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DIS-CHEM PHARMACIES LTDDIS-CHEM PHARMACIES LTDDIS-CHEM PHARMACIES LTD

DIS-CHEM PHARMACIES LTD

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Our opinion on the current state of DIS-CHEM(DCP)Dis-Chem Pharmacies (DCP), which listed in November 2016, is a prominent competitor to Clicks (CLS) in the pharmaceutical, medicine, and beauty products markets. The business is led by the Saltzman family, with a significant stake held through a private company, Ivlyn. In August 2021, Ivlyn announced a reduction in its stake by selling 7.5% of its shares via a bookbuild, distributing 3.75% to selected management (with a 10-year lock-in) and 10.5% to a BEE consortium. This adjustment left the Saltzman family's interest at 31.4%. Ivan Saltzman recently stepped down as CEO, and Rui Morais has taken over the role. Upon listing, Dis-Chem aimed to expand its footprint beyond its initial 108 stores to potentially match Clicks' ambition to reach up to 1200 stores nationwide. This expansive "blue sky" growth potential has contributed to Dis-Chem's high valuation, with a P/E ratio of 21.67. The company has since grown to over 254 pharmacies across the country, opening 10 to 20 new stores per year. The aftermath of COVID-19 has also opened opportunities for lower rental spaces in malls, further supporting its expansion. The company has diversified through acquisitions, including Springbok Pharmacy, Quenets, and Baby City (acquired in 2020 for R430 million), and expanded into healthcare insurance by acquiring 25% of Kaelo Holdings. With increasing health-conscious consumer behavior, the company has benefited from higher sales of vitamins and immunity-boosting products. For the six months ending 31st August 2024, Dis-Chem reported: - Revenue up 9.6% - Headline earnings per share (HEPS) up 16.3% The company attributed its earnings growth primarily to Group payroll cost containment through its staffing framework 1.0, which contributed to a 17.5% growth in operating profit. This effective cost management has bolstered Dis-Chem’s performance, affirming its position as a solid blue-chip investment. Technically, the share had been moving sideways and downward since forming a double top in April 2022. A break through the 200-day moving average on 3rd November 2023 at 2525c per share signaled a positive trend. The share has since increased to 3600c, suggesting momentum that aligns with Dis-Chem’s long-term growth potential.
JSE:DCP
by PDSnetSA
Our opinion on the current state of DIS-CHEM(DCP)Dis-Chem Pharmacies (DCP) listed in November 2016 and competes directly with Clicks (CLS) in the pharmaceutical, medicine, and beauty products markets. It is a family business run by the Saltzman family, who had a controlling stake in the business through a private company, Ivlyn. On 24th August 2021, Ivlyn announced the sale of 7.5% of its shares in a bookbuild, 3.75% to selected management (with a 10-year lock-in) and 10.5% to a BEE consortium. This leaves the Saltzman family's interest at 31.4%. Ivan Saltzman was the CEO but has resigned and will be replaced by Rui Morais. Dischem's objective on listing was to expand its store base from 108 stores, which it has now far surpassed. Theoretically, Dischem can have a store in every shopping mall where Clicks has a store. Clicks had about six hundred stores when Dischem was listed and has spoken of plans to expand its store base to as many as 1200. This means that Dischem has considerable "blue sky" potential - which accounts for its relatively high rating (P:E of around 21.67). The company is buying Springbok Pharmacy and Quenets, which shows that it is growing rapidly. The company now has more than 254 pharmacies countrywide and is opening between 10 and 20 new stores a year. It may be possible for the company to expand into spaces left in malls as a result of COVID-19. These may be available for lower rentals. The company is benefiting from an increased awareness among customers of the need to boost their immunity and general health by buying more vitamins. On 15th May 2020, Dischem announced that it had acquired 100% of Baby City for R430m in a conditional agreement. There are significant synergies between the two companies' product and service ranges. The company is expanding into healthcare insurance with the acquisition of 25% of Kaelo Holdings. In its results for the year to 29th February 2024, the company reported revenue up 11.1% and headline earnings per share (HEPS) down 1.6%. The company said, "...the Group was impacted by the base effects of the prior year's performance, which were distinctly different across the two halves of the year with the first half of the prior year delivering a strong performance when compared to the second half of the prior year. Contributing to the stronger first half performance in the prior year, was the acquisitions of the warehouse properties resulting in a R72 million once-off gain from the release of the lease liability and right-of-use asset as well as the impact of COVID-19 vaccine administration and testing services which has ended and did not contribute in the current financial period." In our view, this is a solid blue-chip company with a good future. Technically, the share moved sideways and downward since making a "double top" in April 2022. We advised waiting for a break up through a 200-day moving average before investigating further. That break appeared to be happening on 3rd November 2023 at a price of 2525c per share. Since then, the share has moved up to 3128c. We consider Dischem to be a solid defensive share with good long-term potential.
