PIZZA "Shakeys" PH

[nguyentrongphuoc]

#PIZZA | 1Q Earnings Play

Was shocked that a brokerage recommended a restaurant to buy during this COVID ECQ lockdown. At first glance, its easy to think that all restaurants will lose money during a prolonged lock down because deliveries do not really make up most of the sales a dine-in restaurant makes.

Looking into the stock deeper, I found some insights that may be interesting.

Pulled up a google trends chart to see demand of pizza in the Philippines and saw a shocking find. The search term "Pizza" is through the roof!! It even went over December Season! Crazy.

Now you guys might be thinking, the word "Pizza" is so broad, there are so much competitors in the space. Yes that is valid but according to their annual report... It owns 64.2 % of the Pizza Market!!!

Not only that, 42% of Shakeys sales also comes from delivery so a boost in sales here can actually move the needle for Shakeys!

The senior management also bought shares all the way from the bottom of the market until now!! This may be a vote of confidence for the stock and its performance.

1Q report is coming soon, do you think it will perform better than other restaurants? Last year's Q1 report came out on May 14, 2019; this year's report may come around that period.

In parallel, US stock Chipotle's Q1 same store sales only went up 3.3% only (average 8% last year) but their digital sales went up 81%! After that news, the stock rallied to the high of 15%!!

https://www.cnbc.com/2020/04/21/chipotle-mexican-grill-cmg-q1-2020-earnings.html

Fun Facts:

Did you know that Shakeys is not only known for their Pizza? People apparently like their chicken and mojos! HAHAHA

"Fried Chicken" in google trends was doing so well too! Highest in 5 years!

Source:

https://spavi-noo-prod.s3.ap-southeast-1.amazonaws.com/s3fs-public/documents/investor_presentations/PIZZA%20Sustainability%20%26%20Annual%20Report%202018_0.pdf

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What do you guys think? Did you order pizza this ECQ? Out of stock ba siya? Will we see the stock pop?

Let me know what you guys think.

 

[jordanbanks]

@nguyentrongphuoc Quoting from ABACUS (may 5):

Compared to Jollibee, Shakey’s has fewer stand alone stores as a % of total while Max’s is about the same. Going forward, having a higher percentage of stand alone (vs. mall-based) stores may be an advantage given that foot traffic will be severely restricted over the next few months or even quarters. Despite this, PIZZA has more stores open as a % of total compared to both MAXS and JFC. This may be a function of where in malls the typical Shakey’s is located (probably with road side access) which is an advantage in the near term when delivery and takeout is the norm.

Quoting from FMSEC (apr 24):

We expect PIZZA to be one of the least affected among restaurant chains as its main product, pizza, is a top of the mind option for food delivery.

•In its FY19 earnings briefing, the restaurant chain operator noted that it is already seeing 4-5x more volume in delivery orders compared to pre-quarantine levels.

•We recommend buying the stock when it breaks out of its P6.20 resistance.

I actually followed fmsec advice (virtually lang tho kasi at the same time their platform just decided to fk itself, for like what, a week?) as it's almost the same as what I read from its charts back then. Could've made a few decent gains from that.

My opinion for now e these consumer, restaurant stocks would be the first to pop-off pabalik sa pre-ecq levels nila, but won't go up way higher than previous levels. I haven't read through reports ni PIZZA, but looking na it's on the downtrend, there's probably something wrong fundamentally, even pre-covid.

 

[nguyentrongphuoc]

@jordanbanks Can you locate me this disclosure? 4 to 5x sales can move the needle for Shakey's.

42% of its sales is from delivery.

 

[jordanbanks]

@nguyentrongphuoc Not sure if it's in a disclosure, but research arms of brokerages usually make calls to the company they're researching, interviewing them of their current status.

 

[aristocatt]

@nguyentrongphuoc Most likely tumaas nga sales ng Shakey's ngayong ECQ just don't use Google Trends to project pizza sales. ang reason ng uptick na nakita mo sa tool is marami kasing gustong matutong gumawa ng pizza kaya tumaas ang searches for "pizza". tsaka google trends won't tell you "demand" as in sales demand. lastly, if you really want use Google Trends, try searching for "Shakey's" na rin and compare its movement to "pizza"

 

[nguyentrongphuoc]

@aristocatt But shakeys owns 64% of the Pizza market. The buying behavior of middle class Pinoys is to buy Pizza rather than make it at home. They might not have the ovens to make these.

Edit: I checked the Pizza term again... It was not even a spike. Its a flat 99 rating for 3 weeks... Insane

 

[aristocatt]

@nguyentrongphuoc For the past 30 days, people in the Philippines who googled "pizza" also searched for "how to make pizza at home" and "how to make pizza dough". The rest of the top 5 are pretty much the same.

Since March 13 to today (March 13 nga ba start ng ECQ? Haha!), there's "pizza dough without yeast", "pizza dough recipe easy", etc. Meron lang isang sumingit na "Yellow Cab Delivery" sa top 5.

What tools do i use for stocks? Main one was Amibroker. But this was when i still did technical analysis and i had more time. Nowadays i just invest long and i keep it simple.

Lastly, i am not saying bad choice mag-invest sa Shakey's or hindi tumaas benta nila ngayon ah. Just don't use Google Trends lang.

 

[nguyentrongphuoc]

@aristocatt Ah ganon ba ang pag-basa ng Gtrends? I was trying it out kasi a US based trader was using the method to predict earnings / interest in US based companies and was doing good.

Why don't you use TA na? Busy with work etc?

 

[aristocatt]

@nguyentrongphuoc Yes, busy lang talaga. Nagbago na rin risk appetite ko.

 

[nguyentrongphuoc]

@aristocatt What tools do you use then? We are just regular retail traders so tools available is quite small.

 

[spirituallycurious]

@nguyentrongphuoc No reversal from pre ecq perceptions.

 

[skn]

@nguyentrongphuoc The stock is still bearish based on its chart. It already recovered 50% from it's April 1 lows, but its still on a 2-year downtrend. I don't see any fundamental reason for it to breakout during this pandemic period. Perhaps it will go sideways.

 

[nguyentrongphuoc]

@skn Don't you think a performance that is "not as bad" would rock prices higher?

Look at Chipotle, Q1 earnings pop of 15% because of 3% increase in revenue.... liit lang but better than the rest.

Digital marketing sales went up sky high... (81%)

Edit: Sales figures

 

[skn]

@nguyentrongphuoc Perhaps it's "not as bad" performance will help keep the company afloat during the ECQ era. But not so much that it will increase the price action of the stock. After all, pizza is still a discretionary consumer retail product.