- Brokers pick up coverage on Collins Foods
- Both UBS and Deutsche Bank rate stock as a Buy
- Upside from continued solid same store sales growth
- New store openings, refurbishments should also grow earnings

By Chris Shaw

Collins Foods ((CKF)) is one of Australia's largest restaurant operators, controlling 119 KFC restaurants under franchise agreements and 26 Sizzler Restaurants as the owner of the Sizzler trademark in Australia and in 68 other countries.

Shares in Collins Foods listed on the ASX on August 4 and brokers are now picking up coverage, with both UBS and Deutsche Bank initiating coverage on the stock this week. Both brokers are positive, commencing coverage with Buy ratings.

UBS points out Collins Foods has historically delivered resilient growth, as same store sales growth for KFC has been 5.9% and for Sizzler 6.3% from FY02 to FY11. Refurbishment of stores should see solid growth continue, Deutsche noting 84 of the KFC stores are expected to be refurbished over the next five years. This compares to 19 refurbishments over the past three years.

New store openings should also deliver some growth. According to Deutsche Bank, the franchise agreement under which Collins Foods operates will allow for new store openings of up to seven new stores annually over the next five years.