Our Q&As are emailed in our Saturday Morning Report, find the answer to this question below.
Hi MM, Two questions - i) DMP (Domino's) has dropped to near its 5 year low, what is your view towards it? Will MM place DMP into the hitlist? And at what price will MM be interested in DMP? ii) Chemist Warehouse and Sigma - what is MM's view and at what price will MM be interested? Noting it rose from around 60 cents to around a dollar in a year. Thanks, Jacky
Hi Jacky,
Domino’s Pizza (DMP) – the fast food giant provided a very disappointing trading update a fortnight ago based on weakening growth in Japan & Europe despite the local market continuing to post Same Store Sales growth of more than 8%. Domino’s need to show strong growth given the stock trades on ~25x FY24 earnings while they have failed to live up to lofty targets and expectations over the last few years. Despite the stock trading ~75% below highs set in 2021, there have been a number of 20+% rallies along the way so trading the name can prove fruitful if executed well. For now, we aren’t keen to buy the latest dip, and we think there are many other better opportunities out there.
Sigma (SIG) – the pharmacy wholesaler raised $228m last year in preparation for a merger with Chemist Warehouse, a deal that would finally bring the country’s largest chemist chain to the ASX. There remains a number of questions around the deal structure and outcome for shareholders, as well as what it means for Sigma’s other customers who would likely shy away from dealing with the wholesaler given the conflict. We like the tie up, but aren’t keen to jump the gun here.
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