SHAKEY’S PIZZA ASIA VENTURES INC. (PSE: PIZZA)
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SHAKEY’S PIZZA ASIA VENTURES INC. (PSE: PIZZA) Company Presentation January 2017 As of January 2017 “To provide good times and great memories”
Transcript of SHAKEY’S PIZZA ASIA VENTURES INC. (PSE: PIZZA)
SHAKEY’S PIZZA ASIA VENTURES INC. (PSE: PIZZA)
Company Presentation
J a n u a r y 2 0 1 7
As of January 2017
“To provide good times and great memories”
The Prieto
family
became
the master
franchisor
in the
Philippines
Acquired
Shakey’s
trademark
for the
Philippines
in
perpetuity
Established
commissary
Acquired
Shakey’s
trademark
for Middle
East, Asia
(ex Japan,
Malaysia)
including
China ,
Australia
and New
Zealand in
perpetuity
1975 2016 20172006
System-
wide
stores
reached
100
184 system-
wide stores
(end-2016)
Estimated 204
stores by
end-2017
1987
First store
in the
Philippines
1999 2009 2014
Century
Pacific Group
(CPGI) and
Arran (GIC)
acquired
control
Brief HistoryShakey’s established operations span more than 40 years…
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Investment Highlights
Investment Highlights
#1 Pizza Chain and #1 Full Service Restaurant in the Philippines
Strong and well established brand
Proven and scalable business model
Industry leading financial performance
Experienced management team
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3
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5
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Pizza Hut, 16.0%
Max's, 11.8%
Pancake House, 6.0%
Gerry's Grill, 5.0%
Kenny Rogers,
4.8%
Others, 29.6%
Pizza Hut, 34.6%
California Pizza
Kitchen, 2.7%
Papa John's, 2.4%
Others, 2.6%
#1 Pizza Chain and #1 Full Service Restaurant in the PH
Shakey’s dominates the
full service pizza chain
market by value since
2011 until present.
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Full Service Pizza Chain
A 2015 market study
showed that close to 50%
of the total full service
restaurant market by value
is dominated by pizza
players.
Chained Full Service
Restaurant
The full service pizza chain market is dominated by Shakey’s.
Source: Euromonitor
Pizza Chain
Greenwich, 24.3%
Pizza Hut, 23.0%
Yellow Cab, 7.6%
Lots' a Pizza, 4.4%
Sbarro, 3.7%
Others, 8.5%
Domino's Pizza, 1.3%
27.2%
Shakey’s is the leading
pizza chain in the
Philippines by value with
27.2% market share,
trumping Greenwich and
Pizza Hut.
26.7%57.7%
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Pizza
World famous thin crust and hand tossed
pizzas with many different choices
Wholesome combos
Combination of different signature
products offered by Shakey’s
Chicken and Mojos
Signature dish - fried chicken paired with
Shakey’s famous mojos(a)
Family meals
Value for money combination of pizza,
chicken, mojos and beverage
Pasta
Hearty pasta with a wide range of sauces
and toppings paired with garlic bread
Desserts
Wide range of after-meal desserts
Starters
Ranging from fries, mojos, squid rings,
chips and chicken
Soup and Salad
Extensive choice of soup and salad for
health-conscious customers
Bundled offerings catering to families and groups
Differentiated menu with iconic products
Strong and well established brand2
Shakey’s offers a differentiated menu with iconic and well-loved products.
(a) thinly-sliced potatoes coated with Shakey’s breading and fried to a golden brown perfection
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• No royalty payments, leading to shorter payback period and sustainably higher margins vs peers
• Revenue from licensing fees and royalties from franchisees
• Freedom to execute and react faster to market changes
• Opportunity for expansion into international markets
Strong and well established brand2
Beautiful and distinct store environment is Shakey’s offering to every customer;
Shakey’s has full control and ownership of its brand.
