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Definitely: better comms and true progress.
In February 2019, they targeted 83 stores by end 2020 (majority sub-franchised); 95 by end 2021 and 107 by end 2022 (63% sub-franchised). We therefore need to see 27 sub-franchisee store openings from 2020-22 inclusive and 7 corporate in that time.
Once mature, the 40 corporate stores they expect to have in 2021-22 should be generating £4,280,000 EBITDA per annum (£107,000 per corporate store, up from £80,000 in the original business case). If we see 107 stores at the end of 2022 and the group at breakeven, then this becomes a very interesting business.
And, if they cannot avoid issuing more equity, then existing shareholders deserve pre-emption rights. Not that we'd get it, on past form!
Next update in January makes sense. I just hope for more communication is 2020. They could start with Google as it shows 24 stores not the 70 they actually have.
That makes perfect sense ADrunkenMarcus! Let’s hope the new year / new CEO marks a reset in management style / fortune. As as aside, some nice buys today by DPP standards. Here’s hoping we get a good trading statement in Jan
I do think we need better communication. They seem to have been making further progress in terms of subfranchising and continuing the store rollout, as well as returning to like for like sales. In the early days, they used to issue releases to mark milestone store openings.
In terms of the trading update, I think the reason one was released in December 2018 was because they had an obligation to warn that full year revenues were going to be below consensus forecasts. I *hope/assume*, therefore, that the absence of one so far indicates full year 2019 expectations will be met. And I do want to see continued progress in 2020 and a clear path to group breakeven.
Best wishes,
Thanks for that! Maybe they will tie it with the new chief executive at the end of January.
No official word sadly. Last year it was on 12 December and the year before that it was on the 29 Jan. And the year before that it was on 8 Feb. So I guess anytime between now and early Feb. The 3 year trend would suggest sooner rather than later. But I would imagine that management may well prefer for the financial year to formally end before updating. My money would be H2 Jan, which would also put DPP in line with the normal practice for DPEU and DOM.
As an aside I think it's a shame that DPP management have not made more of an effort to communicate their strategy / updates with shareholders. Given recent history management should be doing everything possible to engage with shareholders rather than the bare minimum. Why, for example, no announcement on the opening of the 70th store. Now many smaller companies are no different. And nor are DPP's sister companies DOM and DPEU paragons of engagement / disclosure. I just think when a mgmt team is shooting the lights out its more forgivable. DPP clearly is not in that camp. So how about starting with a financial calendar, which would answer your question for one thing. Disappointing
Anybody know when the next update is?
The volumes being traded are very low and the spread is high, as you say. At the sell price it's trading for 0.8 times est. 2019 earnings; 0.61 times est. 2020 earnings; and 0.51 times est. 2021 earnings.
Maybe lack of interest because the spread on this share is currently 20%.
But that's true for so many shares. Hard to see a pizza shop going bust but WTFDIK? It makes me want to open a pizza shop! Maybe after I've made my fortune elsewhere with ZIOC and LOGP.
Thanks for your input. Since investing in DPP I've been looking at DPEU which looks more problematic due to raging inflation in their markets. Pleased to report I bought a pizza in Waitrose!
There's a trading update due in December 2019. If they can show they have met or exceeded forecasts for 2019 then perhaps sentiment will change somewhat. They really need to show progress and going through 2020-21 with good momentum.
Since February 2019, when they raised equity and removed the CEO, there hasn't been any similar bad news and yet the share price has kept sliding. They have made progress on gaining sub-franchisees, 39% of the current estate is now sub-franchised, and like for like sales are rising.
Current market cap is less than this year's forecast revenue and only 0.73 times 2020 revenue estimates or .60 times 2021 revenue estimates. It's also less than net asset value. To put it in context, when the share price surged in 2016 it was then at over 10x revenue - the same rating today would give us 50p a share even with more shares in issue than there were then. We have gone from one extreme to the other, yet turnover has grown from £3.8m in 2014 to £12.7m forecast this year and £19.9m in 2021.
I can't help wondering if the market fears further equity dilution, however they do have a borrowing facility to tap once DP Polska is cash positive and the group as a whole is forecast to be EBITDA positive in 2022.
Very positive article on the prospects for the Polish Economy in MoneyWeek today which can't do DPP any harm.
Chunky buy ..extra topping anyone ?
130 trades x 2 ...a bit odd.
As cheap as chips..lol
Yes, topping up has never tasted so good! Most of the "sells" over the past week are actually
buys. I've taken a small position as DPP looks cheap to me. They may be loss-making now but as soon as the profits start to materialise I'm expecting exponential growth. Earlier this year Directors paid a lot more than the current SP and there's £5m in the bank. As for the stores being worth £1m each I can't see it and don't you need to differentiate between company-owned and franchisee-owned or am I missing something? I might add I've NEVER bought a takeaway pizza!
