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DP Poland

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ADrunkenMarcus
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Re: DP Poland

#199653

Postby ADrunkenMarcus » February 7th, 2019, 5:23 pm

CommissarJones wrote:
ADrunkenMarcus wrote:Depending on their strategy, I would now expect a capital raise of some sort in 2019.

Well called - a £5.3 million placing was announced today. Also, the CEO is walking the plank and will step down in June.

https://www.investegate.co.uk/dp-poland ... 00043115P/

There is a reference to a renewed focus on sub-franchisee recruitment, and the company said it will consider closing corporate stores if they continue to underperform.


It is an about-turn from their March 2018 aspiration that they would need no further equity raise to hit 145 stores by 2023. Looking back, they could have raised a lot more equity with much less discount when they were trading at 50p or above in late 2016/early 2017 and I wish they had done so. I think the chief executive's departure was inevitable given the amount of time it was taking to get to group breakeven.

What they're doing seems reasonable given the situation they are in now. They have given specific targets for corporate stores, sub-franchisee stores and converted stores and total store estate out to 2022. They did need to shift the mix to sub-franchised stores. The EBITDA estimate for mature corporate stores is £107,000, which is actually markedly above the £80,000 originally cited.

I topped up somewhat at 8p.

Best wishes

Mark.

westmoreland
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Re: DP Poland

#200016

Postby westmoreland » February 8th, 2019, 6:58 pm

CommissarJones wrote:
ADrunkenMarcus wrote:Depending on their strategy, I would now expect a capital raise of some sort in 2019.

Well called - a £5.3 million placing was announced today. Also, the CEO is walking the plank and will step down in June.

https://www.investegate.co.uk/dp-poland ... 00043115P/

There is a reference to a renewed focus on sub-franchisee recruitment, and the company said it will consider closing corporate stores if they continue to underperform.


this was predicted in the recent company analysis by hardman, and is the main reason i decided not to buy the shares:

https://www.hardmanandco.com/research/c ... ue-growth/

'This means, in our view, that the company is likely to need some additional funding during 2019.'

it's a massive dilution for current shareholders. the thing i can't understand is that if the mature stores are as profitable as DPP say they are, why are they struggling to attract franchisees? yes it's a former communist nation, but it has been in the EU for over 15 years now, and enjoys healthy GDP growth per capita.

ADrunkenMarcus
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Re: DP Poland

#200389

Postby ADrunkenMarcus » February 10th, 2019, 7:10 pm

westmoreland wrote:why are they struggling to attract franchisees?


I hope the new Head of Sales and Operations, whose remit will include driving sub-franchisee recruitment, will make progress in this area. They have given some much more specific targets, including conversion of existing corporate stores to sub-franchised ones:



Best wishes

Mark.

westmoreland
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Re: DP Poland

#200669

Postby westmoreland » February 11th, 2019, 8:02 pm

ADrunkenMarcus wrote:
westmoreland wrote:why are they struggling to attract franchisees?


I hope the new Head of Sales and Operations, whose remit will include driving sub-franchisee recruitment, will make progress in this area. They have given some much more specific targets, including conversion of existing corporate stores to sub-franchised ones:



Best wishes

Mark.


hopefully this bears fruit, although targets on their own don't mean anything without a proven track record. at the moment although by most accounts it has a superior product, it doesnt have the superior economics nor the significantly reduced risk of the dominos franchise model as long as it keeps opening corporate stores.

we must of course remember that buying in to the business at a shade over £12m market cap with the risks having made themselves known represents much lower risk than buying in a year ago when it was over £50m.

ADrunkenMarcus
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Re: DP Poland

#200673

Postby ADrunkenMarcus » February 11th, 2019, 8:17 pm

westmoreland wrote:hopefully this bears fruit, although targets on their own don't mean anything without a proven track record. at the moment although by most accounts it has a superior product, it doesnt have the superior economics nor the significantly reduced risk of the dominos franchise model as long as it keeps opening corporate stores.

we must of course remember that buying in to the business at a shade over £12m market cap with the risks having made themselves known represents much lower risk than buying in a year ago when it was over £50m.


I'd agree with all of that.

They have had sub-franchised stores since 2013, however clearly not enough! They are, in future, going to do much more on conversions of existing corporate stores which may help. Perhaps that is a key part of the reason they have sought new chief executive leadership.

I tend to think the 8.5p share price is based on the knowledge that there will be more shares in issue when the placing officially completes. Assuming the share price stays the same when placing shares are admitted then the market cap would be over £20 million which compares to revenues reaching that figure annually in 2020-21. The ratio of market cap to total revenues was 28 in 2011, 10 in 2016 and is about 1.3 on 2019 estimates. This shows how much it's de-rated.

I bought some more shares at 8p. However, I would not expect to add any further substantial tranches until there is much more clarity on the group being at breakeven and not needing to issue further equity. If they can get to breakeven in 2022 and with 107 stores, still growing rapidly, then the proposition will be much more interesting. I think Domino's UK took 14 years of development before they even listed in 1999.

Best wishes

Mark.

westmoreland
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Re: DP Poland

#200888

Postby westmoreland » February 12th, 2019, 5:54 pm

ADrunkenMarcus wrote:
westmoreland wrote:hopefully this bears fruit, although targets on their own don't mean anything without a proven track record. at the moment although by most accounts it has a superior product, it doesnt have the superior economics nor the significantly reduced risk of the dominos franchise model as long as it keeps opening corporate stores.

we must of course remember that buying in to the business at a shade over £12m market cap with the risks having made themselves known represents much lower risk than buying in a year ago when it was over £50m.


I'd agree with all of that.

