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Australia | Retail | Food & Beverage
Market capitalisation   AUD 4,688.6m
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Overview

DMP is a multinational fast-food retailer that owns the exclusive franchise agreements for Domino’s in Australia, New Zealand and parts of Europe and Asia. It also sublicenses its Domino’s Pizza brand to third-party franchisees in Australia, New Zealand and parts of Europe and Asia.

Business Lines

DMP generates most of its operating revenues from its fast-food restaurants in Australia and New Zealand,  Europe and Japan. Of the AUD1,150 million it generated in the 2018 financial year 35% was generated in Japan, 35% in Europe and 29% in Australasia.

DMP owns the exclusive master franchise agreements for Domino’s in Australia and New Zealand until 2028, Japan until 2031, France and Belgium until 2041, and Germany and the Netherlands until 2043, which it acquired from Domino’s Pizza. Domino’s (www.dominos.com.au) is an international fast-food chain, specialising in pizza. There are approximately 2,400 Domino's restaurants in Australia, New Zealand, Japan, France, Germany, Belgium and the Netherlands, of which about 450 are owned and operated by DMP and the rest are franchised by DMP to third-party franchisees in exchange for royalties and operating fees. Most Domino’s restaurants offer take-out and delivery options.

DMP leases most of the buildings out of which its restaurants operate and sources its packaging and ingredients from international suppliers such as Leprino’s Foods, Paradise Tomato and Ardent Mills, which it delivers directly to its restaurants or has distributed to its restaurants using third-party logistics providers.

Strategy, Risks and Opportunities

Quick service restaurants are often characterised as low margin and highly competitive with growing pressure from new entrants and multinational brands, changes in consumer preferences, and the adoption of alternative foods and technologies. Companies try to minimise these risks and increase customer revisitation by promoting new menu items and customer loyalty programs while carefully managing their delivered ingredient costs and inventory levels. Specifically, DMP has indicated its near-term focus is to: introduce new product offerings and expand its range of products; continue to invest in its online ordering platform and increase the efficiency of delivery services using new technologies; and expand its international network through new restaurant openings and acquisitions, with the target of increasing the group store network from 2,393 to 4,650 by 2025 with Australasia increasing from 819 to 1,200, Europe from 1,054 to 2,600 and Japan from 520 to 850 [1].

DMP competes with other domestic quick serve and other restaurants and cafes that are also trying to attract customers through various product offerings, pricing and other customer propositions. Some of its larger competitors are Pizza Hut, Hell Pizza, McDonald’s, KFC, Hungry Jacks, Nando’s and Subway.

DMP owns an established fast-food brand with strong channels to market in Australia and New Zealand. It also operates in a number of different countries, giving it some ability to allocate more of its resources to countries with favourable demand drivers and exchange rates, and vice-versa. Going forward, it should continue to benefit from increased sales and economies of scale through organic growth, expanding its product range and geographic presence, optimising its operations and supply chain as well as undertaking complementary and value-accretive acquisitions. Its downside commercial risks could include: a broader economic slowdown that could affect the propensity of customers to purchase discretionary fast-food meals; erosion of market share and gross margins from other domestic competitors; loss of a key distributor, supplier or employee; changes to the availability, quality and delivered price of wholesale products and third party supplier costs that are unhedged and cannot be passed on to customers through pricing increases; a depreciation of the AUD, which would increase the unhedged cost of its imports (equally however, this could increase the unhedged value of any foreign capital it chooses to expatriate back to Australia); greater domestic health restrictions and regulations that may increase its compliance costs or prevent it from selling certain products; and any inheritance of undue liabilities or commercial risks through new product offerings, store openings, acquisitions and entrances into new markets.

History

2005: Domino’s Pizza was founded by Tom and James Monaghan in 1960 as a low-cost, fast-food pizza chain in the United States. It quickly expanded into new countries with the first Australian restaurant opened in 1983. The Australian restaurants along with the exclusive Australian and New Zealand master franchise rights were acquired by Silvio’s Dial-a-Pizza in 1993. Silvio’s Dial-a-Pizza was rebranded and renamed Domino’s Pizza Australia in 2000. Domino’s Pizza Australia went through a period of domestic and international growth which saw it open, acquire and rebrand a number of other pizza restaurant chains including Big Daddy in Australia and Pizza Haven and Mad Dogs Pizza in New Zealand.

