Friday 13 December 2013 by FIIG Research Company updates

Silver Chef adjusts guidance

Key points:

  1. Management adjusts NPAT guidance down 10-15% from previous announcements
  2. Increased competition has led to lower growth in the GoGetta business
  3. Business line still growing, just at a slower rate

Last week, management of Silver Chef announced a downgrade to previously provided guidance in the range of 10-15%. Previous guidance was for NPAT of $13m for the 2014 financial year. We note that under the new guidance the company still remains profitable and credit metrics remain well within acceptable levels. The downgrade would bring NPAT for FY14 back to around what was reported for FY13 at $11.5m.

In particular the company noted that the core hospitality business continues to perform in line with expectations however the rate of growth in the GoGetta has been slower than previously forecast due to increased competition.

Whilst shares in the company were hit as a result of the reported slower growth, we remain comfortable with Silver Chef from a bond perspective with credit metrics staying largely within expectations.