1) The funds got into Dino Polska early and lately they have been profit taking...
2) Alot of podcasters and Substackers etc have been talking about the stock compared to other so-called EM stocks just as the "smart money" is getting out or taking profits...
3) Its not clear where future growth will come from. At some point, they will have Poland saturated - if not already as they already have one store for every so many Poles (sorry, can't remember the figures I have seen...). Expansion eastward to Russia and Belarus is probably out along with Ukraine given its a war zone rapidly loosing population.... Germany, Czech, Slovakia etc would be completely new markets with probably different retail laws even though they are EU...
4) At some point, the stores will need to be remodelled by somebody e.g. landlord, tenant or Dino if they are the owner... Same with any refrigeration etc equipment as it will need to be replaced - not sure the lifespan of such equipment...
With that said, they do have the right business model when it comes to format size. Here in Malaysia, Speedmart and K.K. no frills smaller format chain stores have saturated every neighbourhood and housing estate selling mostly the shelf stable basics (and it seems like at higher prices than supermarkets!) while Indomaret and Alphamart have done the same in Indonesia (albeit there is still room for growth there given Indonesia's size and they have multiple formats + the latter expanded into the Philippines)... And of course, the USA has its dollar store chains...
I think Dino is interesting and has been on my watch list but as it matures it's multiple will come down further. Jeronimo, Carrefour, Tesco and Koninklijke all trade at much lower multiples. So it's more likely to trade down to low teens than 20x PE. So valuation can still offset the growth and result in a lower return.
I linked to your post in my post for today - Emerging Market Links + The Week Ahead (April 1, 2024) https://emergingmarketskeptic.substack.com/p/emerging-markets-week-april-1-2024
My concerns would be:
1) The funds got into Dino Polska early and lately they have been profit taking...
2) Alot of podcasters and Substackers etc have been talking about the stock compared to other so-called EM stocks just as the "smart money" is getting out or taking profits...
3) Its not clear where future growth will come from. At some point, they will have Poland saturated - if not already as they already have one store for every so many Poles (sorry, can't remember the figures I have seen...). Expansion eastward to Russia and Belarus is probably out along with Ukraine given its a war zone rapidly loosing population.... Germany, Czech, Slovakia etc would be completely new markets with probably different retail laws even though they are EU...
4) At some point, the stores will need to be remodelled by somebody e.g. landlord, tenant or Dino if they are the owner... Same with any refrigeration etc equipment as it will need to be replaced - not sure the lifespan of such equipment...
With that said, they do have the right business model when it comes to format size. Here in Malaysia, Speedmart and K.K. no frills smaller format chain stores have saturated every neighbourhood and housing estate selling mostly the shelf stable basics (and it seems like at higher prices than supermarkets!) while Indomaret and Alphamart have done the same in Indonesia (albeit there is still room for growth there given Indonesia's size and they have multiple formats + the latter expanded into the Philippines)... And of course, the USA has its dollar store chains...
I think Dino is interesting and has been on my watch list but as it matures it's multiple will come down further. Jeronimo, Carrefour, Tesco and Koninklijke all trade at much lower multiples. So it's more likely to trade down to low teens than 20x PE. So valuation can still offset the growth and result in a lower return.