Domino’s Pizza Australia was renamed Domino’s Pizza Enterprises shortly before it was first listed on Australian Stock Exchange in 2005 (DMP.AX). At the time, it owned and operated over 100 restaurants in Australia and New Zealand and had a further 230 franchisees

2006: DMP continued its international expansion by acquiring 6 company-owned and 147 franchised Domino’s restaurants in France, Belgium and the Netherlands from Domino’s Pizza

2007: DMP acquired and rebranded another pizza chain in The Netherlands called Al Capone’s and one in Belgium called Alvolo

2009: DMP acquired and rebranded another Australian pizza chain called Pinky’s Pizza. By the end of the year, it had grown its Domino’s branded network to 107 company-owned and 669 franchised restaurants in Australia, New Zealand and parts of Europe

2010: DMP acquired and rebranded another a pizza chain in Belgium called Pizza Company

2014: DMP first entered the Asian market after it acquired 75% of Domino’s Pizza Japan, which itself had over 215 company-owned and 40 franchised restaurants

2016: DMP established a 67:33 joint venture with the Domino Pizza Group of the United Kingdom called Daytona, which later acquired several Domino’s restaurants and the master franchise agreement in German. Daytona also acquired and rebranded a Germany pizza chain called Joey’s Pizza, which had over 210 restaurants. DMP itself acquired another French pizza chain called Pizza Sprint and by the end of the year it had grown its Domino’s branded network to 448 company-owned and 1,535 franchised restaurants around the world

2017: DMP was required to acquire the 25% minority interest in Domino’s Pizza Japan from Bain Capital after Bain exercised a pre-existing put option over the business

2018: DMP, through its Daytona joint venture, acquired and rebranded Hallo Pizza, an independent chain of 170 restaurants across Germany. DMP also renewed its Domino’s master franchise agreement for Australia and New Zealand until 2028

Governance

DMP was first listed on the Australian Stock Exchange on 16 May 2005. It had 85.7 million shares on issue at the end of the 2018 financial year, 27% of which were owned by Somad Holdings and the rest by a mix of approximately 10,250 retail and institutional investors.

DMP has 6 board members who, at the end of last year, collectively owned 4.2 million shares. The board comprises of:

  • Jack Cowin has been the Non-Independent Chairman since March 2014. Jack comes from the fast-food industry and is the Founder and Chairman of Competitive Foods Australia. He is also a Director of Ten Network Holdings, Fairfax Media, the Chandler Macleod Group and BridgeClimb;
  • Don Meij has been the Managing Director and Chief Executive Officer since August 2001;
  • Ross Adler has been an Independent Director since March 2005. Ross is currently also the Chairman of Amtrade International;
  • Grant Bourke has been an Independent Director since August 2001. Grant is currently also a Director of Pacific Smiles Group;
  • Paul Cave has been an Independent Director since March 2005. Paul is also a Director of Lovisa and BridgeClimb; and
  • Lynda O’Grady has been an Independent Director since April 2015.

Don Meij has been the DMP Chief Executive Officer and Managing Director since August 2001. Don comes from the quick-serve food industry and was previously a franchisee of Domino’s Pizza.

References

Comparative Metrics

Summary Income Statement (AUDm)

FY17AFY18AFY19FFY20FFY21F
Revenue 1,071.3 1,150.2 1,263.7 1,380.8 1,518.6
Revenue growth 15.4% 7.4% 9.9% 9.3% 10.0%
EBITDA 210.6 235.9 266.7 295.1 328.6
EBITDA Margin 19.7% 20.5% 21.1% 21.4% 21.6%
NPAT normalised 105.5 119.5 130.3 142.9 160.4
NPAT reported 102.9 121.5 104.4 142.9 160.4
EPS normalised 119.0 137.2 152.5 167.2 187.6
EPS growth 21.9% 15.3% 11.2% 9.7% 12.2%

Summary Balance Sheet (AUDm)

FY17AFY18AFY19FFY20FFY21F
Total assets 1,132.8 1,302.4 1,332.8 1,385.6 1,448.0
Net debt 278.8 522.5 571.7 590.9 577.6
Total liabilities 717.7 994.7 1,013.9 1,030.9 1,032.1
Shareholders' equity 415.1 307.7 318.9 354.7 415.9
ROCE 16.6% 16.0% 18.1% 19.3% 21.0%
WC to revenue -4.0% -5.1% -5.0% -4.8% -4.8%
Net debt to capital 40.2% 62.9% 64.2% 62.5% 58.1%
Interest cover >25.0 >25.0 14.1 13.0 12.2

