Domino’s Pizza Enterprises Ltd.

Decent Trading Update: Domino’s Pizza Enterprises Ltd.’s (ASX: DMP) stock was down 2.115% on November 28, 2018. Lately, the group reported that same store sales increased by 2.91% for the first 17 weeks of trading of FY19, compared to the previous corresponding period (pcp). The company has started FY19 with 2,393 stores, and has opened 36 organic new stores in this Financial Year to Date. Domino’s Pizza Japan has delivered Same Store Sales growth of 5% for the Financial Year to Date, and has opened 14 new stores. In Europe, the integration of the Hallo Pizza business in Germany is progressing well, and 134 stores are now committed to convert to Domino’s stores in the second half of the Financial Year. Overall, the group’s same store sales were a bit lower than expectations given the short-term impact of a relatively hot European Summer. Meanwhile, long-time director Paul Cave has announced his resignation last month. While the group may benefit from the ANZ Same Store Sales (with low-single digit upside) given the new summer menu launch, the stock still faces challenges in some of the other jurisdictions. Further, shift in economic conditions can impact margins and dividends. Meanwhile, DMP stock has fallen 15.55% in three months as on November 27, 2018 and is still trading at a high P/E (33.57x). The stock is trading at the price of level $45.81, and has support at $45 and resistance around $52. Therefore, we give a wait and watch view on the stock at the current price of $ 45.81.
 

Washington H. Soul Pattinson and Co. Ltd.

Fall in NPAT in FY 18: Washington H. Soul Pattinson and Co. Ltd.’s (ASX: SOL) stock has risen 19.13% in three months as on November 27, 2018 after the company for FY 18 delivered 17.4% rise in the regular profit after tax. This is on the back of a number of investments that significantly increased the contributions, including New Hope Corporation Limited, up 74.7%; Apex Healthcare, up 33.6%; Financial Services Portfolio, up 19.3%; and Brickworks Limited, up 8.0%. However, net profit after tax (NPAT) fell 20% to $266.8 million for the full year on the previous corresponding period. NPAT was affected due to non-regular losses of $64.3 million (2017: $51.6 million profit), which are mainly related to New Hope’s impairment of an undeveloped exploration project in Queensland. Additionally, in the first month of the new financial year (August), the company’s portfolio has grown by 19.8% ($1.08 billion). Meanwhile, SOL stock is trading at a P/E of 24.9x, and is at the price level of $27.84 with support at $24.0 and resistance at $30.5. Fundamentally, SOL’s FY18 ROE has reduced and is at 8.1%, which is close to industry median while operating margin has lowered down a bit. The group aims to maintain the forward 12 months dividend yield around 2% while the stock is below its 21 day exponential moving average. We believe that the stock is already at higher levels and is a watch for decent investment opportunity while it trades at the current price of $ 27.84.

FY 18 Financial Performance (Source: Company Reports)
 
 

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