Goldring estimates a target price for the Sphera share in the range of 39.07 - 42 lei in the next twelve months

• "For the second quarter of the year, we estimate obtaining an operating profit slightly higher than that reported at the end of the first three months of 2024, at the level of 49 million lei", the Goldring report states

• "Taking into account the number of restaurants already open up to this point, we expect to be included in Sphera's related development plans for this year", say those from Goldring

Goldring has a target price for Sphera Franchise Group (SFG) shares of between 39.07 lei and 42 lei for the next twelve months, slightly above yesterday's mid-market quote of 38.8 lei, as it appears from the latest analysis report published by the brokers on their own website.

The document states that, in the first three months of the year, Sphera's turnover reached 365.9 million lei, up 9.2% compared to the same period last year, due to increased sales in the first in Romania, but also in Italy and the Republic of Moldova. "For the second quarter of 2024, we expect to maintain the same upward trend, estimating a value of total revenues of approximately 384 million lei," the report states.

Operating profit in restaurants increased significantly, by 63.1%, reaching 44.6 million lei in the first quarter, and EBITDA increased by 69.1%, up to 39.8 million lei, against the background of effective control measures of costs and revenue growth. Also, the net profit increased by 192.1% compared to the first quarter, up to 21.4 million lei. "For the second quarter of the year, we estimate obtaining an operating profit slightly higher than that reported at the end of the first three months of 2024, at the level of 49 million lei", according to the report.

For 2024, the Sphera Group estimates a 12% increase in restaurant sales compared to 2023 and targets a normalized net profit of 95.7 million lei, 20% higher than last year. The plans of the operator of the chains of public catering units include the opening of six KFC restaurants and investments of 69 million lei in remodeling and digitalization. "Taking into account the number of restaurants already open up to this moment, respectively four, we expect to be included in the related development plans for this year, although in 2023 the degree of fulfillment of the development plan was only 80%", it is stated in relation.

To evaluate the SFG share, Goldring combined the method based on multiples and the Gordon Growth Model.

By the method based on multiples, where among the comparable companies are McDonalds, AmRest Holdings or Yum! Brands, the brokerage house's team estimated a target price of 39.07 lei for Sphera's shares. Through the Gordon Growth Model, which focuses on the prospect of dividend growth, the estimated target price is 42 lei. Sphera Franchise Group allocated a dividend of 1.05 lei per share this year and intends to propose a similar allocation to shareholders, unless exceptional circumstances arise.

On June 30, 2023, Tatika Investments (Cyprus) had 28.6% of SFG shares, and Computerland Romania - 20.5% and Wellkept Group (Romania) - 17.1%. Tatika Investments and Wellkept Group are owned by Radu Dimofte, and Computerland by Nicolae Badea.

The stock market valuation of the operator of public food chains, which brings together the KFC, Pizza Hut and Taco Bell brands under its umbrella, amounts to approximately 1.5 billion lei.