky City's Current Cinema "Boom" a Horror Story in Disguise
Stock of the Week: Sky City Entertainment Group
Are Insiders selling Sky City Stock?
Sky City Entertainment 2009 Interim Result Preamble
2008 Sky City profit analysis
Sky City share offer confusing and unfair for smaller shareholders
Sky City Entertainment 2008 Full Year profit results , NZX release, 2008 full year presentation, result briefing webcast, financial statements
Sky City 2008 profit preamble
Sky City outlines a clear future plan
As recession bites Sky City bites back
Sky City Assets: Buy, sell and hold
Why did you buy that stock? [Sky City Entertainment]
Sky City Share Volumes set tongues wagging
Sky City half year exceptional on cost cutting
NZX Press release: Sky City profit to HY end Dec 2007
Sky City Cinemas no Blockbuster
Sky City Entertainment share price drop
New Broom set to sweep
Sky City Management: Blind, deaf and numb
Sky City sale could be off
Opposition to takeover
Premium for control
Sky City receives takeover bid
Sky City Casino Full Year Profit to June 30 2007
Setting the record straight
Sky City CEO resigns
Sky City Casino: Under performing
Sky City Casino 2007 HY Profit(analysis)
Sky City Casino 2007 HY Profit


Discuss SKC @ Share Investor Forum
Download SKC Company Reports

Recommended Amazon Reading


The Intelligent Investor: The Definitive Book on Value Investing. A Book of Practical Counsel (Revised Edition) by Benjamin Graham
Buy new: $14.95 / Used from: $6.99
Usually ships in 24 hours




c Share Investor 2007