Member Info for Peterson

3. We have confirmation that EUR debt has been fully refi'ed. "no hard currency left in the Group". Rouble loan is nicely aligned with the growing importance of RUB revenue
4. Nice commentary from CEO that costs are being tightly managed and "Historically, the business has been relatively robust in challenging economic conditions and we continue to monitor the situation closely given the uncertain short term outlook. This is my third such experience at the helm of DP Eurasia during a difficult macroeconomic environment in Turkey and on each previous occasion we have come through stronger relative to the competition due to our market leadership position, focus on value and service to the customer and resilient franchise partners."
4. Brokers have updated their target prices to 130p (down from 300p but a significant positive delta from today's SP).
5. On a per store basis of roughly £225K per store DPEU is now by far the cheapest of all the listed Domino's global businesses
So in summary a high risk investment no doubt. But my does the current SP price in a lot of bad news. On a 5 year view and assuming economic / FX normalisation I believe the broker views are deeply conservative and 90p will be seen as as a once in a lifetime entry point. Of course do your own research...

Really not bad all things considered and only strengthens my view that this share is deeply oversold, CAVEAT, for those with a long term perspective! I just say that of course because anything can happen in the short term, particularly in the world of Turkish politics / economics. That aside, some interesting data points:
1. Growth strategy remains intact. 700th store will open in late 2018, with the emphasis on Russia / CIS, which are obviously less impacted by the crisis and will help with diversification
2. Board expects full year EBITDA to be in line with expectations

Just to add that most active fund managers do not consistently beat index. That's not my subjective opinion. That's just fact. They also engage in group think and herd behaviour. Again, fact. And on the flip side as a growing amount of money is managed by passive index trackers, price discovery is undermined and you get self-perpetuating share price patterns both up or down. To my mind RPC's SP is a product / victim of these trends. And seeing "War on plastic" every other day in the headlines cannot have done it any favours... Again, all IMHO.

Why? With what agenda? I'm merely providing my thoughts on possible reasons for the recent SP weakness. You can bet your last dollar that Bain / Apollo would not be considering a bid here if they did not see significant value on offer, over and above the acquisition premium that they will pay. And remember that as non-strategic buyers it's more difficult for them to hide behind / generate synergies to justify that premium as they are not merging assets. So either they are fools (and they are not based on their formidable track record) or they are seeing something the market isn't.

Now the bid may well fail because they discover some accounting skeletons in the cupboard. But it may just be that the market has wrongly got itself worked up over creative accounting. A buy and build strategy, which is what RPC were following by definition tends to bring a lot of accounting restatements. Cash flow generation was robust at year end. And this is what the PEs will be analysing. The market has clearly fallen put of love with the company, whether it be over accounting, plastic, strategy, etc. I mean management said as much themselves post results. The point is the market is not always right. Or perhaps charitably the market has a different risk appetite than PEs...

Very interesting! Thanks for posting. I don't disagree. Market is behaving as if GDPR is terminal. The truth is that only time will tell. I can only comfort myself that given the equity they have invested in the business management will be / are moving heave and earth to compensate / work around the changes. Also that I don't seem to be receiving any less e-mails than before, which has been annecdotally been confirmed by friends and family. So perhaps you have a fantastic business model that now becomes a great or merely an ok business model. But again you are coming from 50% gross margins, 20% net income margins. And you are getting this for less than 4x EBITDA, a 6% historic yield, in an unlevered vehicle. That's an interesting risk / reward proposition. I'm not trying to be flippant here and there may be company specific issues that become apparent on the 24 September and insiders are front running. But, But, But... By comparison Fevertree (and I know its complete apples and pears) with a not dissimilar gross margin and net income margin profile is trading on 75x EBITDA, close to a 100x historic PE, 0.3% yield. Oh and founders are continuously selling shares. With no disrespect to their wonderful business model but in today's market something "strange" is definitely going on! I guess all we can do is wait for the 24th. I have to hope that if it wasn't for the closed period Ory would be filling his boots at these levels...

Amazing how the public markets are mis-pricing certain companies. Is it because we have all become so fond of simple stories i.e. in the case of RPC "plastic is bad". As if RPC were dependent on producing plastic straws. In any case thanks to the PEs for once (unlike when they are pushing their over priced / over levered IPOs) for seeing value where others don't. Assuming Bain and / or Apollo ultimately push the button one would hope that the offer price should be at least 900p, and hopefully much more. Based on intrinsic value, broker target prices and typical (30%+) acquisition premia to average 6M share prices they will still be getting a bargain at this level. I'm obviously grateful for the nice, quick profit on this one but sad as management had a credible buy and build story here. But sadly because of gutless, ignorant fund managers it's going to the the top 0.1% via their private Private Equity holdings who really benefit in the long term here and not Joe public.... Rant over :)

