1. The Legend of Pizza Brother
With the accelerated pace of life, most young people prefer simple, cheap, and delicious fast food, and pizza has naturally become the first choice for young people to take out. Domino's has attracted the attention of a large number of young people with its slogan "30 minutes must arrive". In addition, Domino's is also the exclusive general franchise of a well-known pizza brand in mainland China, Hong Kong Special Administrative Region of China and Macao Special Administrative Region of China As of now, Dashi shares have 569 directly-operated stores in 14 cities in mainland China. After suspending the listing plan at the end of last year, Dashi Co., Ltd. (Domino's China), a subsidiary of Pisa Domino's, which holds the title of "Global No. 1", recently announced that it will start trading on the Hong Kong Stock Exchange on March 28. This is Dashi’s second exploration of the Hong Kong stock market. This time, Dashi is full of confidence. Can it continue the legend of Pizza Brother?
2. Fundamental analysis
2.1 Financial Data of Rampage
**In terms of revenue:**The company's total revenue from 2020 to 2022 will be 1.104 billion yuan, 1.611 billion yuan, and 2.021 billion yuan, respectively, with a compound annual growth rate of 35.30%. The company's revenue growth rate is still relatively good , mainly due to the rapid expansion of the company in new growth markets (mainly referring to markets other than Beijing and Shanghai) , which will be introduced in later chapters.
**In terms of profit: **The company's net profit in 2020, 2021, and 2022 will be -274 million yuan, -471 million yuan, and -223 million yuan respectively, and the company's losses are gradually shrinking.
**Number of stores:**According to the prospectus, the number of its stores has increased by 119.4% from 268 in 2019 to 588 as of December 30, 2022, with a compound annual growth rate of 26.86%. The company is still relatively fast in terms of store opening speed. Restrained, and did not follow the fast store model, the result is that the quality of the store can be guaranteed, but it is easy to miss the market. 
2.2 Industry status, ranking third
2.2.1 Crazy revenue performance
In terms of revenue in 2022, the top five players account for 49.9% of the market share, of which Dashi has become the third largest pizza restaurant company in China's pizza market with a market share of 5.3% with a market share of 2.021 billion yuan, ranking first in the market and The second is Pizza Hut and Zumbo Pizza, with market shares of 35.2% and 5.6% respectively. Before that, in 2017, 2018, 2019, 2020 and 2021, the company's market share was 1.6%, 2.0%, 2.4%, 3.6% and 4.4% respectively, realizing the national pizza market share for 6 consecutive years Positive growth, while the market shares of Pizza Hut China and Zumbo Pizza, which rank first and second, have been eroded by other brands to varying degrees, including Dashi shares.
2.2.2 Amazing takeaway sales
The most important feature of Domino’s Pizza is that it has an independent delivery system, which promises to be delivered within 30 minutes. This is also the most proud competitive advantage of Domino’s . The competitive advantage seems to be less prominent.
In terms of takeaway sales in 2021, the company is still the third largest pizza catering company in China, with a market share of 6.7%. Pizza Hut and Zumbo Pizza rank first and second in the market respectively, with market shares of 26.8% and 8.4% respectively
. The number of stores is about 2,200, while the number of stores owned by Dashi is only 588, the number of Pizza Hut stores is 4.8 times, and the number of Zumbo Pizza is 3.74 times, but the takeaway share of Pizza Hut is 3.8 times. The takeaway share has been equal to Dashi shares. From these figures, we can see that Domino’s Pizza has a clear advantage in takeaway, and the takeaway share of a single store has far surpassed Pizza Hut and Zumbo Pizza, which ranks first and second. It seems that only the number of stores restricts the development of the company. Therefore, as long as the number of Domino's Pizza stores increases, the market share will further expand, which is basically a certainty.
2.3 Magic weapon of surprise
For catering chain enterprises, the number of stores is an important proof of whether the company can become the industry leader. In 2019, 2020, 2021, and 2022, the number of company stores will be 268, 363, 468, and 588 respectively, with a compound annual growth rate of 29.94%. The rapid expansion model, from the perspective of store expansion speed alone, is actually relatively restrained by Dashi shares.
