Dp Poland Share Discussion Threads

[lbo] 07/8/2018 13:12

It confirms that DPP is way overvalued on AIM

[bigboyo] 07/8/2018 12:05

adrunkenmarcus,

The sale of telepizza to pizzahut is as a result of the broad agreement signed between telepizza and pizzahut.

Amrest is the European master franchisee for pizzahut in Europe and Telepizza is now the master franchisee for Pizza Hut in Latin America (and also its biggest global franchisee)

This is a big structural realignment for yum brands (owner pizza hut) and telepizza.

Dominos this year overtook pizza hut as the worlds biggest pizza seller (total system sales value).

This has obviously galvanised yum brands into making huge structural changes in big markets like Europe and Latin America.

We can already see Dominos UK buying up many smaller EU franchises. Is this part of a global re-alignment for Dominos ??

The competition between dominos and pizza hut to be world's number one pizza brand (by system sales) will see intense and fierce competition.

DP Poland is a small player just like the telepizza poland operations, its ownership and valuation is dependent on the the parent brands and their ultimate global policy decisions.

hxxps://www.telepizza.com/en/press/

hxxp://adage.com/article/cmo-strategy/domino-s-unseats-pizza-hut-biggest-pizza-chain/312463/

[adrunkenmarcus] 05/8/2018 10:49

bigboyo, do you have your own thesis as to what Telepizza's sale implies for DP Poland's market capitalisation? Thanks.

[bigboyo] 02/8/2018 13:50

Intresting fact about Telepizza is that its 107 stores generated system sales of PlN 103 million.

In last accounts 54 stores of DP Poland generated system sales of PLN 58 million.

Telepizza was sold for 8 million Euros.

What does this imply for the equity value of DP Poland and its current market cap ?

hxxps://www.amrest.eu/en/investors/regulatory-announcement/rb-422018-share-purchase-agreement-tele-pizza-sau

[davep4] 27/7/2018 12:44

From Peel Hunt:
Cut-price competitor exits market
Telepizza, one of DP Poland’s larger competitors with 107 stores, has announced it is selling out to Amrest, an international business listed in Warsaw which operates Pizza Hut (and other brands) in Poland. Overall we expect the impact on DP Poland to be positive as a low-priced competitor exits the market.

[davep4] 26/7/2018 23:07

I believe the revised Master Franchise requires DPP to achieve 65 store openings by year-end, thereafter the pressure to open new stores should ease off.

[adrunkenmarcus] 26/7/2018 19:07

prettybullish, my preference would be for DPP to get to a position where they are at group breakeven and self-financing the rollout and marketing investment with internally generated cashflows. However, I do agree with you that they might get bought out earlier - perhaps by the UK-based one. I hope this does not happen, as in the long run I think shareholders would get a greater return if it remains a standalone company, but it does offer an element of safety in a sense. (My average cost is far below the current price of 28p, in fact I've trebled my money on the lowest tranches of shares purchased.)

They did indicate recently that they did not think their rollout plan (100 stores by 2020, 145 stores by 2023, and a potential 282 stores in 2030 [per Peel Hunt]) required further equity issuance, which was an interesting statement. There is an indication that they are adapting the rollout accordingly and I hope the huge drag from immature stores opened in 2017 and even 2016 diminishes sharply soon. They do have a borrowing facility for 2019 assuming the Polish subsidy gets to breakeven.

It has taken time to get to the current number of stores and it takes time and investment to build a business. I think they did make a big mistake initially, in raising inadequate capital in 2010. That resulted in a huge dilution in 2012 for those who invested at the start. Subsequent capital raisings have been more measured.

[adrunkenmarcus] 26/7/2018 18:56

a1samu, I appreciate you sharing your thoughts with us. However, I'd be very interested to see your calculations with regard to: the amount of equity you expect them to raise; the basis for you calculating that there will be issuance of shares (either a placing or rights issue?) at a price of 20p. Without seeing the mathematical basis for what you're saying, it is difficult to put any value on your claims. Thanks.

[prettybullish] 24/7/2018 22:15

Thanks food for thought....although I still think big picture they will be bought out at some point once they get to a certain number of stores. It may happen quicker if the share price hits the levels mentioned and stays there for any amount of time.

[a1samu] 23/7/2018 06:47

Interims on the 18 September will be accompanied by a massively diluting cash call of 20p per share.

[bigboyo] 22/7/2018 22:29

prettybullish,

I have added the bottom row for edidta (taken from annual reports. The 24 stores that were open for more than 2 years were still unable to carry the losses of the newer ones. With the bulk of the store portfolio being weighted to stores open less than 36 months the ebidta figure will not be a pretty sight.

And ditto for the cash position.

