Dis-Chem Pharmacies | Growing pains
DisChem (DCP) released a satisfactory FY ‘18 result but missed expectations. Adjusted diluted HEPS increased by 14% yoy to 78.7cps, including a 5% increase in issued shares post the 2017 capital raise. Like-for-like sales growth slowed by 200bps to 7% yoy due to the acceleration of the group's store rollout. New stores are near existing stores and temporarily encroaching on like-for-like sales. In our view, the DCP investment case is strong. DCP opened 46 new stores (c.36% of total stores) over the past three years. DCP continues to gain share in its participating categories. DCP's maturing trading densities contribute to the group's earnings growth ahead of peers. We forecast adjusted diluted HEPS CAGR of 24% over the next three years to c.150cps in FY ‘21.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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