Indonesia franchise boosts Delifrance earning prospects
Indonesia franchise boosts Delifrance earning prospects
SINGAPORE (Reuter): Delifrance Asia Ltd's expansion of its
French-style cafes to Indonesia prompted analysts yesterday to
revise upwards the company's earnings prospects.
"The impact is definitely going to be positive. At least in
the next two to three years, we will see Delifrance realizing
franchising fees," Soc-Gen Crosby analyst Michael Ong told
Reuters.
On Wednesday, Delifrance said it had agreed on a master
franchise and joint venture with Indonesian partner PT Citra
Bonang, the family holding of Indonesian businessman Kris Wiluan.
Wiluan is also the president director of Indonesian steel
giant PT Citra Tubindo, which supplies oil and gas pipeline
products.
Under the agreement, PT Citra Bonang will have the exclusive
rights to operate Delifrance outlets in Indonesia. As partner in
a 50:50 joint venture company, to be named PT Delifrance
Nusantara, it will also make and sell Delifrance bakery products
in the country.
Delifrance, which has 144 outlets in Singapore, Malaysia, Hong
Kong, Australia, China and the Philippines, said it was
targeting to open 120 Delifrance outlets in Indonesia by 2006.
Analysts said Delifrance stood to reap up to Singapore $1.5
million in franchising fees alone immediately with the opening of
about 30 outlets within the first year.
The Indonesian contribution is expected to be reflected in the
group's 1998 earnings.
For the financial year ended June 30, 1997, Delifrance's net
profit was forecast by analysts in the Edinburgh Publishing
Estimate Directory at S$8.8 million, up 29 percent over the
previous year.
Analysts said they expect the company to see even higher
growth rates for 1998 because of the Indonesian deal.
"Prospects for Delifrance are very good. But it is a long-term
buy...(I)n terms of price earnings it is not cheap. A lot of the
expectations have been factored in the share price," said Nora
Cheng, investment analyst at HSBC James Capel Securities.
Delifrance stood at S$1.88 at midday Thursday after hitting a
high of S$1.90. Volume was active with over 1.3 million shares
traded.