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DP Poland

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ADrunkenMarcus
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DP Poland

#1373

Postby ADrunkenMarcus » November 6th, 2016, 8:37 pm

Safe in the knowledge that many will avoid a loss making AIM-listed company entirely, especially one with a market cap of £70 million or so(!), I nominate DP Poland: the master franchisee for Domino's Pizza in Poland. I tasted their pizza in 2012 and enjoyed it thoroughly. I also have a significant shareholding. The business is probably massively overvalued for where it is now, but I believe it's considerably undervalued if it fulfils its potential and we come to see several hundred stores in Poland in a decade's time.

It has taken time and the company has been gobbling up cash as it works to get established, but I think it is now in a reasonable position for profitable expansion and they have recently raised a significant amount of cash to help the roll out. The existing store estate is profitable but the company overall is still reporting losses. Revenues have been rising very substantially - both from existing stores which continue to grow healthily and the new stores being rolled out - and the business appears to have considerable momentum. Nonetheless, losses are forecast at group level through 2017 and I assume 2018 might merely show a substantial improvement before it hits breakeven in several years' time.

The share price has risen from under 8p early in 2015 to about 50p today (peaking at 58p recently). So I guess I should have posted this early in 2015, when I bought a large number of shares. Peel Hunt (warning: house broker) have a 75p target price on the shares - make of that what you will...

Best wishes


Mark.

CommissarJones
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Re: DP Poland

#4799

Postby CommissarJones » November 14th, 2016, 1:22 pm

I have thought vaguely once or twice about putting some money into this stock as a side bet (I am mainly focused on income investment) and might be tempted at a lower price. To say the least, Domino's has shown at this point that its brand is adaptable to a variety of foreign markets, so I see no reason why the company shouldn't do well in Poland too. The nation has a population of about 38 million (ranking sixth in the EU) and the World Bank is forecasting economic growth of 3.7% this year and 3.5% in both 2017 and 2018, so it strikes me as a good place for Domino's to be expanding.

ADrunkenMarcus
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Re: DP Poland

#4947

Postby ADrunkenMarcus » November 14th, 2016, 7:15 pm

Yes, I hold DP Poland in my dividend growth portfolio and it's the only company that doesn't actually pay a dividend! I am hoping that in the long term it will deliver dividends and strong dividend growth.

I visited Warsaw in 2012 and was impressed by all the shiny new infrastructure and construction work going on. There was quite a sense of prosperity and Poland's GDP per capita is converging with the Western European average. As you say, with almost 40 million people this is not a small country and I hope there is scope for hundreds of stores in the long run.

DP Poland is in my SIPP but the enormous growth over the last two years or so has resulted in it accounting for 40 percent of the pot. Logically, it might be grounds for trimming but I am running with it. Time will tell if I have been clueless...

Best wishes


Mark.

ADrunkenMarcus
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Re: DP Poland

#10686

Postby ADrunkenMarcus » December 1st, 2016, 8:03 am

They have sub-franchised more of the existing stores:

http://www.iii.co.uk/research/LSE:DPP/n ... xt=LSE:DPP

DPP closed at a 56-56.5p spread yesterday: an all-time high market cap.

Sub-franchising is a key component of the business model. Good news.

Best wishes


Mark.

ADrunkenMarcus
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Re: DP Poland

#10806

Postby ADrunkenMarcus » December 1st, 2016, 1:03 pm

I visited Warsaw in 2012 and tried out one of their earliest stores. The food was very tasty - 91 Zloty, or about £18, for three large pizzas and drinks for five people IIRC.

Best wishes


Mark.

ADrunkenMarcus
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Re: DP Poland

#29883

Postby ADrunkenMarcus » February 8th, 2017, 12:39 pm

Their trading update looks reasonable:

http://www.iii.co.uk/research/LSE:DPP/n ... xt=LSE:DPP

Best wishes


Mark.

Andy46
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Re: DP Poland

#41747

Postby Andy46 » March 27th, 2017, 9:52 pm

Hi,

I've recently come across this company too. Things looking good albeit risky like any AIM / small company. Personally I'll be waiting for quite a drop in the share price before making any purchase. Am jealous of anyone buying them at 8p tho !!.