Is this the base ?
GabsterX, I think the UK Dominos, then, was basically loss making from 1985 to 1995. Profits followed in 1996 then floatation in 1999. So, DP Poland is at 1994 if we use the same timescale and they aim to be cashflow positive at the equivalent of 1997. Not that this is worth anything, but helps put DPP into context with the UK one which is people's natural comparator. People don't tend to realise the long, hard slog before DOM exploded.
DP Poland's sales are growing, albeit slowly in 2019, and stronger growth is forecast in 2020 and 2021.
DOM shareholder here, I'm trying to understand DPP from an international new market perspective. From what I've compiled through the annual reports DPP has been making losses each year since 2010.
I'm trying to draw a parallel to what's going on in Sweden and Norway with DOM as losses are increasing and sales not growing. David Wilde (the departing CEO) had said "the UK business was loss making for the first 10 years", so is it expected in a new market to keep losing money for a decade before turning a profit?
“There is nothing wrong with the pizza market in Norway, and the competition is beatable,” he said, noting that the UK business had been loss-making for 10 years before turning a profit. This must be before the company went public as the income statement is positive since 1996.
I have today topped up my holding at 6.75p ... which has pushed my average down a bit but I'm still losing badly on this since getting back involved in early 2018. However I profited handsomely in 2015 & 2016 when I doubled my money both years and banked profits. At 6.75p I'm almost paying as little as our scumbag CEO in the insider giveaway early this year, so maybe, just maybe his incentives are now aligned with ours.
Don't quite share the optimism of some here for the future growth, but I could easily see the Polish market progressing over the next 2-5yrs to become 1/3rd size of UK market and I'd be very satisfied if this was then worth 1/6th value of DOM.
I think you're right, ijr1, when you say 'it will still be a good investment' but it's one to put away in the bottom drawer. That is, it has very long term potential. After DPP's surge in 2015 and 2016, it grew to represent 21% or so of my portfolio in April 2017. It's now fallen to under 5% at a time when there hasn't been new capital added (I'm talking capital values as dividends have been withdrawn). However, my accumulation unit value (yes, I'm a unitisier) has still risen by slightly more than the FTSE All World ($), FTSE 100, FTSE 250 and FTSE All Share since April 2016. Even with this huge hit to DPP's capital value, I have had wonderful performers such as Spirax Sarco Engineering and, more recently, MasterCard, which have pretty much made up for it. (That is, they've managed to keep me ahead of these indexes despite the huge hit from DPP.) I believe in a concentrated portfolio.
EBITDA forecasts have recently been revised from losses of £2.1, £1.5 and £0.8 million in 2019, 2020 and 2021 respectively, to losses of £2, £1.4 and £0.7 million. However, it's group breakeven when it will really start singing and that is now looking like 2022 instead of 2020-21. On an optimistic scenario with the current number of shares in issue and a future estate of 600 stores in Poland, then a market cap of £1 million per store gives us £600 million market cap or a share price of about £2.40. That represents a 30-fold capital return on today's share price but we're talking a generation to get there!
Thanks for that ADrunkenMarcus. It's been very quiet on here recently. I have to admit I've stopped buying shares in DPP as I have enough of a loss and while I think it will still be a good investment it's one I've put away in the bottom draw for now. Let's hope for some good results soon.
I don't know, ljr1.
DOM's projected turnover for 2021 is £654 million. The current market cap is 1.9 times that (was 2.7 a year ago). They have free cash flow forecast for 2021 at £82 million and net borrowing of £167 million vs £208 million in 2019, so they could borrow £41 million and restore borrowing to 2019 levels in cash terms (and less relative to growing earnings and cashflows).
DP Poland's projected turnover for 2021 is £20 million. Applying the same ratio as DOM now - which is arguably undervalued (1.9) - would get £38 million. That would be a share price of 15p. Would DPP's shareholders accept that? Or 2.7 gets us to a 22p share price.
There have been setbacks for DPP and particularly considerable equity dilution. However, the current store estate *is* profitable and profits per mature store have exceeded original plans. It is not breaking even at the group level due to investment in expanding the store estate and losses as immature stores create a drag. I see greater upside for DPP as an independent company but that's provided they get to cashflow breakeven in 2022 as planned. If not, the greater resources of DOM might help (or even DPEU or the Australian one).
Maybe now dominoes UK is sorting itself out this could become a takeover target. Any thoughts?