Brand ownership means: 2016 Philippine Top Brands:
Restaurant
Category: Brand:
2
Source: Asia’s Top 1000 Brands Survey by Campaign Asia, in partnership with Nielsen Company
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Dine-in
• Most popular sales channel due to unique family
and friends experience
• Aim to “WOW the guest”
Delivery
• Delivery available nationwide
• Single delivery hotline number (77-777) for Metro
Manila and adjacent areas; can be used nationwide
by 2H 2017
Carryout
• Convenient and fast method of sales
Functions
• Legacy and free standing stores have function
rooms for events such as parties and company
gatherings
Online sales
• Active online and mobile presence with own website
and mobile app
• http://www.shakeyspizza.ph
Supercards
• A very popular paid loyalty card
• PHP 499 – annual fee
(a) Includes carryout, catering and functions
Others, 14.4%
Delivery, 25.7%Dine-in,
59.9%
Supercards benefits include:
• A birthday pizza treat
• Buy 1 Take 1 pizza promotion for delivery
• 10% off on dine-in or carryout purchases
• SuperPoints (1 point for every Php100
spent) for dine-in or carryout purchases
Sales split by channel (1H 2016)(a)
Proven and scalable business model Strong and well established brand3
Multiple sales channels provide convenience and accessibility to Shakey’s customers.
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Legacy storesFree standing
storesStrip mall stores Mall stores Others
Typical store
footprint
(sqm)400 300 - 350 200 - 250 120 - 250 120 - 180
# of system-wide
stores as of
end-20169 63 29 71 12
% to total
system-wide
stores5% 34% 16% 38% 7%
Proven and scalable business model3
Shakey’s multiple store formats allows for market and expansion flexibility.
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Proven and scalable business model3
• Firmly positioned in the fast casual segment (A, B and upper C market) that delivers high margins, good volumes, and scale
• Benefitting from key consumer trends – eating out more and upgrading from fast food to casual dining
Brand positioning
• Own commissary for proprietary raw materials protects key supply chain and maintains consistency and control over quality
• Economies of scale and purchasing synergy
Vertical integration
• Long-term leases for store locations at attractive rentals
• Presence of standalone stores (i.e. those outside malls) lead to low rent-to-sales ratio
Asset light approach
• Business model and strong discipline leads to typical payback period of 3-4 years
• Low upfront cost and strong cash generation per store
Short payback period
Proven and scalable business model3
Shakey’s is a well-established brand, while operating on an asset light model.
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Proven and scalable business model3
Shakey’s has a well-established franchise model, with industry leading return on investment (ROI).
Company-owned vs
franchise stores ratio
9
12
8
2
< 10 years> 10 years >30 years > 40 years
No. of fr
anchis
ee
s
Franchise history
Good mix of franchise and Company-owned
stores
• We are able to expand
more quickly in provincial
areas while still controlling
operations and protecting
the brand.
Strong franchise retention and multiple stores per franchisee leads to strong operators
• Majority of our franchisees have been doing business with Shakey’s for over 10 years.
• We maintain a strong relationship with all our franchise partners.
Top 6 franchisees
49%
Others51%
Franchised Stores breakdown
Franchised store ownership
• We prefer multiple store
franchising to maintain
control over our franchise
stores.
Franchise40%Company-
owned60%
System-wide Stores breakdown
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Vicente L. Gregorio, President & Chief Executive Officer (Age: 51)
• Over 30 years of successful experience in the food business
• Started career in the first ever Shakey’s branch in the Philippines
• Key driver of Shakey’s brand strategy, organisation culture, core values and mission since 2003
• Proven management and leadership track record in foodservice retail set-up, expansion and turnaround management
Manuel Del Barrio, Vice-President & Chief Financial Officer (Age: 52)
• Previously the Assistant Vice-President for Finance of Century Pacific Food Inc. (CNPF) and Pacific Meat, Inc.
