Archived article
Please note that tax, investment, pension and ISA rules can change and the information and any views contained in this article may now be inaccurate.
magazineDP Eurasia still tasty despite currency issues weighing on share price
DP Eurasia (DPEU) 168.6p
Loss to date: 26.7%
Original entry point: Buy at 230p, 9 November 2017
Shares in DP Eurasia (DPEU) haven’t travelled in the direction we first expected. While the business continues to sell more pizzas
in Turkey and Russia, the sterling-dominated shares have been hit by devaluation of the Turkish lira which is the company’s reporting currency.
This is simply a translational issue and there is nothing wrong with the underlying business.
High inflation is a recurring issue in Turkey and DP Eurasia says it can cope with these pressures better than its peer group. ‘We have the highest purchasing power in the quick restaurant sector in Turkey and we pass on all extra costs,’ says CEO Aslan Saranga.
Inflation has been in a declining trend in Russia but real wages started to improve last year. That bodes well for consumers having spare cash for treats like pizza, and indeed the company claims
it is the value leader in the Moscow pizza sector.
First quarter like-for-like system sales growth in Turkey at 10.9% is above the company’s medium-term guidance of high single digit growth. In Russia, 18% like-for-like system sales growth is also ahead of medium-term guidance of low-mid teens growth.
Important information:
These articles are provided by Shares magazine which is published by AJ Bell Media, a part of AJ Bell. Shares is not written by AJ Bell.
Shares is provided for your general information and use and is not a personal recommendation to invest. It is not intended to be relied upon by you in making or not making any investment decisions. The investments referred to in these articles will not be suitable for all investors. If in doubt please seek appropriate independent financial advice.
Investors acting on the information in these articles do so at their own risk and AJ Bell Media and its staff do not accept liability for losses suffered by investors as a result of their investment decisions.