2.4 Diversified development strategies
The company's current strategic layout is mainly focused on new growth markets. According to the track record, more than half of the company's new stores are opened in new growth markets. 39.1%, 42.9%, and 46.9%. It is worth mentioning that although the average daily total sales of stores in the new growth markets have not yet reached the level of Beijing and Shanghai, the growth rate of the average daily total sales of a single store is far faster than that of Beijing and Shanghai stores.
According to the prospectus, in 2020, 2021, and 2022, the total revenue of the new growth market will account for 21.3%, 28.8%, and 36.7% of the total revenue respectively. The contribution of the new growth market to the company's revenue can be said to be rising step by step. This is also closely related to the company's current strategic layout.
3. Cornerstone and Sponsor Analysis
The company did not have a cornerstone investor in the last IPO, and it is still the case this time. This is still a little surprising. According to the major shareholders, it is also the number one pizza restaurant chain company in the world. It is not easy to get a few cornerstones in. It can only be said that the company is still full of confidence in this listing.
4. Analysis of winning rate
The company's IPO Hong Kong public offering of 1.28 million shares (145,000 shares more than the last 1.135 million shares, it seems that the valuation has increased...), 100 shares per lot, a total of 12,800 lots, the current margin is only It’s less than 0.1 times. A while ago, the Hong Kong stock market was a bit warmer when it launched a new market. Unfortunately, there have been too many black swan events recently. The Hang Seng Index once again fell below 19,000 points. In the end, it will not exceed 15 times, and of course it will not Call back, then Group A and Group B each get 6,400 lots. According to 3,000 people applying for purchase, it is estimated that the winning rate of one lot will be 100%, and one lot of subscription will be guaranteed.
5. Comprehensive analysis and rating of new shares
1. From a fundamental point of view , there is no doubt about the company’s revenue. The compound annual growth rate of revenue has reached an impressive 35.3%. Since the company is still in the stage of rapid expansion, the company has been in a loss and has not yet made a profit, but it is good Losses are decreasing. In the future, only the number of stores will restrict the company's revenue. As long as the company's store scale increases, its revenue and net profit will also keep up. Therefore, the company's profit model is relatively simple and easy to replicate.
2. From the perspective of popularity , Domino’s Pizza, the major shareholder of Dashi shares, is the world’s largest pizza catering company. It is well-known in terms of popularity, but Pizza Hut has already preconceived. When it comes to pizza, everyone’s first reaction is Pizza Hut. Of course, the first thing to mention Pizza Hut The immediate reaction is pizza. Pizza Hut and pizza have become one. Although Dashi shares have the support of world giants like Dolomy, it is still difficult to change the inherent mindset.
3. From the perspective of cornerstone investment , such a big company, Dashi shares did not find a cornerstone. I don’t know whether it is too confident or the capital is not optimistic enough.
4. From the perspective of the market environment , the market environment has been a bit miserable recently. The Hang Seng Index finally reached 20,000 points, and recently fell to 19,000 points.
5. From the perspective of valuation , the current market value of the company is between 6 billion and 7 billion Hong Kong dollars. Since the company has not yet made a profit, we can only look at the price-to-sales ratio PS. In 2022, the company’s revenue will be 2.021 billion yuan, PS=60/20.21= 2.96 times, while Pizza Hut’s parent company, Yum China, has a price-to-sales ratio of 2.43 times. Of course, Yum China not only has Pizza Hut but also KFC, so we can only use it for reference. However, in the catering industry, Dashi shares This price-to-sales ratio is indeed not very attractive. The price-to-sales ratio of Hong Kong-listed local restaurant Tanzai International, which was listed last year, is only 2.39 times.
6. From the point of view of stores , Dashi shares are now opening stores at an annual expansion rate of 29.94%. This kind of store opening speed is actually relatively conservative and not stable. The result is that the quality of store openings is generally relatively high, and single store operations The ability is also relatively high, so as long as Dashi shares can continue to maintain such a growth rate, the number of stores will increase in the future, and the revenue and profit will come naturally.
Disclaimer:
1. This article only represents the opinions of one family and does not serve as any investment opinions or suggestions. The securities market is ever-changing, unpredictable, and ups and downs are capricious. This still needs to be handled carefully.
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