• Worked in accounting positions at several leading companies
Jorge Ma. Q. Concepcion, General Manager (Shakey’s Philippines) (Age: 60)
• Over 30 years of experience in consumer related business
• Significant experience in the US foodservice industry for about 10 years in numerous managerial positions
Alois Brielbeck, General Manager (Commissary) (Age: 56)
• Over 30 years of experience in the foodservice business
• Moved to Asia in 1986, taking up positions in pastry kitchens in Hong Kong and Tokyo
• Moved to the Philippines in 2000 as Chief Operating Officer for Culinary Systems Specialists Incorporated
• Appointed as Bakemasters General Manager in 2005
Joseph A. Remsa, Consultant – International Development
• Previously the President & CEO of Shakey’s USA
• Leading the development and operations of the Shakey’s brands in Asia, Middle East, Australia and New Zealand
• Over 25 years of experience leading operations and franchising in top chained restaurants
3 Experienced Management Team4
VISION: to be the LEADING and PREFERRED full service pizza chain restaurant
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Industry leading financial performance5
Shakey’s has superior profitability and margins versus its peers.
(a) Pro Forma figures for 1H 2016 have been adjusted for non-recurring income of PHP253mn
809
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Financial Overview
4,0384,553
5,076
2,3772,689
117
143
168
7994
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4,154
4,697
5,244
2,457
2,804
2013 2014 2015 1H 2015 1H 2016
Net sales Royalty & franchise fees Pro Forma Consolidated
5,057
5,696
6,425
3,037
3,448
2013 2014 2015 1H 2015 1H 2016
Revenue (PHPmn) System-wide sales (PHPmn)
Consistent double-digit top-line growth for over 10 years
13.1%
11.7%
14.2%
12.6%
12.8%
13.6%
No price
increase
2013 2014 2015 1H 2015 1H 2016
No. of
stores140 153 167 159 177
% growth - 9.3% 9.2% - 11.3%
2013 2014 2015 1H 2015 1H 2016
SSSG(a)(b) 7.6% 7.6% 3.9% 3.5% 4.2%
(a) System-wide (company-owned and franchise stores)
(b) SSSG represents growth in sales of those operating for at least 15 months and includes relocated stores
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Capital Expenditure (PHPmn)
Capex funded by strong cash flows
Capex for commissary
expansion
533
183
99
8165
295
350
632
193 191
2013 2014 2015 2016E 1H2015 1H2016
SPAVI (Standalone) Pro Forma Consolidated
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Better than industry ROEs and improved Net Debt-to-Equity ratio post-IPO
PHP mns 2015A 1H 2016 PF
(pre-IPO)
1H 2016 PF
(post-IPO)
Total equity 1,578 1,862 3,148
Total liabilities 1,086 5,921 4,750
Total debt-to-equity ratio 0.69 3.18 1.51
Net debt 697 5,595 3,538
Net debt-to-equity ratio 0.44 3.00 1.35
Interest-bearing debt - 4,952 3,952
Gearing ratio - 2.66 1.26
(a) Annualized figure
-
2.48
1.10
2015A 1H 2016A (pre-IPO) 1H 2016A (post-IPO)
Net Gearing Ratio
30.4%37.6%
22.2%
2015A 1H 2016A (pre-IPO) 1H 2016A (post-IPO)
Return on Equity
(a)
The interest-bearing debt of ~PHP5 bn was acquisition
leverage incurred during the change in ownership of
Shakey’s from the Prieto family to the Century Pacific Group.
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Key Growth Strategies
Key growth strategies
• 17 new stores opened in 2016
• Estimate of 20 new stores in 2017 (10 stores signed / under negotiation already)
New store openings
• Improving transaction count and average ticket
• Develop new products
• Increase accessibility - online sales and delivery
• Digital marketing and leveraging Supercard loyalty program
Increase same-store sales growth
• Large potential to increase 3rd party sales with doubling of capacity in 1Q 2017
• Currently only 20% of revenue from 3rd parties due to limited capacity
Grow commissary business
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91.993.4
95.196.7
98.4100.1
101.8103.5
105.2106.9
108.4
Phili
ppin
e P
opula
tion (
mn)
Real GDP Growth Rate (%)
New store openings
Store network remains under-penetrated outside of Metro Manila.