ADrunkenMarcus
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Re: DP Poland

#41792

Postby ADrunkenMarcus » March 28th, 2017, 8:04 am

Andy,

I think my purchases around that time were about 10p or so - and I had made the mistake of investing in the company somewhat early, so I had earlier purchases at a higher price than that. The drop to 10p gave me a great chance to 'average down' though and I piled in. My holding is now solidly in the black, having 'several-bagged'.
The 2016 results presentation by Chief Executive Peter Shaw can be viewed here. It's a pity they don't have it as a pdf. download, too, because we see the slides alongside the video and there are many graphs in there that I'd prefer to have in a different format:

http://webcasting.brrmedia.co.uk/broadc ... 04102638d1

The existing store estate seems to be solidly profitable and I was particularly pleased that the most profitable corporate stores are generating in excess of the £80,000 EBITDA originally expected. There doesn't seem any sign of this stopping and they're also store-splitting in Warsaw which suggests further room for growth as two stores exceed the original store's performance.

I very much like the business model. It's really a question of how they get to break even and how much additional equity capital they raise - and, of course, keeping an eye on the situation in Poland and hoping it remains pro-foreign investment and pro-free market.

Best wishes

Mark.

CommissarJones
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Re: DP Poland

#44226

Postby CommissarJones » April 6th, 2017, 11:15 pm

DPP seems to have broken decisively downward in recent weeks, after trading between about 56.5 pence and 59p in the two-month period through early February, and is now below 50p for the first time since Q4 2016. The stock has clearly dropped through the 200-day moving average and closed today at 47.5p. I think the price would have to fall below 40p to tempt me into buying, anyone else got thoughts?

(No position in DPP, but an interested observer.)

Halicarnassus
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Re: DP Poland

#44375

Postby Halicarnassus » April 7th, 2017, 2:04 pm

Interesting post on Find the Moat http://findthemoat.com/2017/02/14/dominos-pizza/ on DP. Aussie slanted but pizza is pizza.

ADrunkenMarcus
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Re: DP Poland

#45432

Postby ADrunkenMarcus » April 12th, 2017, 7:50 am

Thanks for sharing, Halicarnassus.

Interesting reading and I hope the Polish company differs from the Australian one in that particular respect.

Best wishes

Mark.

ADrunkenMarcus
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Re: DP Poland

#49168

Postby ADrunkenMarcus » April 27th, 2017, 12:33 pm

DPP seems to have risen significantly in the last few days - there's the AGM next Friday 5 May 2017 which should be accompanied by a trading update that will cover the first quarter of 2017 and also shed some light on recent store openings.

Best wishes

Mark.

ADrunkenMarcus
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Re: DP Poland

#53335

Postby ADrunkenMarcus » May 14th, 2017, 10:13 am


CommissarJones
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Re: DP Poland

#53403

Postby CommissarJones » May 14th, 2017, 5:15 pm

The business is performing well, there's no doubt about that. Looking at DPP's chart, though, it seems to me that the stock failed to break above the 50-day moving average in late April. With the 50-dma still heading down after rolling over at the start of March, perhaps patience will be rewarded at some point with a better buying opportunity.

ADrunkenMarcus
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Re: DP Poland

#53404

Postby ADrunkenMarcus » May 14th, 2017, 5:21 pm

Oh, I expect it could well go lower and 'yo yo' - it's often done that and it can react quite strongly if there are any large purchases or sells on low trading volumes. It's very much been a rollercoaster ride. As you say, there may be a good opportunity to purchase (or top up) coming up.

My focus is very much a long term one as it gets established, becomes profitable at the group level and not just the store estate level, and expands (hopefully) throughout Poland.

Best wishes

Mark.

CommissarJones
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Re: DP Poland

#58122

Postby CommissarJones » June 6th, 2017, 1:51 pm

ADrunkenMarcus wrote:As you say, there may be a good opportunity to purchase (or top up) coming up.


Has a buying/top-up opportunity arrived? DPP fell almost 7% yesterday on a closing basis, which I would think obviously stemmed from the company's £5 million (net) share placing.

http://www.investegate.co.uk/dp-poland- ... 00042038H/

The stock is up today and has recouped about half of the drop, but glancing at a chart, it looks to me as though DPP is still clearly making lower highs and lower lows. The 200-day moving average now seems to have flattened out and might be starting to roll over.

