DSK (ASX) Updated Views on DSK

Originally posted by timbowls: ↑

Alright so I've been playing around with my (very amateurish) financial model in line with the advice and feedback of some other posters on here.

I stopped rounding up/down to the nearest million and made everything exact to the last dollar and also did this for the total shares on issue (I'll still round up or down to the nearest million for this post for convenience and to make it easier to read)

I also increased the other main operating expenses by 5% across the board rather than 10% which was probably a bit extreme.

I left D and A steady (I'm actually surprised their deprecation is such a big expense. Is this largely around investment in store fit outs and could we expect it to reduce over coming years if most of them are already the latest format?)

This time I actually reduced sales by 15% on FY23 rather than 10% although I still think we might get a slight surprise on the upside here.

To follow up Seth's comment on projecting the wage bill (which is a very big factor in how the total profit ends up when I look at the spreadsheet) using a percentage of gross sales rather than simply adding 10 percent to last years bill I looked back through the records to find what the previous percentages had been and from FY20 to FY23 they ranged from 21.3% to 27% across those 4 financial years.

To be conservative I used 30% and factoring in the drop in sales this would lead to a wage bill of 35 million as compared to the $42 million we'd get if we simply added 10% to the wage bill from last year so this is a big variance.

This resulted in an EBITDA of 25 million (DSK really is a good cash generator when you break it down)

Then an EBIT of 6 million

Factoring in the tax overpayment should mean that no tax would be payable in this scenario right?

So that would lead to a net profit (do we still call it a net profit if no tax is payable in a particular financial year? and is this then reflected in the EPS/PE calculations even though it's a once off until the full tax write off has been used?) of 6 million which works out of 9.8c per share EPS (a not very cheap PE ratio of 11 based on the current share price) and supports a 6c dividend based on a 65% payout ratio.

Do you guys think I've gotten a little closer here?

Also just a couple of general comments on previous posts:

1. I found it interesting that Woomp pointed out a lot of us who are optimistic on DSK (myself included) are treating it is a bit of a given that we get a substantial improvement in financial performance in FY25 whereas that's far from guaranteed and probably should mean a greater margin of safety if any of us are going to top up on the shares

2. I probably have to disagree with Woomps comment that DSK shoppers are more insulted from the economy because they are older wealthy home owners. It's really more aimed at younger women between 25 and 55 as an affordable luxury. Unfortunately I would say that our target market has been one of the first to get squeezed by interest rates and cost of living and that's been a big contributor to the sales drop off.

Having broken this down further I don't think I'll top up again at the current price but if it gets down to the high 90cs again I would seriously consider it.

Expand

I suggest given your biggest positions are Robert Millner controlled companies, you study how Robert Millner undertakes valuation.

You will then re-write everything you have written coming at it from a different framing.

What you have written is already in the price.

Plus your forecast is redundant in only 8 days when year end lands.

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(20min delay)
Last $1.17		Change 0.030(2.63%)		Mkt cap ! $72.85M

Open	High	Low	Value	Volume
$1.15	$1.18	$1.14	$101.5K	87.55K

I suggest given your biggest positions are Robert Millner...

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