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An article by Philip Whiterow, Proactive Investors 27 July 2018
DP Poland tipped to benefit as discounter exits Polish pizza market
DP Poland PLC (LON:DPP) should get a boost from the exit from the Polish market of cut-price competitor Telepizza, according to broker Peel Hunt.
Telepizza has 107 stores and is one of DP Poland’s larger competitors, but these are being sold to Amrest, which runs Pizza Hut Poland.
Positive impact on DP Poland
Amrest is a Warsaw-listed international restaurant and café business and the broker expects it to close some Telepizza stores and convert the others to Pizza Hut or one of its other brands.
Even though Pizza Hut is growing in Poland, Telepizza was a discount operator that was competing largely on price and its exit should allow a bit more wriggle room on promotions.
DP Poland might also be able to pick up experienced Telepizza sub-franchisees displaced through the deal.
In May, Telepizza and Pizza Hut agreed a global partership and today’s announcement ‘feels more like a bit of a tidy-up around the edges of that deal, rather than a change of strategic direction for Amrest in relation to pizza in Poland,’ said the broker.
“Overall we expect the impact on DP Poland to be positive as a low-priced competitor exits the market.”
The broker has a buy recommendation and 75p target price.
“The opening of our 50th store is a major milestone for Domino’s Pizza in Poland, a milestone that we are celebrating with promotions across the store estate. Store #50 is located in Olsztyn, a town with a population of some 170,000, 200km north of Warsaw. We are now present in 21 Polish towns and cities, ranging from the capital city Warsaw, with a population of c.1.8m, to towns of 100,000. We have 4 further stores currently under construction.
Our second commissary that came on stream in August is fully operational and is supplying a large proportion of our stores. Our expanded commissary capacity has the potential to supply up to 150 stores.
We opened our first store in Warsaw in February 2011 and, through the backing of our investors and the hard work of our team and our sub-franchisees, the establishment of Domino’s as a national brand in Poland is moving from vision to reality.”
View the interview with Peter Shaw and Andrew Scott of Proactive Investors: Link to interview
020 3393 6954DP Poland PLC
Peter Shaw, Chief Executive
020 7418 8900 Peel Hunt
Adrian Trimmings/George Sellar
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 50 Domino’s Pizza stores in 21 Polish cities, 26 corporately managed, 2 under management contract and 22 sub-franchised.
Third party article in The New York Times, by Ruchir Sharma, 5 July 2017
Ruchir Sharma is the chief global strategist at Morgan Stanley Investment Management and author of “The Rise and Fall of Nations: Forces of Change in the Post-Crisis World.”
Coinciding with President Trump’s recent visit to Poland, Sharma’s article in the New York Times suggested that the next major nation to be counted by the International Monetary Fund as wealthy or an advanced economy could be Poland, the previous nation to be added to this category being South Korea some 20 years ago.
Disclaimer: Neither DP Poland PLC nor its subsidiary DP Polska SA, directors or employees, have had any input to the writing of this article and cannot verify its content, including the views, facts or statements expressed within it by the author. Neither DP Poland PLC nor its subsidiary DP Polska SA bear any responsibility for any investment decisions made based on the reading of this article or other writings by the author Ruchir Sharma. 19 July 2017.