DMP results a miss, relative to consensus, with FY22 (NPAT $171 vs $165 actual, EBIT $272m expected vs $262 actual).

Your friendly local pizza store for just 30x forward into a normalised eating environment for a value conscious inflation-impacted consumer.

Same store sales are, for now, going backwards (network -2.4%, SSS -1.1%) although there is a strong store roll out program ahead, which will boost total sales.

That said, sales growth expectations are still a high hurdle,

& profitable sales expansion (EBITDA) also likely a challenge, giving current EBIT is declining in face of inflation.

The problem remains the multiple. It isn’t clear that pizza is an inflation resistant business (yet); most of the costs are escalating significantly (fuel/petrol for delivery, electricity for cooking, wheat for the pizza, labour costs for staff) and given the product is meant to be for the value conscious it isn’t clear how much of that you can push onto the consumer.

It’s also not clear what the sustainable margin is, across the different geographies.

Nor is it clear that the balance sheet is appropriately geared for a shift in consumer preferences.

With ND/EBITDA rising to levels that are worrisome for a pizza franchise.

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This document is based on information available at the time of publishing, information which we believe is correct and any opinions, conclusions or forecasts are reasonably held or made as at the time of its compilation, but no warranty is made as to its accuracy, reliability or completeness. To the extent permitted by law, neither Aequitas nor any of its affiliates accept liability to any person for loss or damage arising from the use of the information herein.

Please note that past performance is not a reliable indicator of future performance.

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