Philippine Full Service Chain Restaurants
Forecasted Value Growth (2014A – 2019E CAGR)
Sustained GDP growth in the next 5 years will support forecasted growth of full-service chain restaurants in the PH.
PIZZA Actual and Projected Store Openings (2011A – 2017E)
Metro Manila,
49%
Luzon (ex-Metro Manila),
38%
Visayas, 9%
Mindanao, 4%
PIZZA Store Footprint as of June 30, 2016
78 81 80 89 97 109
55 55 60 64 7075
133 136 140 153 167184
204
2011A 2012A 2013A 2014A 2015A 2016A 2017E
Company owned Franchise Series3
Source: Euromonitor
7.9%
1.8% 1.5% 1.5%
Pizza EuropeanCuisine
AmericanCuisine
AsianCuisine
Source: Euromonitor
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20
Increase same-store sales growth
Improve in-store experience, develop new products, and grow other sales channels
Develop new product innovations Create new customer experiences
Grow other sales channels
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Existing Potential
Products
Customers
Market
Production
capacity
• Pizza crust, pizza dough balls, bakery
products, sauces, dressings, cheese
shredding
• Frozen pizza dough and similar products
• Customized products
• 80% - Shakey’s
• 20% - 3rd parties such as major airlines,
hotels and other restaurant chains
• Increase sales to 3rd parties such as
fast food operators, other hotels and
airline catering services, etc, which will
add to the overall revenue of the group
• Philippines • Export to international markets
• Full capacity, primarily to serve Shakey’s
stores
• Move to a larger plant in 1Q 2017 which
will at least double capacity
Grow commissary business
Large potential to increase 3rd party sales with doubling of capacity
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Financial Results
Financial Results – Consolidated Pro Forma (Unaudited)
Consolidated Pro Forma Income Statement
(a) Includes non-recurring income of PHP253mn
in PHP mns 2015A 1H 2016A
Net sales 5,114 2,710
Royalty and franchise fees 168 95
Total revenues 5,282 2,804
Cost of sales (4,095) (1,995)
Gross profit 1,187 809
Operating expenses (606) (366)
Other income 33 308 (a)
Interest expense (2) 0
Operating income 612 751
EBITDA 919 610
Provision for income tax (197) (148)
Net income after tax 415 603
Net income adjusted for one-off item 415 350
Margins
Gross profit 22.5% 28.9%
Operating income 11.6% 26.8%
EBITDA 17.4% 21.8%
Net income 7.9% 21.5%
Adjusted Net income 7.9% 12.5%
Effective tax rate 32.2% 29.7%
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Financial Results – Consolidated Pro Forma (Unaudited)
Consolidated Pro Forma Balance Sheet
in PHP mns 2015A 1H 2016A
Cash 407 326
Financial assets 36 -
Trade and other receivables 444 366
Inventories 256 215
Prepaid expenses 12 19
Total current assets 1,155 927
Related party loan (net of current) - -
AFS investments 683 0
Property and equipment 693 813
Deferred tax assets 34 33
Deferred input tax 36 43
Rental deposits 92 98
Intangible assets 4,765 4,765
Goodwill 1,102 1,102
Total non-current assets 7,405 6,855
TOTAL ASSETS 8,560 7,782
in PHP mns 2015A 1H 2016A
Accounts payable 948 750
Loan payable - current portion 23 23
Income tax payable 60 84
Total current liabilities 1,031 858
Loans payable (net of current) 4,952 4,952
Accrued pension costs 40 62
Accrued rent 43 49
Deferred tax liability 1 1
Total non-current liabilities 5,035 5,064
TOTAL LIABILITIES 6,066 5,921
Capital stock 769 769
Deposit for future stock subscription 1,031 1,031
Other components of equity (20) (30)