JSE:DCP
by PDSnetSA
$JSEDCP - Dischem: Ending Diagonal & Loss of Momentum CautionSee link below for previous analysis. Dischem is still trading in the fifth and final wave of the advance from May 2023. Wave is unfolding as an ending diagonal pattern and has surpassed the previous target of 3300 cps. There is also a clear loss of momentum in the stock as new highs have not been confirmed by the MACD thereby giving a bearish divergence signal. The stock can still go much higher though locking in profits is wise at this stage of the trend.
JSE:DCPLong
by Loyiso_BlaqueSoros_Mpeta
2
Our opinion on the current state of DCPDis-Chem Pharmacies, listed since November 2016, directly competes with Clicks in the pharmaceutical, medicine, and beauty products markets. Originally a family business controlled by the Saltzman family through Ivlyn, it saw a significant change in August 2021 when Ivlyn sold a portion of its stake, reducing the family's interest to 31.4%. This move aimed to diversify the company's ownership and expand its management and BEE consortium involvement. At its listing, Dis-Chem aimed to exceed its 108 stores, a goal it has significantly surpassed, demonstrating its "blue sky" potential and ambitious expansion plans. This growth is partly driven by its objective to match or exceed Clicks’ footprint, which hinted at expanding up to 1200 stores. Dis-Chem's rapid expansion includes acquisitions like Springbok Pharmacy and Quenets, and the strategic purchase of Baby City for R430m in May 2020, enhancing its product synergy and expanding into healthcare insurance by acquiring a 25% stake in Kaelo Holdings. For the six months ending in August 2023, Dis-Chem reported a 9.4% increase in revenue but a 17.2% decrease in HEPS, affected by economic constraints, higher interest rates, and load-shedding costs. Finance costs rose by 33.2%, with significant investments in tangible and intangible assets. A trading update for the five months to January 2024 showed a 12.2% increase in revenue, with the wholesale business experiencing notable growth, especially from external customers. This performance underscores Dis-Chem's resilience and strategic expansion in the retail pharmacy sector. Technically, Dis-Chem experienced a sideways and downward trend since April 2022 but began showing signs of an upward trajectory in November 2023. This movement suggests a potential recovery and continued growth for the company, making it a solid defensive investment with promising future prospects.
JSE:DCP
by PDSnetSA
$JSEDCP - Dischem: Great Run, But I Count Five WavesSee link below for previous analysis. Dischem has had a stellar run from the 2154 low, tracing out a textbook five wave advance. Wave is a leading diagonal followed by wave which unfolded as a complex zig zag with a b-wave triangle; wave is a strong impulse and wave is a simple zig zag. Wave can unfold as an impulse or ending diagonal and looks likely to take price towards 3300 cps. Buying fifth waves is risky as on completion of the five wave advance, a three wave correction follows. I will remain bullish but with caution.
