Taste listing loses sizzle on rate hike
Wendy Hall
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Consumer Industries Reporter
FAST-food franchise group Taste Holdings was battered by investors in the shareÆs first day of trading on AltX.
The share was trading at 81c in afternoon trade, down 14% on the prelisting private placement share issue price of 90c. It opened well, trading at 95c, but declined steadily during the day to close at 84c, 11,6% down.
Taste, owner of Scooters Pizza and MaxiÆs franchise outlets, raised R22,5m in a private placement ahead of yesterdayÆs listing.
In its prospectus, the group forecast that sales for the year ended next February would improve 42% to R343m, and revenue would increase 40%, which included the addition of 30 new stores across both chains.
Group sales for the year to February increased 165% to R241m, including contribution of the 39 MaxiÆs outlets acquired in April last year. Revenue for the year increased 88%, of which MaxiÆs accounted for 40%.
Coronation Fund Managers investment analyst Quinton Ivan said TasteÆs performance yesterday could possibly be put down to the fact that it was a bad time for a new listing because of market negativity and the interest rate hike.
Ivan said there was less confidence in the fast-food sector as the recent interest-rate hike had resulted in a reduction in disposable spending among consumers, who generally cut back on nonessential spending such as eating out.
Taste planned to expand to become one of the largest food franchise groups in Africa, with more than 600 outlets by 2010.
The group held 91 Scooters Pizza franchise outlets, which it planned to expand to more than 100 by the end of the current financial year, and 39 MaxiÆs restaurants.
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