Dino Polska: A Polish Compounder w/ Clay Finck & Kyle Grieve (TIP587)
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- Опубліковано 19 чер 2024
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Clay is joined by Kyle Grieve to share a stock deep dive on Dino Polska. Dino Polska is an incredible business that has increased its store base by over 5x since 2015 and increased its earnings per share by over 10x since that time.
Kyle Grieve is the host of The Millennial Investing Podcast and also helps Clay run the TIP Mastermind Community - a community built by investors, for investors.
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IN THIS EPISODE, YOU’LL LEARN:
0:00:00 - Intro
0:00:27 - The primary characteristics Kyle looks for in his stock investments.
0:04:15 - What Dino Polska’s business model is and how they’ve perfected their growth formula.
0:09:55 - What sticks out about Dino’s management team.
0:14:30 - Dino Polska’s competitive advantages.
0:19:22 - What enables Dino Polska to continue to grow its store counts at above-average rates.
0:25:42 - Why it’s important to understand both the qualitative and quantitative aspects of a moat and durable competitive advantage.
0:30:15 - The key things to know about Dino operating in Poland.
0:39:45 - How Kyle views the valuation of Dino Polska.
0:43:10 - Potential new verticals that Dino Polska may expand into.
0:48:21 - Potential risks investing in Dino Polska.
0:54:01 - What live events TIP recently hosted in NYC.
1:02:02 - How you can join Clay and Kyle in Omaha for our upcoming events during the Berkshire weekend.
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As a local Dino 'user' I would add a few cents of my own.
Poles are very patriotic in their choices, if they have a choice they will definitely use the home brand. I don't quite agree that Dino is targeting users without cars. As for the cost of gasoline, Poland has one of the lowest rates in Europe (20-30% cheaper than Western Europe), so this is generally not a problem.
As a nation we are very car-centric, with a very (and I do mean very) scattered residential buildings.
Hardly anyone in their right mind would walk to a major shopping trip. Check out "Number of cars per 1000 Europeans". In this respect we resemble the USA, especially compared to the Czechia or Slovakia, not to mention Western countries.
Inflation is not a problem, its biggest source was energy and fuel costs, now with the transition of the war in the east from a hot phase to something resembling Korea everything is stabilizing.
As for the currency, you can be sure that the new government will greatly accelerate entry into the Eurozone, so the local currency will be replaced by the Euro within 3-4 years max.
I expect Dino to get into fuels and EV chargers, this might be their next growth accelerator.
As for risks, you certainly can't ignore the problem of declining population in small towns (migration and aging population).
Overall, I absolutely agree with the summary.
Appreciate the insights! The question of proximity is interesting. Would you say that people like Dino more because of the national brands than the proximity? Or do both factor in?
@@clayfinck In my opinion, the main success factors are: prices(!), Polish brand, good availability of local products, to a much lesser extent a walkable distance. As I mentioned, the towns are very sprawling with low-density housing, public transport poorly developed, so a car is a must.
Like here, check in Google maps: Dino Broniszewice 44C, 63-304
Anyway thanks for your inside, definitely changed my view on that stocks.
@@clayfinck People here are fed up with the foreign chains (especially German) benefiting from the special tax treatment. Walmart is probably the second cheapest choice in the US, after Aldi, while Dino may not even be 10-th in Poland! Additionally thanks to its limited locations still many Poles have no familiarity with it. Inflation y/y dropped to +6,5% however last 6 month annualized was 0%. Real wages come back to the up-trend, one of the strongest in the EU. Since Poland became a member in 2004 Złoty vs Euro is +9%. Sure we are a (too much) car nation.
@@clayfinck Definitely proximity also long opening hours. Dino’s primary source of growth is still existing but shrinking amount of traditional stores located in rural areas. In regard to brands portfolio many of core, international brands are available at Dino. Fundamental difference between Dino and other supermarket/discount chains is fresh meat, cold cuts and cheese section. Especially meat/ cold cuts provided by Agro-Rydzyna company strictly connected with Dino Polska.
Clay, you are on a roll with one top notch podcast after the other. keep them coming.
Much appreciated! Glad you are enjoying them.
Been watching your podcasts for a few years now and never knew you were a fellow Nebraskan, Clay. 😁 That’s awesome.
Or Twitter 😁
Need to watch it but I'll give it a thumbs up up front. I've got a full position starting to compound.
Any thoughts on Polands decreasing population effect on Dino?