Retained earnings 714 93
Total equity 2,494 1,862
TOTAL LIABILITIES and EQUITY 8,560 7,782
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31 24
23 20
(84)(69)
Receivable Days Inventory Days Payable Days
in PHP mns 1H 16 FY 15
NET INCREASE (DECREASE) IN CASH (83) (17)
Cash and cash equivalents, BEGINNING 410 424
Cash and cash equivalents, ENDING 326 407
(30 days) (25 days)
2015A 1H2016A
Financial Results – Consolidated Pro Forma (Unaudited)
Consolidated Pro Forma Cash Flow Statement
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in PHP mns 2015A 1H 2016A
Income before income tax 612 751
Depreciation and amortization 311 109
Working capital changes (106) 11
Income taxes paid (172) (119)
Interest received 5 4
Others (10) (237)
CASH FLOWS FROM OPERATING ACTIVITIES 640 519
CAPEX (370) (191)
Disposal of PPE 3 5
Acquisition of FVPL and AFS investments (477) -
Redemption of FVPL and AFS investments 475 721
Advances to a related party (5,000)
CASH FLOWS FROM INVESTING ACTIVITIES (369) (4,465)
Availment of loan payable - 4,975
Dividends payment (283) (1,102)
Interest payment (2) -
CASH FLOWS FROM FINANCING ACTIVITIES (285) 3,873
NET INCREASE (DECREASE) IN CASH (17) (83)
Cash and cash equivalents, BEGINNING 424 410
Cash and cash equivalents, ENDING 407 326
Financial Results - Audited
SPAVI Audited Income Statement
in PHP mns 2014A 2015A
Change
YoY 1H 2015A 1H 2016A Change YoY
Net sales 4,554 5,076 11% 2,377 2,689 13%
Royalty and franchise fees 143 168 17% 79 95 20%
Total revenues 4,696 5,244 12% 2,457 2,784 13%
Cost of sales (3,639) (4,048) 11% (1,867) (1,977) 6%
Gross profit 1,058 1,196 13% 589 807 37%
Operating expenses (528) (583) 10% (334) (359) 7%
Other income 50 46 (8%) 36 58 61%
Operating income 581 659 13% 291 505 74%
EBITDA 739 864 17% 386 566 47%
Provision for income tax (152) (179) 18% (78) (140) 79%
Net income after tax 429 480 12% 213 365 71%
Margins
Gross profit 22.5% 22.8% +0.3pps 24.0% 29.0% +5.0pps
Operating income 12.4% 12.6% +0.2pps 11.8% 18.1% +6.3pps
EBITDA 15.7% 16.5% +0.8pps 15.7% 20.3% +6.1pps
Net income 9.1% 9.2% +0.1pps 8.7% 13.1% +4.4pps
Effective tax rate 26.2% 27.2% +1.0pps 26.8% 27.7% +0.9pps
*
* IH 2016A financial data have been consolidated to include the subsidiary SSI.
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Financial Results – Audited
SPAVI Audited Balance Sheet
in PHP mns 2014A 2015A 1H 2016A
Accounts payable 1,038 949 751
Loan payable - - 23
Income tax payable 50 58 83
Total current liabilities 1,088 1,007 856
Loans payable (net of current) - - 4,952
Accrued pension costs 30 37 58
Accrued rent 41 43 49
Deferred tax liability - - -
Total non-current liabilities 71 80 5,059
TOTAL LIABILITIES 1,158 1,087 5,915
Capital stock 369 769 769
Deposit for future stock subscription - - -
Other components of equity (4) (20) (30)
Retained earnings 900 830 208
Total equity 1,265 1,578 946
TOTAL LIABILITIES and EQUITY 2,423 2,664 6,861
in PHP mns 2014A 2015A 1H 2016A
Cash 406 389 308
Financial assets 39 36 -
Trade and other receivables 433 567 5,417
Inventories 255 239 198
Prepaid expenses 11 11 18
Total current assets 1,144 1,241 5,941
Related party loan (net of current) 24 8 55
AFS investments 687 683 0
Property and equipment 440 577 698
Deferred tax assets 27 34 33
Deferred input tax 26 32 39
Rental deposits 75 90 95
Intangible assets - - -
Goodwill - - -
Total non-current assets 1,279 1,423 920
TOTAL ASSETS 2,423 2,664 6,861
* IH 2016A financial data have been consolidated to include the subsidiary SSI.