Frisby,
I couldn't agree more. Shareholders are panicking and the fall is becoming a self-fulfilling prophecy, presumably exacerbated by stop losses kicking in. Based on the latest trading update, which confirmed that the "group continues to trade in line with revised market expectations" and on a fundamental value basis this seems hard to justify. As was mentioned below the recent regulatory changes of course been a significant net negative. But at these levels the market is increasingly pricing the business model for collapse. But lets remind ourselves of certain bullpoints: 1. Strong net cash positive balance sheet 2. Valuation of less than 4x EBITDA 3. excellent ROCE 4. diversification in progress 5. founder share purchases (albeit after a large prior share sale). I have no special insight here beyond what's in the public domain but this just feels like shareholder capitulation. I hope that the Interims bring some counter weight to the rampant pessimism.

NB: In a way I see some read across here from the recent travails at RPC (misunderstood / incorrectly valued) where we have had some very good news this morning. Basically in today's skittish environment the public markets seem to be doing a terrible job at valuing certain companies. On the one hand you have the ridiculously inflated valuation of companies such Tesla that can do no wrong and then companies such as XLM that can no do no right. The only comfort is that in the long term value does shine through, which gives fantastic opportunities for those who are prepared to go against the herd...

Just for purposes of full disclosure I have a small long only holding here, which I hold in my smaller "speculative bucket" but don't feel I have a particular dog in this fight. I have added this morning as I feel that at these levels the company is ridiculously under valued...

ADrunkenMarcus
I couldn't agree with you more and have the same "long term hold" philosophy on this one. Publicly listed, immature, negative cash flow companies are a relative rarity, particularly outside of the commodities sector, and I think something the market / investors really struggle with. Arguably DPP would be much better served off market at this early stage in its development. That said, I for one am really glad it isn't, as it gives smaller private shareholders the chance to get on board before the outsized gains have been made by the usual VCs / PEs. The downside is that it makes more for a very volatile ride on the way, as patience is the one commodity that is always in short supply. Add in some nervousness around EM (I would argue Poland isn't but who knows what investors think), potential erroneous read across from headwinds at DOM UK (which is obviously at a completely different stage in its development and arguably being mismanaged - but that's another debate) and you have the perfect background for SP weakness / volatility. It will be interesting to see if the Interims are enough to break the recent trend...

Not much out on them in the public domain. Pageant is the investment vehicle of Irish businessman Nick Furlong. There is an article from September '17 re. his c. 10% investment (via Pageant) in Providence Resources, with the associated commentary that they seek "value out of out of favour stocks and sectors". Just to clarify that they have not gone from 0% to 10% in one go. RNS from April '18 confirmed a previous move above 9%. But obviously positive that they see value at this level and are continuing to creep.

Would add that I agree the current share price seems strange / disappointing in the context of recent progress. But surely much is a factor of the limited liquidity. SP is down 1.5% today on the back of 5000 odd shares traded i.e. c. £1K. So one impatient private punter has caused a 1.5% drop. The flip side is that this paves the way for a fast and sharp re-rating once sentiment improves.

Agree with the comments below that hopefully the Interims will provide further reassurance as regards store maturity / dilution / progress to cash flow break even.

I would love to add more at these levels but am at my limit for commitment to a single stock

Just to add that pizza in and of itself is also a relatively resilient / affordable product. If DPEU were dependent on expensive imported products the depreciation would be a disaster. But it's wheat, tomatoes, cheese, etc - all locally sourced. Assuming debt is a non-issue and with the ability to modulate growth capex they should be able to get through this. Also 25% of the business is in Russia / CIS, which is much less affected...

What did Buffet say "You pay a high price in the stock market for a cheery consensus". Jokes aside it's obviously a complete punt at this stage. Much in the short term depends on whether the Turkish govt blinks. History suggests that no one can buck the market indefinitely, so some sort of (face saving) back track is surely on the cards. Assuming normalisation does occur and the Lira bounces back the stock will too. I have invested this morning on the basis of an eventual normalisation. At these levels you are getting a double digit growing DOM franchise with over 670 restaurants for an EV of c. £150m. Compared to any other listed DOM franchise that valuation of c. £200K odd per restaurant is a bargain. The company is not highly levered with under 2x historic EBITDA. BUT a portion of this (including a ST portion) is Euro dominated, although the recent trading update suggested that a portion (all?) of this was being refinanced with a RUB loan. The trading update in and off itself was very strong, with strong growth across the estate. Interim results are due mid-September. I would argue that if you are patient and have capital you can afford to lose this is a wonderful punt at these levels...