JSE:DCP
by Loyiso_BlaqueSoros_Mpeta
Our opinion on the current state of DCPDis-Chem Pharmacies (DCP) listed in November 2016 and competes directly with Clicks (CLS) in the pharmaceutical, medicine and beauty products markets. It is a family business run by the Saltzman family who had a controlling stake in the business through a private company, Ivlyn. On 24th August 2021 Ivlyn announced the sale of 7,5% of its shares in a bookbuild, 3,75% to selected management (with a 10-year lock-in) and 10,5% to a BEE consortium. This leaves the Saltzman family's interest at 31.4%. Ivan Saltzman was the CEO, but has resigned and will be replaced by Rui Morais. Dischem's objective on listing was to expand its store base from 108 stores, which it has now far surpassed. Theoretically, Dischem can have a store in every shopping mall where Clicks has a store. Clicks had about six hundred stores when Dischem was listed and has spoken of plans to expand its store base to as many as 1200. This means that Dischem has considerable "blue sky" potential - which accounts for its relatively high rating (P:E of around 21,67). The company is buying Springbok Pharmacy and Quenets which shows that it is growing rapidly. The company now has more than 254 pharmacies country wide and it is opening between 10 and 20 new stores a year. It may be possible for the company to expand into spaces left in malls as a result of COVID-19. These may be available for lower rentals. The company is benefiting from an increased awareness among customers of the need to boost their immunity and general health by buying more vitamins. On 15th May 2020 Dischem announced that it had acquired 100% of Baby City for R430m in a conditional agreement. There are significant synergies between the two companies' product and service ranges. The company is expanding into healthcare insurance with the acquisition of 25% of Kaelo Holdings. In its results for the six months to 31st August 2023 the company reported revenue up 9,4% and headline earnings per share (HEPS) down 17,2%. The company said, "The constrained economic environment, higher interest rates and costs associated with load-shedding, has resulted in a weaker performance by the Group over the prior comparative period". Finance costs were up 33,2% and capital expenditure on tangible and intangible assets of R279m. In our view, this is a solid blue-chip company with a good future. Technically, the share has been moving sideways and downward since making a "double top" in April 2022. We advised waiting for a break up through a 200-day moving average before investigating further. That break appeared to be happening on 3rd November 2023 at a price of 2525c per share. We consider Dischem to be a solid defensive share with good potential.
JSE:DCP
by PDSnetSA
Dischem showing strong upside to R30.24 Cup and handle formed on the daily. We need price to break above and close above the brim level to confirm upside to come. 7>21 bullish Price<200 but likely to head up to equilibrium. RSI>50 Bullish Target R30.24 SMC SSL (Order block) ABOUT THE COMPANY Dis-Chem was founded in 1978 by Ivan Saltzman and his wife, Lynette. The first Dis-Chem store was located in Mondeor, a suburb in Johannesburg, South Africa. Dis-Chem is currently one of the largest pharmacy chains in South Africa with over 180 stores nationwide. The company is headquartered in Midrand, South Africa. Dis-Chem employs over 18,000 people. The company offers a range of products and services, including pharmaceuticals, health supplements, beauty products, and baby care items. In addition to its retail stores, Dis-Chem also operates several clinics that offer various health services, including blood tests, vaccinations, and basic health screenings. Dis-Chem has its own private label range of products, including vitamins, supplements, and skincare products.
JSE:DCPLong
by Timonrosso
$JSEDCP - Dis-Chem: Bears Win Neckline War, No Support In SightThe last time I covered Dis-chem was on the 18th of November 2022 and I cautioned on the rounding top formation. I also said I would monitor price action at the 2834 neckline. On the 17th of February 2023, Dischem issued a trading update for the period 1 September 2022 to 5 February 2023. The Group focused too much of revenues in my opinion and did not mention much on earnings. The following trading days have seen price break decisively below the neckline and it is difficult to find areas of support on the price chart. This is where i say "short the rallies". Dis-Chem’s results for the year ended 28 February 2023 will be released on SENS on Friday, 19 May 2023, at around 7:05 am.
JSE:DCPShort
by Loyiso_BlaqueSoros_Mpeta