Summary Cashflow Statement (AUDm)

FY17AFY18AFY19FFY20FFY21F
Operating free cashflow 132.9 185.4 194.8 212.9 237.5
Capital expenditure 124.5 196.8 125.0 125.0 125.0
Distributable cashflow 30.6 17.3 43.9 87.9 112.5
Post-tax DPS declared 93.3 107.8 114.3 125.4 140.7
Franking 50.0% 56.1% 75.0% 75.0% 75.0%
Payout 78.6% 77.0% 75.0% 75.0% 75.0%
Dividend cover 1.1 1.4 1.4 1.4 1.4

Summary Discounted Cashflow Valuation (AUDm)

Financial year end30-JunShares on issue85.5
WACC8.7%TV/DCF67.3%
Explicit value4,052.7Terminal value2,727.6
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Domino's Pizza boss Don Meij has called on the Coalition to adopt Labor's plan to force listed companies to report comparison ratios of chief executive ......Click Here
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The Domino’s Pizza Enterprises share price has converged and is now 24.1% more expensive than its DCF valuation. It has the 7th best financial metrics of the 11 Retail (Food & Beverage) companies on Shareclarity.1. Just Water International2. Metcash3. Woolworths Group4. Restaurant Brands5. Collins Foods6. Retail Food Group7. Domino’s Pizza Enterprises8. Veritas Investments9. Wesfarmers10. Burger Fuel Worldwide11. Oliver's Real FoodKey financial metrics: value gap, P/E, EV/EBITDA, P/B, dividend yield, debt to capital, Interest cover, WC to revenue, WACC, TV/DCF, 3yr EPS growth, 3yr EBITDA margin, 3yr dividend cover, 3yr cash conversion, 3yr ROCE
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Ms Ferguson has also conducted celebrated investigations into National Australia Bank, IOOF, 7-Eleven, Aveo, Domino's Pizza and the Retail Food ......Click Here
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The workplace watchdog believes Domino's Pizza remains riddled with employment law breaches throughout its network, after an almost two-year ......Click Here
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The Domino’s Pizza Enterprises share price has diverged and is now 25.1% more expensive than its DCF valuation. It has the 6th best financial metrics of the 10 Retail (Food & Beverage) companies on Shareclarity.1. Metcash2. Restaurant Brands3. Woolworths Group4. Collins Foods5. Retail Food Group6. Domino’s Pizza Enterprises7. Wesfarmers8. Veritas Investments9. Burger Fuel Worldwide10. Oliver's Real FoodKey financial metrics: value gap, P/E, EV/EBITDA, P/B, dividend yield, debt to capital, Interest cover, WC to revenue, WACC, TV/DCF, 3yr EPS growth, 3yr EBITDA margin, 3yr dividend cover, 3yr cash conversion, 3yr ROCE
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The Domino’s Pizza Enterprises share price has converged and is now 24.2% more expensive than its DCF valuation. It has the 6th best financial metrics of the 10 Retail (Food & Beverage) companies on Shareclarity.1. Metcash2. Collins Foods3. Restaurant Brands4. Woolworths Group5. Retail Food Group6. Domino’s Pizza Enterprises7. Wesfarmers8. Veritas Investments9. Burger Fuel Worldwide10. Oliver's Real FoodKey financial metrics: value gap, P/E, EV/EBITDA, P/B, dividend yield, debt to capital, Interest cover, WC to revenue, WACC, TV/DCF, 3yr EPS growth, 3yr EBITDA margin, 3yr dividend cover, 3yr cash conversion, 3yr ROCE
  0
1m
The Domino’s Pizza Enterprises share price has diverged and is now 25.2% more expensive than its DCF valuation. It has the 6th best financial metrics of the 10 Retail (Food & Beverage) companies on Shareclarity.1. Metcash2. Collins Foods3. Restaurant Brands4. Woolworths Group5. Retail Food Group6. Domino’s Pizza Enterprises7. Wesfarmers8. Veritas Investments9. Burger Fuel Worldwide10. Oliver's Real FoodKey financial metrics: value gap, P/E, EV/EBITDA, P/B, dividend yield, debt to capital, Interest cover, WC to revenue, WACC, TV/DCF, 3yr EPS growth, 3yr EBITDA margin, 3yr dividend cover, 3yr cash conversion, 3yr ROCE
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The Domino’s Pizza Enterprises share price has converged and is now 24.5% more expensive than its DCF valuation. It has the 6th best financial metrics of the 10 Retail (Food & Beverage) companies on Shareclarity.1. Metcash2. Collins Foods3. Woolworths Group4. Restaurant Brands5. Retail Food Group6. Domino’s Pizza Enterprises7. Wesfarmers8. Veritas Investments9. Burger Fuel Worldwide10. Oliver's Real FoodKey financial metrics: value gap, P/E, EV/EBITDA, P/B, dividend yield, debt to capital, Interest cover, WC to revenue, WACC, TV/DCF, 3yr EPS growth, 3yr EBITDA margin, 3yr dividend cover, 3yr cash conversion, 3yr ROCE