They have had sub-franchised stores since 2013, however clearly not enough! They are, in future, going to do much more on conversions of existing corporate stores which may help. Perhaps that is a key part of the reason they have sought new chief executive leadership.

I tend to think the 8.5p share price is based on the knowledge that there will be more shares in issue when the placing officially completes. Assuming the share price stays the same when placing shares are admitted then the market cap would be over £20 million which compares to revenues reaching that figure annually in 2020-21. The ratio of market cap to total revenues was 28 in 2011, 10 in 2016 and is about 1.3 on 2019 estimates. This shows how much it's de-rated.

I bought some more shares at 8p. However, I would not expect to add any further substantial tranches until there is much more clarity on the group being at breakeven and not needing to issue further equity. If they can get to breakeven in 2022 and with 107 stores, still growing rapidly, then the proposition will be much more interesting. I think Domino's UK took 14 years of development before they even listed in 1999.

Best wishes

Mark.


i did notice that the corporate stores that were sold to franchisees were sold at book value, which i thought was a bit strange given how valuable they are in the UK. the UK ones go for 62 x weekly sales which is at least £1m in most cases.

the listing has been stated to raise about £5m, so the market cap will be about £17m. importantly, this will give it the firepower to fight back against the delivery aggregators which seem to be making life difficult for dominos.

it's darkest before the dawn, and we must be wary of getting too bearish once all the risks are known. with the UK one, once a tipping point was reached, each extra franchise store is effectively an annuity of which almost all dropped to the bottom line.

the market can struggle to value loss making firms. has the intrinsic value of DPP fallen by four fifths in less than 6 months? i very much doubt that.

ADrunkenMarcus
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Re: DP Poland

#201431

Postby ADrunkenMarcus » February 14th, 2019, 8:56 pm

westmoreland wrote:the market can struggle to value loss making firms. has the intrinsic value of DPP fallen by four fifths in less than 6 months? i very much doubt that.


Ditto.

Fatalistic one moment.

Hopelessly optimistic the next.

And vice versa.

They announced today the 'broker option' has been fulfilled, so they'll be deploying it into marketing activities in 2019 and hopefully accelerating sales.

Best wishes

Mark.

ADrunkenMarcus
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Re: DP Poland

#201546

Postby ADrunkenMarcus » February 15th, 2019, 12:23 pm

Nor was DP Poland 21% more valuable earlier this morning than it was on opening!

Best wishes

Mark,

ADrunkenMarcus
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Re: DP Poland

#278698

Postby ADrunkenMarcus » January 20th, 2020, 10:23 am

DPP is up 18% today, rising 61% in the last month or so from 4.5 to 7.25p. A reflection on its huge fall but very welcome.

Best wishes

Mark.

ADrunkenMarcus
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Re: DP Poland

#301793

Postby ADrunkenMarcus » April 19th, 2020, 4:17 pm

I made a small top up Friday. They have announced that all 69 stores are continuing to trade and offer takeaway food services, which is positive. However, key for DPP - as always - is that they need to get to group level breakeven and be cashflow positive by 2022 as they anticipated.

Best wishes

Mark.

ADrunkenMarcus
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Re: DP Poland

#369360

Postby ADrunkenMarcus » December 23rd, 2020, 10:39 pm

The details of the DP Poland-Dominium merger are becoming clearer and the combined company will certainly have much more scale and geographic reach in Poland, with a doubled store estate.

Consensus forecasts - FWIW! - see positive EBITDA of £2.2 million in 2021 followed by positive EBITDA of £3.3 million, positive EBIT and pre-tax profit in 2022 with positive free cash flow. The group getting into overall profit so that they can use their free cash flow to help fund expansion will be very encouraging, but the Domino's model is very much that sub-franchising is the key. They intend to open 5 stores in 2021 and then 10-15 a year from 2022, which may be accelerated if they are able.

Best wishes

Mark.

ADrunkenMarcus
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Re: DP Poland

#371281

Postby ADrunkenMarcus » December 30th, 2020, 2:56 pm

It's a quiet time for trading. Since the suspension was lifted, DP Poland has risen from about 7.5 to 9 p on a buy price basis. I did a small top up at 7.62p.

Best wishes

Mark.

ADrunkenMarcus
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Re: DP Poland

#427283

Postby ADrunkenMarcus » July 13th, 2021, 9:35 am

The long slog continues.

DP Poland has a market cap of £50 million or so.

On current forecasts, it will be free cash flow positive in 2022. EBITDA is forecast at over £7 million in 2023 but much of that will go on amortisation as they reduce debt down to £1 million (if forecasts are right). They need to be taken with a pinch of salt, nonetheless the figures for 2024 will presumably look much better with EBIT matching EBITDA much more closely. The current market cap is 1.3 times 2023 forecast revenues, which looks undemanding to say the least: if it went to the over-hyped rating of 10 times revenues as it was in 2016 then that would equate to a 65p share price. I doubt it will. Nonetheless I still think 8p is cheap and I have been topping up in 2020.

Management are presenting this afternoon so I will listen keenly!

Best wishes


Mark.

ADrunkenMarcus
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Re: DP Poland

#427818

Postby ADrunkenMarcus » July 15th, 2021, 10:18 am

I found the investor presentation informative.

On the positive side, they suggested the store estate could double over the next 3-4 years. They intend to fund this expansion by operating cashflow and bank borrowings, not equity issuance - because they want to avoid dilution. The mix is expected to be 20-25% corporate vs. 75-80% sub franchised stores.

Best wishes


Mark.

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Re: DP Poland

#435788

Postby westmoreland9 » August 18th, 2021, 7:56 pm

i've been following this company from afar, for years. there's no sign at all of things getting better unfortunately, despite what should be covid headwinds. they're on their 3rd CEO in quick succession, and they seem to be going backwards.


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