Year to dec ...........|2011 | 2012 | 2013 |2014 | 2015 | 2016 | 2017 |2018
start cash (000).......|5059 | .873 |10929 |7297 | 4466 | 6987 | 6308 |4505
end cash (000).........| 873 |10929 |.7297 |4466 | 6987 | 6308 | 4505 |
cash raised (000)......| ..0 |13161 |... 0 |...0 | 5205 | 3055 | 5260 |
Spent cash (000).......|4186 |.3105 |.3632 |2831 | 2684 | 3734 | 6831 | total £27mill
Directors Pay (000)....| 185 |..194 |..283 |.328 | .351 | .352 | .325 |
ShareBasedPayment(000) | 113 |..127 |..127 |..73 | .214 | .352 | .253 |
Stores open ...........|..12 |...15 |...17 |..18 | ..24 | ..39 | ..54 |
Loss per store (000)...|.349 |..207 |..214 |.157 | .112 | ..96 | .126 |
Weighted shares (mill) |..17 |...28 |...92 |..92 | .109 | .129 | .142 |
Grp EBIDTA LOSS (mill) |1.76 |2.673 |2.844 |2.40 |1.645 |1.580 |1.780 |

[prettybullish] 22/7/2018 22:08

on what basis?

[a1samu] 22/7/2018 17:16

Share price aim is still 22p by time of interim announcement on the 18 September 2018.

[trytotakeiteasy] 19/7/2018 12:52

What about first half pace of revenue growth at 38% versus forecast full year forecast revenue growth of 54%. They do focus on different things. The former is system sales and the latter is reported sales. However, it still appears that DPP may struggle to meet the full year forecast revenue.

[prettybullish] 19/7/2018 11:23

I have no issue with them focusing on reaching breakeven on stores opened, generating EBITDA, conserving cash and managing store rollout. At some point the business has to self fund and at the current share price I would prefer the focus to be on this rather than opening another 10 stores, diluting shareholders. Time will tell but to me it looks like the model is working and there are a lot of positives to take out of these results. As I said lets see the details in the interims, when available.

[bigboyo] 19/7/2018 11:15

prettybullish,

What I take from this update is that like for like growth is slowing , new openings are slowing (compared to previous year) and it seems the company is trying to conserve cash.

For me anyway , the Like for like figures are showing a noteworthy slowdown :

Half year 2018 Like for Like growth : 13%
Full year 2017 Like for Like growth : 17%
Half year 2017 Like for Like growth : 17%
Full year 2016 Like for Like growth : 27%
Half year 2016 Like for Like growth : 28%
Full year 2015 Like for Like growth : 16%
Half year 2015 Like for Like growth : 16%
Full year 2014 Like for Like growth : 19%
Half year 2014 Like for Like growth : 13%
Full year 2013 Like for Like growth : 43%
Half year 2013 Like for Like growth : 72%

[prettybullish] 19/7/2018 07:04

Great update this morning....as expected...sales and ebitda increasing and likely to accelerate as stores opened in 2016 and early 2017 now reach breakdown and start to contribute positively towards EBITDA. Look forward to more details in the interims.

[a1samu] 10/7/2018 10:35

In Nov 12 they raised £10.5M @ 15p. If they stay longer, they will repeat the same again soon.

[prettybullish] 29/6/2018 18:25

I agree but at these levels I think the valuation looks attractive. European cheese prices are down by 5-10% in the last 6mths, which should trim operating expenses, sales volume should be up due to store openings etc. Lets see, if they dont deliver a good performance against this backdrop then I would be concerned.

I also dont think the quantum of shares issued is material, Stg£60k in total across three directors based on 35p share price. Hardly fat cat levels!! Options priced @ 50p and only two year term, so again not too bad and a lot better than the usual 5 year option packages you see with a strike price marginally above current price.

I also think that DP have enough of a footprint now that if the price continued at lower levels the company would become a takeover target. Just look at what JAB are doing in the sector.

[bigboyo] 29/6/2018 16:59

prettybullish,

Await the half year results and cash position to see where we are. Too many variables.

[trytotakeiteasy] 29/6/2018 13:40

prettybullish - Good point there. When they turn cash positive I read that they can use an overdraft. With regard to capex, on the one hand they don't need more commissary capacity. On the other hand as a growing business they will be opening new stores. The worst case scenario, in my view, is a modest further capital raise of I would guess less than £4m.

Shareholder remuneration - Slightly worried about all the options being issued. They have been very good at issuing new shares over the years.

To get a good handle here I would have to have an idea of on the pizza delivery market in Poland. I.e. the competitive dynamics. Who is the leader, who is in second place etc etc.

[prettybullish] 28/6/2018 23:08

Read the last presentation, it clearly said that they will not need to raise further financing. Pg 12. "No further equity raise anticipated to deliver 5-year roll-out plan of 145 stores by YE 2023".

Of course things can change but would be some change in strategy if they do raise equity but you can never say never.

Booming Polish economy, boosted by world cup, H1 results should be positive. Based on timing last year, results announced expected in the next two to three weeks.

[trytotakeiteasy] 11/6/2018 12:18

So essentially it is not clear whether they will need to raise more money. Not least if capex is less than depreciation for the next few years. It will be a close call if they don't need to raise more money.

[hybrasil] 11/6/2018 12:15

100 by 2020

[trytotakeiteasy] 11/6/2018 09:46

Bigboyo - but I think the have commissary capacity for 150 stores and only will have 70 by the end of 2018. Also advertising expenditure in 2017 was partly for 2018.