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Labouring the point being our speciality, we return, again, to Domino's Pizza. The market's wilful blindness to the overstatement of the company's ......Click Here
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The Domino’s Pizza Enterprises share price has converged and is now 25.2% more expensive than its DCF valuation. It has the 5th best financial metrics of the 11 Retail (Food & Beverage) companies on Shareclarity.1. Metcash2. Just Water International3. Restaurant Brands4. Retail Food Group5. Domino’s Pizza Enterprises6. Veritas Investments7. Collins Foods8. Woolworths Group9. Wesfarmers10. Oliver's Real Food11. Burger Fuel WorldwideKey financial metrics: value gap, P/E, EV/EBITDA, P/B, dividend yield, debt to capital, Interest cover, WC to revenue, WACC, TV/DCF, 3yr EPS growth, 3yr EBITDA margin, 3yr dividend cover, 3yr cash conversion, 3yr ROCE
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The Domino’s Pizza Enterprises share price has increased 6.9% today, compared to 1.0% by the other 11 Retail (Food & Beverage) companies on Shareclarity.Shareclarity will review all publicly available information and update the DCF valuation accordingly.
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Domino's Pizza shares plunged as much as 12 per cent on Tuesday after the Australian fast-food giant revealed lower than expected sales and profit, ......Click Here
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... to $192.75, Challenger falling 6.9 per cent to $11.59 and Domino's Pizza dropping 6.5 per cent to $49.00 after investors weighed up their results....Click Here
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Reporting season news focused primarily on two noteworthy misses yesterday: first from Cochlear, the second from Domino's Pizza. For Cochlear, the ......Click Here
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The Domino’s Pizza Enterprises share price has decreased -8.6% today, compared to -0.4% by the other 11 Retail (Food & Beverage) companies on Shareclarity.Shareclarity will review all publicly available information and update the DCF valuation accordingly.
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Shareclarity has revised the Domino’s Pizza Enterprises Limited DCF Valuation down 1% to AUD41.32. The share price is currently AUD46.99 and the value gap is -12.1%.Shareclarity take: "DMP reported a result which was largely in line. "
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The share price has moved 10% above the DCF valuation. The share price is currently AUD50.06 and the value gap is -16.8%% downside. It has the 4th best metrics of the 11 Retail(Food & Beverage) companies on Shareclarity.1. Metcash (MTS.AX)    13 of 152. Just Water International (JWI.NZ)    11 of 153. Restaurant Brands (RBD.NZ)    9 of 154. Domino’s Pizza Enterprises    8 of 155. Collins Foods (CKF.AX)    8 of 156. Retail Food Group (RFG.AX)    8 of 157. Veritas Investments (VIL.NZ)    8 of 158. Woolworths Group (WOW.AX)    7 of 159. Wesfarmers (WES.AX)    6 of 1510. Oliver's Real Food (OLI.AX)    6 of 1511. Burger Fuel Worldwide (BFW.NZ)    5 of 15Key financial metrics: value gap, P/E, EV/EBITDA, P/B, dividend yield, debt to capital, Interest cover, WC to revenue, WACC, TV/DCF, 3yr EPS growth, 3yr EBITDA margin, 3yr dividend cover, 3yr cash conversion, 3yr ROCE
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... a series of articles in Fairfax Media has highlighted underpayment of workers and other issues at 7-Eleven, Caltex and Domino's pizza franchises....Click Here
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Mr Swan referred to pay including that of Domino's Pizza boss Don Meij who has taken home $36.8 million, which is almost 435 times the full-time ......Click Here
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Morgan Stanley lifted Domino's Pizza's price target to a street high of $65, from $55, and retained its 'overweight' rating for the stock, saying that once ......Click Here