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DIS-CHEM PHARMA sees an upgrade to Positive due to a better fundamenta...
The general evaluation of DIS-CHEM PHARMA (ZA), a company active in the Drug Retailers industry, has been upgraded by the independent financial analyst theScreener with the addition of a star. Its fundamental valuation now shows 4 out of 4 possible stars while its market behaviour can be considered as defensive. theScreener believes that the additional star(s) merits the upgrade of its general evaluation to Positive. As of the analysis date March 22, 2022, the closing price was ZAR 36.99 and its...
- Jiten Bechoo
- Pratish Soni
Dis-Chem Pharmacies | Inflection point
Direct and indirect costs from two consecutive strikes over the last two years will leave DCP's FY '20 earnings on FY '17 earnings despite the Group growing revenue by c.13% pa. Adjusting for the once-off impacts, we estimate the Group would have grown earnings in line with revenue. This is despite low inflation and the additional costs from aggressive store expansion constraining margins. In our view, the Group's earnings trajectory is normalising. DCP's store expansion is moderating and ma...
- Jiten Bechoo
- Pratish Soni
Dis-Chem Pharmacies | Adjusting for anomalies
Dis-Chem (DCP) were recently hosts to sell-side analysts on a site visit to its three stores in the Greenstone node in Gauteng, to explain its store co-location strategies. Management also gave detail on sizable once-off items and rebate timing issues from the last 12 months, which will unwind in FY '20 and optically skew the company's underlying earnings growth trajectory. DCP's store rollout strategy over the last two years identifies greenfield locations and regions with existing mature sto...
1 director sold
A director at Dis-Chem Pharmacies Limited sold 1,000,000 shares at 22.425ZAR and the significance rating of the trade was 100/100. Is that information sufficient for you to make an investment decision? This report gives details of those trades and adds context and analysis to them such that you can judge whether these trading decisions are ones worth following. Included in the report is a detailed share price chart which plots discretionary trades by all the company's directors over the last t...
- Jiten Bechoo
- Pratish Soni
Dis-Chem Pharmacies | Proxy voting recommendation *updated
We published a DCP proxy voting and governance report on 22 July 2019 but became aware of further information regarding related parties. This has led to the following changes: > We reduce DCP's corporate governance score to 2.71 out of 5 and rate them 'adequate' (previously 3.27 out of 5 and a 'good' rating). > We increase DCP's ESG score to 2.6 out of 5, the corresponding Beta adjustment is now 5.6% (previously 2.4 out of 5 and a 4.1% Beta adjustment). > We include a table of related parties, ...
- 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 ‘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: • 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 str...
- Jiten Bechoo
- Pratish Soni
Dis-Chem Pharmacies | Watch this space
Dis-chem (DCP) aggressive store rollout (8% new space in FY'19) dilutes trading densities short-term but increases the longer-term opportunity set and in turn the value of the group. While CLS has a more established business model, DCP's valuation discount (c.20%) and investment in its footprint, provides investors with an attractive opportunity in the medium-term. Key to both counters, is that they are well placed to gain market share from independents and grocery chains in the drug and perso...
- Jiten Bechoo
- Pratish Soni
Dis-Chem Pharmacies | Wellness does not come cheap
DisChem (DCP) released a satisfactory H1 ‘19 result with diluted HEPS up 11% yoy to 51.7cps. Like-for-like retail sales growth slowed by 310bps yoy to 3.5% yoy due to 280bps lower inflation yoy at 1.2%. The acceleration of the Group's store rollout is affecting like-for-like sales. New store trading densities are ramping up and there is some cannibalisation of the existing footprint. Group total income margins were 110bps higher yoy at 29.4% due to improved term from suppliers as the compa...
- Atiyyah Vawda
- Jiten Bechoo
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...
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