Looking at a one-year chart, I also see DPP has now dropped below the low point reached in September 2016, when the stock had quite a slide in the month's first half. Bloomberg shows the stock closing at 44.5 pence on Sept. 12, compared with the current price of 44.25p. Yesterday's close of 42.63p was clearly affected by the placing, but with that now out of the way, I would have to wonder whether a further decline might be in the offing if the stock proceeds to head below 44.5p in closing terms.

DPP is now down 25% from the closing peak of 59.25p reached in January, btw.

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Re: DP Poland

#58191

Postby Clitheroekid » June 6th, 2017, 7:58 pm

I've been watching DPP for a while, and found this article interesting - but also rather discouraging - http://www.shareprophets.com/views/2952 ... ng-to-plan

I think you may have to register but it only takes a minute, and I quite enjoy the emails anyway.

ADrunkenMarcus
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Re: DP Poland

#58286

Postby ADrunkenMarcus » June 7th, 2017, 7:51 am

Cheers guys.

I seem to remember Shareprophets being very bearish on DP Poland - particularly when the price was around 10p or so compared to today's 44p! I've always viewed it as a long term investment and long term hold. There may be better opportunities in the meantime in terms of investment, but whether those would be recognised in a short period by the 'market' or whether I'd be better off placing money elsewhere and then buying back in all comes down to what is effectively 'market timing' IMHO: something I'm sure I'd be no good at.

Best wishes

Mark.

ADrunkenMarcus
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Re: DP Poland

#68266

Postby ADrunkenMarcus » July 19th, 2017, 7:58 am

An update for the first half of 2017:

RNS Number : 4227L
DP Poland PLC
19 July 2017

19 July 2017
DP Poland plc
("DP Poland" or the "Company")
Update on Store Performance H1 2017, unaudited
System Sales up 50%. Like-for-likes up 17%. 73% of delivery sales ordered online.
DP Poland, through its wholly owned subsidiary DP Polska S.A, has the exclusive right to develop, operate and sub-franchise Domino's Pizza stores in Poland. There are currently 45 Domino's Pizza stores in 18 towns and cities, 20 corporately managed, 2 under management contract and 23 sub-franchised.
· Total System Sales* up 50% to 27m PLN H1 2017 (18m PLN H1 2016)
· 17% like-for-like** growth in System Sales H1 2017 on H1 2016
· 19th consecutive quarter of double digit System Sales growth
· 10 new stores opened to-date 2017
· 45 stores in 18 towns and cities across Poland to date 2017
· 73% of delivery sales ordered online
· New commissary close to completion
Peter Shaw, Chief Executive of DP Poland said:
"We continued to see strong growth in system sales in the first half of 2017, thanks to robust double digit like-for-likes and 10 store openings, year to date. 8 additional towns and cities have been added to the Domino's map in Poland so far this year.
Our rate of growth in online sales continues with 73% of all delivery orders made online in the first half of 2017, compared to 71% for the full year 2016, a trend that brings us in line with many of the more mature Domino's markets. An effective online ordering system benefits both our customers and our operational efficiencies, making the ordering process easier and less labour intensive. We expect the proportion of delivery sales made online to continue to grow as we invest in our digital technology and marketing.
Our state-of-the art commissary in Łódź is nearing completion and we expect it to come on stream in September, giving us the capacity to supply up to 150 stores with fresh dough and ingredients, in combination with our Warsaw facility."
The Company will release its interim results for the first half of 2017 on 18 September 2017.

* System Sales - total retail sales including sales from corporate and sub-franchised stores, unaudited.
** Like-for-like growth in PLN, matching trading periods for the same stores between 1 January and 30 June 2016 and 1 January and 30 June 2017
This announcement contains inside information for the purposes of the Market Abuse Regulation.


Progress continues.

Best wishes

Mark.

ADrunkenMarcus
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Re: DP Poland

#119033

Postby ADrunkenMarcus » February 19th, 2018, 12:43 pm

I made a small top up at 34.1p. :)

Best wishes

Mark.


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