Thanks for sharing. It's a good write up. Just can't figure out how to purchase from a US Equity account.
We have interests in Poland and spend part of the summer over there.
We're familiar with them, as well as Biedronka, Zabka and others.
The market that they serve, the smaller communities are growing as people are building more outside of the cities. This "Suburbanization" is creating developments closer to these stores.
Granted, it's not in all area that it's occuring, however the ability to "Shop local" is important to factor in.
One more estimate for your table: Shree says 5,300-5,500 domestic stores here: https://www.youtube.com/watch?v=OXYwcYNkdnM&t=793s , and he repeated the 5,300 number in a recent interview with CompoundingQuality.
Nice writeup btw (yes, time-consuming indeed! I've spent my fair share on this company). I like the Nick Sleep angle of asking "what could stop this company from reaching its destination." I suppose that would be how fast Biedronka expands with its small store format into small towns (needs to be monitored).
Thanks. I'll add the data point in a future update. I agree that dino and biedronka should be tracked side by side in the future. It is by far dino's biggest threat
The share price can definitely 10x or even 100x, it doesn't really matter that the number of stores has an upper limit. They could do share buybacks and eat away 5% of shares every year once they reached the store limit. Or they extend the product line by adding something like fuel stations, storage containers or fast food restaurants into their stores. Also the asset value will be significant, they will be one of the largest owner of property. I see the most likely expansion country is Ukraine (after the war ended) because it has similar rural structure and large population and country size.
I appreciate the feedback! I agree that it's not just about future growth in revenue that makes the value of the share price. We could model the situation where they reach for example 6000 stores, only maintenance CAPEX is needed and then look at how much cash is generated. When the annual report of 2023 will be released, I plan to do an update of the article. I'll take your comments into account. Thanks.
Hey Kevin! Thanks for your research. Why exclude the possibility of a 10x? With LFL growth, won't the same stores generate enough FCF over time to achieve a 10x in owner earnings without needing a 10x increase in stores?
Well, I'm working on a bear case for the moment, and it's the exit multiple that worries me. If Dino becomes number 2 in Poland, and all mom and pop stores are competed away, the competitive dynamics with Biedronka will determine the final multiple. If they get into a pricing bid, then margins will erode and multiples will fall. If they get into some sort of non-agreed cooperation, then margins will stay higher. I'm trying to write a bear case to 'destroy one of my beloved ideas"
Definitely a fantastic article and feels like it puts my condensed research to shame. Appreciate you sharing all this valuable research into the public forum :)
Gas Gas Gas Polish companies. My home country! :)
You can be proud of your country’s growth. Fastest GDP grower over the last 2 decades I believe.
But politicians are stupid, putting people uncapable yo state owned companies like Orlen
Thanks for sharing. It's a good write up. Just can't figure out how to purchase from a US Equity account.
We have interests in Poland and spend part of the summer over there.
We're familiar with them, as well as Biedronka, Zabka and others.
The market that they serve, the smaller communities are growing as people are building more outside of the cities. This "Suburbanization" is creating developments closer to these stores.
Granted, it's not in all area that it's occuring, however the ability to "Shop local" is important to factor in.
You should be able to buy them with Interactive Brokers
One more estimate for your table: Shree says 5,300-5,500 domestic stores here: https://www.youtube.com/watch?v=OXYwcYNkdnM&t=793s , and he repeated the 5,300 number in a recent interview with CompoundingQuality.
Nice writeup btw (yes, time-consuming indeed! I've spent my fair share on this company). I like the Nick Sleep angle of asking "what could stop this company from reaching its destination." I suppose that would be how fast Biedronka expands with its small store format into small towns (needs to be monitored).
Thanks. I'll add the data point in a future update. I agree that dino and biedronka should be tracked side by side in the future. It is by far dino's biggest threat
The share price can definitely 10x or even 100x, it doesn't really matter that the number of stores has an upper limit. They could do share buybacks and eat away 5% of shares every year once they reached the store limit. Or they extend the product line by adding something like fuel stations, storage containers or fast food restaurants into their stores. Also the asset value will be significant, they will be one of the largest owner of property. I see the most likely expansion country is Ukraine (after the war ended) because it has similar rural structure and large population and country size.
I appreciate the feedback! I agree that it's not just about future growth in revenue that makes the value of the share price. We could model the situation where they reach for example 6000 stores, only maintenance CAPEX is needed and then look at how much cash is generated. When the annual report of 2023 will be released, I plan to do an update of the article. I'll take your comments into account. Thanks.
Hey Kevin! Thanks for your research. Why exclude the possibility of a 10x? With LFL growth, won't the same stores generate enough FCF over time to achieve a 10x in owner earnings without needing a 10x increase in stores?
Well, I'm working on a bear case for the moment, and it's the exit multiple that worries me. If Dino becomes number 2 in Poland, and all mom and pop stores are competed away, the competitive dynamics with Biedronka will determine the final multiple. If they get into a pricing bid, then margins will erode and multiples will fall. If they get into some sort of non-agreed cooperation, then margins will stay higher. I'm trying to write a bear case to 'destroy one of my beloved ideas"
Yes that's a sound strategy maybe I'll join you in doing that :)
Thanks for the plug Kevin!
Definitely a fantastic article and feels like it puts my condensed research to shame. Appreciate you sharing all this valuable research into the public forum :)
Thank you. Still learning but happy to share!
Nicely written. I like your new format! Also enjoy the measured conclusion too! Keep it up Kevin!
Thanks a lot. Just learning from the pros like you! 😉
I'm glad my stuff is helpful. There is so much to learn, Kevin! And very happy to walk on this journey with you.