Leading analyst Simon French of Panmure Gordon takes a look ahead to the full year results for Prezzo, the Jonathan Kaye-led chain, which will update on the market on the 52 weeks to 30 December next Wednesday (10 April).
He said: “We forecast £17.5m PBT (5.6p EPS) broadly in line with consensus expectations of £17.4m PBT (5.5p EPS). We do not anticipate much detail on current trading but expect the group to reiterate its guidance of c25 new restaurant openings per annum. The stock, like its peer The Restaurant Group, enjoyed a re-rating during Q1 to trade on a 2013E adjusted EV/EBITDAR of 7.7x (P/E 14.2x). We reiterate our Hold recommendation and increase our Target Price from 70p to 86p, based on a 2013E adjusted EV/EBITDAR of 7.5x.
“For the 26 weeks to 1 July, Prezzo announced H1 results broadly in line with our expectations. Revenue increased 14% to £68.1m and EBITDA increased 11% to £11.0m with PBT increasing 4% to £7.6m (2.4p EPS) versus our forecast of £7.8m PBT (2.5p EPS). The business had performed well over the summer months and the group was confident of further progress over the remainder of the year.
“We do not anticipate much detail on current trading but expect the group to reiterate its guidance of c25 new restaurant openings per annum. We expect continued cost inflation in food and utilities which we anticipate the group will look to offset through lower levels of discounting.
“On the back of the interims results we downgraded our 2012E forecast by c2.5% to £17.5m (5.6p EPS) reflecting slightly weaker than anticipated H1 performance and the fragile consumer outlook for the remainder of the year. Our forecast is broadly in-line with consensus expectations of £17.4m PBT (5.5p EPS). In 2013E we forecast c12% growth in earnings to £19.4m PBT (6.3p EPS) broadly in line with consensus expectations of £19.2m PBT (6.2p EPS).
“The stock, like its peer The Restaurant Group, enjoyed a re-rating during Q1 to trade on a 2013E adjusted EV/EBITDAR of 7.7x (P/E 14.2x). We reiterate our Hold recommendation and increase our Target Price from 70p to 86p, based on a 2013E adjusted EV/EBITDAR of 7.5x.”
