Tuesday, September 18, 2012

Why not EPF just take over KFC?

I am thinking a little bit controversial here. After all, EPF has already had stakes in so many of Malaysian companies, why not another good franchise? As in my earlier article, I have mentioned of my liking for the local KFC franchise. I like EPF's takeover of PLUS. You see, whenever PLUS gives discount, it is our Malaysian employee's money anyway. I have no qualms over paying EPF for the toll fees - cut it either way (discount or no discount), I still like it.

EPF has the cash, something which Johor Corp does not have much. In fact, I see Johor Corp needing to come out with more cash to buy up 51% of the franchise. No doubt, KFC has a strong franchise and this franchise is not something that Johor Corp is extremely good at managing.

If EPF can manage RHB and PLUS decently well, it can manage KFC well too - with good managers. If you look at facebook or youtube, the Malaysian KFC franchise has now turned into a little bit of a racial thing - which shouldn't be the case. C'mon, selling and eating fried chicken is not supposed to be a racial thing.

Johor Corp is deemed to be a state organization which I do not know why they are very eagerly into KFC so strongly. Political again? If EPF controls the chain - the franchise will be a people's asset which I think EPF (with some good IR) will be able to explain well.

Not cheap

After all, the price of RM4.00 - the total purchase price is going to be RM3.3 billion. At KFC's last year (2011) Net Profit of RM144 million, that translates to 23x earnings. Yes, KFC is a cash generating business, but this business still needs cash for expansion. EPF owning KFC will be in fact more beneficial as Johor Corp would probably be squeezing the cash harder than EPF.

I am not able to speculate on why the takeover takes so long to be completed. Who is not happy here? Minority Shareholders? EPF? YUM! Restaurant, the owner?

I already know that EPF is to take 25% stake of KFC, but wouldn't it be better for the fund to take up a majority stake? I think that would be less controversial and more beneficial.

By EPF owning KFC, I perhaps will frequent KFC more than McDonald's.


limchohooi said...

Fast food is not good for health, better avoid both!

felicity said...

Haha, but I think I am ok

SureWin said...

Do u notice that the current KFC restaurants do NOT have the previous spice fragrance that we used to get. Cost cutting measures by reducing the use of spices??!!

felicity said...

I do not know how much Yum Restaurant is in control of the management, but usually this will not happen

富升 said...

pls take less meat, is for health.