Since late September, the dining sector of Hong Kong stocks has seen a significant rebound, with strong performance growth momentum from several leading dining brands. Dpc Dash (01405)-Domino's Pizza China, as the exclusive total franchisee of Domino's Pizza in mainland China, Hong Kong Special Administrative Region and Macau Special Administrative Region of China, is one of them. Dpc Dash (01405) reported revenue of 2.04 billion yuan and a year-on-year growth rate of 48.3% in the interim report, outperforming the large cap; net income attributable to shareholders also turned losses into profits, achieving comprehensive profitability. The offline stores continue to expand in the third quarter, with the number of stores set to exceed one thousand.

With the gradual recovery of consumer confidence, the long-term logic of the dining industry remains clear, while the improvement of liquidity environment and rapid market sentiment recovery are expected to lead the dining sector in early repair. As a globally popular pizza chain brand, Domino's Pizza, with its promise of '30-minute delivery guaranteed, free pizza coupon if delayed', and its delicious, high-quality, cost-effective, and rich variety of crusts, has long been deeply ingrained in people's hearts. The impressive performance data and the increasingly high brand volume among the consumer group indicate that this pizza brand is entering a new growth stage.

Stable growth in the number of stores, accelerating the potential of the '4D' strategy.

In recent years, with the improvement of economic level and the change in consumer concepts, especially the increasing acceptance of Western food by the younger generation of consumers, the image of pizza in the minds of consumers has changed from a Western delicacy to an affordable, convenient, and flavorful popular food. As the penetration rate of pizza categories gradually increases, the future pizza market space will have great potential, and the vast Chinese market is becoming a battleground for many brands.

According to the business overview for the third quarter of 2024 released by DPC Dash, as of September 30, 2024, DPC Dash already has 978 stores, covering 33 cities in China. In the third quarter alone, 64 new stores were opened, and the rapid expansion of offline stores has brought strong growth momentum to the company's performance.

Adhering to the implementation of the 'deep and wide' expansion strategy, Domino's Pizza has focused its strategic vision on the huge potential market of new first-tier and second-tier cities. Every time a new store opens, there is a scene of long queues of consumers, frequently creating and breaking multiple global single-store single-day sales records. According to the Wisdom Finance App, in the first 30-day sales rankings of over 20,000 Domino's Pizza stores worldwide, Domino's Pizza China stores occupy 28 seats in the top 30, successfully confirming the positive contribution of this market strategy to performance.

At the same time, the company's single-store profitability has steadily improved, with the average daily sales of single stores in the first half of the year reaching a year-on-year growth rate of 10.1%. As of the third quarter of this year, the company has achieved positive same-store sales growth (SSSG) for 29 consecutive quarters.

As of now, the company's combined net increase in the number of new stores, stores under construction, and signed stores has nearly reached 100% of the annual opening target. With this growth momentum, the company is expected to achieve a milestone of one thousand stores in the fourth quarter of this year, and will subsequently open approximately 300 to 350 new stores each in 2025 and 2026, rapidly seizing more market share.

Behind the impressive fundamentals of DPC Dash, it is inseparable from the company's long-term adherence to and implementation of the "4D" global strategy.

According to the Wise Finance APP, DPC Dash's unique "4D" global strategy includes high-quality store development, delicious pizza at a great value, efficient delivery experience, and digital capabilities.

Publicly available information shows that Domino's continues to innovate, introducing new products every 6 to 8 weeks, with pizza SKUs totaling over 30 varieties (excluding combos), over 20 crust options per pizza, and over 10 additional toppings, providing consumers with diverse and personalized taste customization choices. On various social media platforms, there are plenty of consumer reviews sharing Domino's pizza crust evaluations, flavor pairing strategies, and the brand's ongoing popular campaigns maintaining high brand awareness.

Catering to the consumption trend of the new generation pursuing individuality, creativity, and freshness, Domino's has actively introduced a series of new products this year, including French Burgundy-style beef pizza, Gold Cat Mountain King durian pizza, Korean pear juice plum pork pizza, and new items such as black gold honey barbecue pizza crust, coconut pumpkin double-layer crust, and the volcanic crust. These are complemented by specific city limited-time promotions like "one after the other" and "super week buy one get one," continuously enhancing consumer brand awareness.

According to the business overview, as of September 30, the membership of Domino's, known as the 'Elite Club,' has reached 21.7 million members, a significant increase compared to the same period last year. The high cost-effective membership system and point system continuously enhance user stickiness. In the past 12 months, 11 million new users have placed their first orders through the official online ordering channel, demonstrating the effective conversion of new customers through innovative brand and user strategies.

In addition to the positive fundamentals, several research institutions have expressed a bullish attitude towards Dpc Dash. Sinolink Securities pointed out that the company's expansion speed exceeded expectations, with same-store growth against the trend, reflecting strong product capabilities and brand momentum; Zhongtai Securities estimates that store expansion and daily sales increases will continue to improve profitability season by season. affected by liquidity, the company's intrinsic value is undervalued by the market.

Since its listing on the Hong Kong stock market in March 2023, Dpc Dash's stock price center has been on an upward trend, reaching a high of over 80 Hong Kong dollars, with a cumulative increase of over 60% compared to the issue price of 46 Hong Kong dollars. On the day after the release of the mid-year report on August 29, the company's stock price closed up over 8%, also reflecting investors' confidence in the future outlook. In September 2024, Dpc Dash was successively included in the Hang Seng Composite Index and the list of Hong Kong Stock Connect, partially easing liquidity.

According to the announcement made by Dpc Dash after the market closed on October 17, Domino's Pizza LLC (a wholly-owned subsidiary indirectly owned by Dpc Dash) sold 10 million shares (approximately 7.66% of the total issued share capital of Dpc Dash) through over-the-counter transactions to numerous institutional investors. From the company's listing in March 2023 to the date of the stock sale, Domino's Pizza LLC held 18,101,019 shares, accounting for approximately 13.87% of the total issued share capital of the company. After the completion of this share sale, Domino's Pizza LLC will hold approximately 6.21% of the total issued share capital of the company, and the remaining shares will be subject to a 90-day lock-up period from the date of sale.

The partial shareholding reduction by Domino's Pizza and the enthusiastic participation of diversified shareholders have injected new vitality into Dpc Dash, significantly improving its liquidity. According to the understandings from the Wise Finance App, this capital operation does not affect the long-term strategic cooperation between the two parties and has no significant impact on the company's financial and business performance.

As the pursuit of high-quality and cost-effective products gradually becomes a new consumption trend, Domino's, with efficient operational capabilities, digital genes, and a strong brand advantage, is expected to become one of the leading players in the dining sector. The continuous improvement in profit levels and the continuous acceleration of store expansion indicate that the company is encountering opportunities for sustainable and healthy growth. In the future, as the consumer market continues to heat up, Dpc Dash is also expected to achieve a 'David's double hit' in performance and stock price.

* Official online ordering channels: Domino's Pizza China official website / official WeChat account and mini program / official app.

* For details on buy one get one free and other consecutive promotions, please refer to the information displayed on Domino's Pizza China's official online ordering channels or customer service feedback.