Personally I believe they should buy back shares at these levels. Best of use of cash pile with SP deeply below intrinsic value. Let LT shareholders benefit from the ST paranoia of the speculators. Just my two cents

Hi all. Don't really have anything new to add to the excellent commentary below. I too agree that our company has a bright future and will ultimately follow the successful trajectory of it's international sisters. Hopefully the self-sustaining inflection point is not far off. All that said the recent share price performance has been pretty depressing. No doubt the share price got significantly ahead of itself. But 33p. Really??!! I am convinced that those selling at these levels (except those who do so on a forced basis) are insane. I also try and think of DPP on a VC basis i.e. ignore ST SP movements and top up on the dips. Still this constant erosion does become wearing at times. Are we missing a trick? Or do the impatient "fools" who are selling in dribs and drabs actually know something the market doesn't. Who said this investment game was easy. NB: Sorry for the small rant. I just never thought that having crossed 55 stores, with the 2nd commissary open, following a decent trading update we would be re-testing these levels. The FY results can't come more quickly enough for this bemused shareholder...

Hear, hear! All things considered I was actually pleasantly surprised. The new CEO seems to be competent. To steal a quote from Churchill it feels like with a bit of luck "it's not the end, it's not even the beginning of the end but it is the end of the beginning" :). NB: if in the mid term they can get back anywhere close to their previous 2 year EBITDA of �15m then the current valuation is a bargain.

Perhaps it was Otus Capital Management LP - a "specialist in European smaller companies for institutional and HNW clients". They disclosed a 5.23% position at 3pm today, having not had a disclosable position previously. I take their purchase as good sign. Personally, any ST impact from Carillion aside, our company is ridiculously under valued. 4.4x Historic EBITDA, minimal leverage, double digit ROCE (and that's valuing the equity component at market not book. Latter is even high obviously), and a 3% yield. So long as they can maintain top line momentum and cost discipline I think this should fly on a 12-24M view and I have been topping up at current levels. Looking forward to the Interims...

Not sure if anyone is still on here. But I'm slightly surprised by the recent share price drift at ZEG, which by my estimate has opened up a c. 20% discount to theoretical SOTP. Following the tender offer ZEG has a market cap of GBP163.5m at the current share price of 129.5p. But its minority 15% stake in Euskaltel is worth c. GBP173m (137p per share) at current share prices / FX. This excludes the up to EUR 15m deferred payment due from Euskaltel worth another 10p per share. And the c. EUR 20m sitting on ZEG's B/S (another 14p per share). Taken together and you have a rough total value of 160p per share. So the current share price implies a 20% discount. I believe this represents an interesting entry point for anyone who believes that the ZEG mgmt team can "do a Melrose" in the coming years. I've used the recent share price softness to top-up again post-tender...

threeputt. I hear you! Re. mgmt comp. The certainly feels high for a smaller co., particularly given recent trading. On the other hand I like the fact that Admin expenses were down by almost �1m in 17 vs. 16. C suite salaries aside they seem to run a tight ship. Re. Toys r Us. Again I don't disagree with the concern. But I would argue that a large part of this is driven by the switch in retail habirs from traditional retail to offline, and not necessarily in the demand for traditional toys per se i.e. this is obviously bad news for stores but less so for the toy makers. They just have to find alternative routes to market via online. And they are doing so otherwise the revenues of CCT, let alone Mattel, etc, would have collapsed. That said, there is definitely a risk from a continued switch by kids to "digital" distractions away from more traditional toys. This is a risk but from what I have read it has been somewhat overstated and seems to be impacting the pre-teen age groups less, in which I believe CCT concentrate. At the end of the day CCT is definitely at the riskier end of the spectrum. I just sincerely believe (that barring an unforeseen disaster!) the downside here is really very limited at the current valuation. And arguably the LT upside is high. I see it as one to tuck away, enjoy the divi and forget about for a year or two...

With the greatest respect threeputt if it was a profit warning the share price would be down 20%+. That's how it goes in the current market. I think the problem with CCT is that the market struggles to understand it. And more importantly at �90m it's below the radar of most institutions / brokers. Only Panmure seem to cover and their last update was (I believe) in April 17. What's interesting is that at the time they had a target price of 635p. And that is not as insane as it seems because on the face of it CCT has some fantastic financial attributes. Chief amongst these is that the business is a veritable cash machine, which has grown dividends from 6.6p in 2014 to 17p in 2017. All this whilst staying net cash positive. ROCE is off the charts when measured against book equity. And even to market cap it is in double digits. Trading at c. 5x forward EBITDA I think this company is a steal, unless you believe the traditional "non-digital" toy sector is about to implode. So far there is no evidence of this. If they can just get back to some steady top line growth this share will fly. In the interim the growing dividend and value enhancing share buy-backs are a bonus. NB: I run a pretty concentrated portfolio - 15 positions. And this represents 5%. A bargain in what has become a relatively expensive market. Of course all in IMHO