DOM have a 'cost plus' model when it comes to selling out of their commissaries. whether that advantageous agreement holds up in these inflationary times what with how powerful the franchisees are, remains to be seen. but that, along with the efficient, fully controlled supply chain, is a competitive advantage that is not understood by the market.
buying for 1200 stores brings economies of scale and a greater certainty of supply. it's a very good company, it has so many good things going for it that IMV. |
https://www.google.com/amp/s/capital.com/amp/cury-currys-share-price-double |
certainly a situation to monitor. kandola briefly has diversified into tim horton's franchises in the UK (a canadian coffee chain similar to starbucks). |
Hi m_kerr.
Thank you for the reply.
This not good news, but better we are discussing the issue.
A few years ago, I was talking to the Chairman about this subject (the chairman then actually spoke to shareholders), he told me it was big concern for the company.
I see what you mean about the high inflation causing the franchisees a problem.
I wish the company could be better at explaining their future plans, and the outlook for the coming year.
I still think Dominoes is a good business, will continue to hold the shares.
Keep up you interesting posts m_kerr.
Brian3777 |
it's a bit of a problem simmering in the background for DPG as this will be an ongoing issue - note that the 'agreement' with franchisees only lasts 3 years and so these same issues will be revisited again. if DOM do fine during this high inflation period but franchisees suffer a bit, DOM can expect further aggro. |
Hi, m_kerr.
I always enjoy reading your incisive and perceptive posts.
Could you please direct me to the place where you get the information on Dominoes pizza news?
Brian3777 |
one thing to watch - kandola, who owns around 200 franchises, has continued to buy up more stores, increasing his clout. those stores would have a capital value well in excess of £200m.
the background to the franchisee dispute is that along with kandola, there is another group owned by moonpal grewal singh, who also own 200 stores+. gone are the days where stores were opened by small time store managers taking the next step. they are now sufficiently consolidated to stand up against domino's pizza group and negotiate with a degree of power.
but store openings are a win win. franchisees spend roughly £300k to open a store that's then valued at £1.2m+. |
Half year results published today.
OK full year guidance maintained for 2022 but ......
Were the Sunday Times right - not long to wait.
Suet |
However DB says buy with a tp of 355p.
Who the hell knows anything these days.
Suet |
This weekend's Sunday Times has put up the sell sign.
Suet |
my best estimate is they will generate around £1150m free cash flow in the next 10 years, broadly equal to their current market cap.
my assumptions are 2% like for like sales growth (they have been averaging around 5-6% in recent years), and 40 stores added per year up to a max of 1650, and they have a history of converting profits into cash. |
Hi m_kerr.
Very good analysis of the company.
The company could pay out more in divis, and of course there is the German option payment early next year, which should be payed out as a special divi.
The share buybacks are not really in the shareholders interest.
Every time a share is bought back it has to be paid for, that cash must come from the company bank account on the balance sheet.
Every share bought back weakens the balance sheet.
When I buy a share, I do a due diligence of the company, this will involve looking at the the companies net cash, or deficit.
I will discount the cash against the shares in issue.
That's why I think share buy backs are a waste of cash.
Except, when the share price is less than the net asset value of the share, then fill your boots.
Santos123 |
on a market cap basis, if they stopped buying back shares they could distribute about 6.5-7% per annum in dividends. very cheap for what is effectively an annuity like income stream that should rise by mid single digits per annum.
now that they've only got operational responsibility for UK and ireland, it's a relatively straightforward company to run now, meaning that they shouldnt lose any momentum as a result of the CEO leaving. |
Pretty poor show that the Chairman couldn't be more hospitable to the 2 shareholders that pitched up.
Pure arrogance on his part.
Suet |
Hi Power'D'
Thank you for your reply.
On page 37 of the Annual report and accounts, it says:-
We maintain a constructive dialogue with shareholders and engage with them regularly to understand their perspectives and ensure these are considered in our decision-making.
Fine sentiments, but seem to mean nothing in reality.
That's why I say Bad Governance, see last post.
Brian3777 |
Hi AA29
Thank you for your reply.
I see the German business is on the balance sheet as £28.9 million.
The PUT option is believed to be between £70-£100 million.
So if the company sells with the CALL option of circa £125 million.
Then that's circa £96 million above the price on the Group balance sheet.
This years Statutory profit was only £78.3 million.
So you have wonder AA29, why the Chairman would not want to answer questions about the subject to a shareholder, this amounts to bad governance, as in E.S.G.
Also, I can not understand why there is so much shorting of the shares, I think some people are going to get there fingers burnt.
Brian3777 |
RE:3494
Thank you - sad that only 2 shareholders turned up. The chairman should have made an effort to engage with the people that did make the effort to go. |
Strange, I would have expected you could have talked to someone either during or after the meeting.
You should expect DP Enterprises to exercise the call option early in Jan 2023. They value the put option as a potential liability of c£95m currently so the call price should be higher (and reflect an extra year's growth) at say £125m. So perhaps there might be a special dividend from DP plc early next year. |
Hi AA29.
I did not gain any insights.
I asked the chairman 2 questions about the German investment, and the 'put' options the company has, this will change at the end of this year, and the options will go to the owners of the German franchising company as a 'call' option.
The Chairman refused to answer my questions.
Seems very strange to me that a shareholders 2 question are ignored in a shareholders meeting, A.G.M.
Most companies use there shareholder meetings to engage with individual shareholders, which has been the case in previous Dominoes pizza A.G.M.s
So AA29, I was not impressed with years A.G.M.
BRIAN3777 |
@brian3777 It may have been a waste of cash for them but what insights did you gain? |
Hi Powered D.
I went to the meeting.
Must have cost a quite a few quid for the venue, and catering.
2 shareholders attended the meeting.
That's the lowest attended A.G.M. meeting I have been to.
What a waste of cash.
brian3777. |
Anyone go to the AGM? Did they change the location from this notification?
The location is
etc.venues St. Pauls
200 Aldersgate
London
EC1A 4HD
hxxps://www.etcvenues.com/gb/venues/st-pauls
hxxps://investors.dominos.co.uk/system/files/agm/38227-dom-ar21-07-notice-of-meeting-final.pdf See page 1 |
Pizza Hut, I think. Very strange indeed. |
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