The fresh meat is a big advantage. Pork is a very prominent part of the Polish diet.
Not sure if anyone can hep but i googled around and can't find fees associated with the DNOPY ADR in the US? Does anyone know what the fee structure looks like for this ADR?
Ask your broker
They should partner with Alimentation Couche-Tard
Wow, great company
Glad you found the video valuable!
What about Evolution AB?
Coming soon!
retail business is generally not a good business for most investors. To compete the value for Euro for every customer, Dino has to either develop their own brand skus as well as to optimize their transportation cost via distribution center. I wouldnt be interested unless Dino decides to learn from what Conad has accomplished over these years with its own private labels
Dino is the exception among retailers. Just like Costco or Walmart. Dino just builds two new distribution centers, seems they're right on track. I expect them to roll out more distribution centers (and meatpacking facilities) across the country to accomodate the needs for the new openings. Concerning Conad, I am not impressed by their private label pasta :) Moreover, they have a totally different business model, similar to the German Edeka.
Wooooooooo
People need to be careful about statemets like Europeans like x and y. Its a big continent and its the same as saying Americans like x or y.
I agree, but we Americans do all love freedom and hot dogs. That's a verifiable fact.
The growth of this business is slowing down, margin is going down, competitors in this segment of the market (Jeronimo Martins - Biedronka) are building shops in the proximity of Dino that will make many Dino shops unprofitable. Dino is a high risk investment - even if they grow 50% from now, their valuation will be on par with competitors. That's at least 3-4 years perspective and only if everything goes well. Yes they've shown an impresive growth over the last few years but it will not repeat in the future beacuse scale of the business is different. It's easy to grow from 0 to 2000 shops but now openin 2xx shops a year will not generate the same % of profit growth.
99% of the time when a business grows this fast for this long, people like you have been a dime a dozen along the way, with another reason why now is the time it ends.
Just because shops move in around them doesn’t mean they will suddenly be “unprofitable.” That’s a massive exaggeration. If their value proposition doesn’t change then it’s unclear why any of your reasons will matter.
I have no stake in this company and will not be buying. But as long as the founder owns 51% of the shares and aligns incentives with performance, it’s highly unlikely that their growth will suddenly stall.
@@brianbirnbaum9760 it will not stall, it's not what I wrote. I just said the high grow is over (in the last 2 years they were opening 3XX shops a year, this year it's gonna be 2XX and the same is planned for next year). Also it seems you don't know what's behind this great success (it is a very successful company). They took a risk to build relatively big shops in the villages and small towns. They controlled the cost very well and forced out of business all small shops in the area as they offered better shelf price. None of the big competitors tried to compete with them. However that has changed recently and my observation is that JMP is now taking them very seriously. I live in Poland and noticed many new Biedronka stores where they would have never been built before. A few of them just next to Dino. And belive me if people had a choice they would go Biedronka not Dino.
Can you do Old Dominion Freight Line, Inc.
Thank you for the suggestion! 💯
We are looking into covering this company next quarter (Q3)!
Would you purchase it OTC as DNOPY?
I am investing from Germany and noticed a sizeable spread. I went on adding repeatedly nonetheless but it is awkward to see your recent buy appear in a low single-digit minus in the portfolio.
Bid ask right now has a 3.2% spread for OTC market
@@ericrufranojr.1025 Thanky you, that sounds familiar ..
I have noticed that too with my recent buy. Do you have an explanation for why the spread is so big in Germany?@@RolfStumpfRailMedia
I'm an English guy who has a Polish partner. The Poles are a super industrious people. They get things built and they get things done. Poland is by far the biggest success story of the former Soviet Block countries and has seen continuous growth since the early 90's, and been one of the fastest growing economies in the world. I've been looking in to DIno and largely agree with the summary - I think this could be a very successful long term investment investment. There is only one thing that I think is not quite correct in your thesis. Poland is actually a large land mass that is less populated than other European countries so it is indeed more rural , however a large percentage of the population own cars and petrol is really cheap (if you come from the UK, or France or Germany) enhancing mobility in a country where settlements are scattered. As a result you do see Dino's on high transit roads that people drive past almost like a service station. Thanks for the summary, helpful!
Thank you for sharing your insights! 💯
I don't buy it. Just a supermarkets company. Nothing special, in every developing country there's such growing supermarkets company. Supermarkets don't have moat, maybe except specialized like wholefoods.