*
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*
in PHP mns 2014A 2015A 1H 2016A
Income before income tax 581 659 505
Depreciation and amortization 164 210 58
Working capital changes (77) (233) (29)
Income taxes paid (156) (172) (109)
Interest received 6 5 4
Others 2.2 -10.7 10
CASH FLOWS FROM OPERATING ACTIVITIES 520 458 439
CAPEX (295) (350) (183)
Disposal of PPE 15 3 5
Acquisition of FVPL and AFS investments (1,004) (477) -
Redemption of FVPL and AFS investments 648 474 721
Advances to a related party - - (5,000)
Others (6) 25 (51)
CASH FLOWS FROM INVESTING ACTIVITIES (642) (325) (4,508)
Availment of loan payable - - 4,975
Dividends payment (134) (150) (987)
Interest payment - - (0)
CASH FLOWS FROM FINANCING ACTIVITIES (134) (150) 3,988
Effect of exchange rate changes - - -
Other proforma adjustments - - -
NET INCREASE (DECREASE) IN CASH (256) (17) (81)
Cash and cash equivalents, BEGINNING 662 406 389
Cash and cash equivalents, ENDING 406 389 308 * IH 2016A financial data have been consolidated to include the subsidiary SSI.
Financial Results – Audited
SPAVI Audited Cash Flow Statement
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*
Stock Price Performance
As of 01/16/2017
Current Price
(as of 01/16/17)
PHP 12.28
Initial Listing Price PHP 11.26
Range since listing
date (12/15/16 – 01/16/17)
PHP 10.90 – 12.60
Market Capitalization PHP 18.01 Billion
USD 361.0 Million
Shareholding
Structure
Century Pacific Group, Inc. (CPGI) : 52.0%
Arran Investments Private, Ltd. (Arran) : 18.5%Prieto family : 6.5%
Number of
Listed Common Shares
1,531,321,053
Free Float (%) 23.0%
Absolute Performance
(12/15/16 – 01/16/17)
+9%
Relative to Index
(12/15/16 – 01/16/17)
+4%
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This document is highly confidential and being given solely for your information and for your use and may not be, or any portion thereof, shared, copied, reproduced or
redistributed to any other person in any manner.
The statements contained in this document speak only as of the date which they are made, and the Company expressly disclaims any obligation or undertaking to
supplement, amend or disseminate any updates or revisions to any statements contained herein to reflect any change in events, conditions or circumstances on which any
such statements are based. By preparing this presentation, none of the Company, its management, and their respective advisers undertakes any obligation to provide the
recipient with access to any additional information or to update this presentation or any additional information or to correct any inaccuracies in any such information which
may become apparent.
This presentation contains forward-looking statements based on the currently held beliefs and assumptions of the management of the Company, which are expressed in
good faith and, in their opinion, reasonable. Forward-looking statements involve known and unknown risks, uncertainties and other factors, which may cause the actual
results, financial condition, performance, or achievements of the Company or industry results, to differ materially from the results, financial condition, performance or
achievements expressed or implied by such forward-looking statements. Given these risks, uncertainties and other factors, recipients of this document are cautioned not to
place undue reliance on these forward-looking statements.
Any reference herein to "the Company" shall mean, collectively, Shakey’s Pizza Asia Ventures Inc. and its subsidiaries.
Taguig City, Philippines
SHAKEY’S PIZZA ASIA VENTURES INC.
www.shakeyspizza.ph
http://edge.pse.com.ph/companyInformation/form.do?cmpy_id=664
+632-839-0156
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