Avior Capital Markets - Dis-Chem Pharmacies (19T8) Dis-Chem Pharmacies | Proxy voting recommendation

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Avior Capital Markets

Jiten Bechoo ...

Pratish Soni

Dis-Chem Pharmacies | Proxy voting recommendation

Dis-chem (DCP) receives a corporate governance score of 3.27 out of 5 (FY '18: n/a) and is rated as â€˜good'. By comparison, industry peer Clicks (CLS) has a corporate governance score of 3.38 out of 5.

We do not recommend voting against any of the ordinary or special resolutions. However, we highlight the following risks:
â€¢ A key growth vector for DCP is the group's aggressive store rollout to consolidate the independent pharmacy space in SA. The loss of key persons may compromise the strategic direction of DCP given that the CEO, I Saltzman, is post retirement age (68). However, DCP does have a strong group leadership pool of eight executives outside of the board which could provide an appropriate successor,
â€¢ The Saltzman family have a c.53% interest in DCP. We believe that their vested interest in DCP promotes the interests of minorities, and
â€¢ L Nestadt, the chairman of the board, has an indirect 1.5m share interest in DCP. However, we classify L Nestadt as independent given the quantum of his net worth.

22/07/2019 13 EN

Underlying

Dis-Chem Pharmacies

Dis-Chem Pharmacies Limited, formerly Dis-Chem Pharmacies Proprietary Limited, is a pharmacy company in South Africa. In addition to pharmaceutical products and services, its retail pharmacies also sell personal care and beauty, healthcare and nutrition and baby care products, as well as confectionary, dry grocery, household and other ancillary products. It offers dispensary products, including diagnostics, first aid, and mobility and incontinence; beauty products, including beauty accessories, color cosmetics, face care, fragrance and skin care; toiletries products, including bath care, body care, foot care, hair care, oral care and shaving; electrical products, including heating and cooling, household and lifestyle, and household products, including cleaners and fresheners, insecticides, kitchen tools, purifiers and veterinary. It also offers vitamin products, sports supplements, and sports equipment and aids, and foods and specialized diet. It has over 101 stores in South Africa.

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ZAE000227831 Johannesburg Stock Exchange South Africa

Provider

Avior Capital Markets

Avior is a globally recognised capital markets research and trading firm, with the broadest research coverage within the region, with 100+ SA and 20+ SSA companies under coverage. Avior services clients from offices in London, Cape Town and Johannesburg.

Our research quality is consistently recognised in local and global surveys, with 18 analysts currently rated in their respective sectors (FM 2017). Value add through in-depth, innovative, high quality and consistent research with comprehensive underlying fundamental modelling supported by regular analyst and roadshow interactions.

Avior has proven that by working closely with our clients we can mutually develop dominant positions in certain sectors, going from strength to strength. Avior has a dedicated ESG team, having been ranked #1 in Corporate Governance research since 2008.

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Analysts

Jiten Bechoo

Pratish Soni

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Dis-Chem Pharmacies | Proxy voting recommendation

DIS-CHEM PHARMA sees an upgrade to Positive due to a better fundamental star rating

Dis-Chem Pharmacies | Inflection point

Dis-Chem Pharmacies | Adjusting for anomalies

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