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$达势股份(01405)$ 

DPC Dash Ltd. (HKEX: 1405)

Short Report: The Inevitable Collapse Behind the Fake Prosperity

Date: September 2025

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Executive Summary

DPC Dash (Domino’s Pizza China Master Franchisee) is engineering a fake prosperity in China. Its growth is not driven by genuine consumer demand but by:

1. Deceptive promotions and misleading advertising (e.g., “Buy One Get One Free” that delivers a smaller pizza);

2. Aggressive, capital-intensive store expansion;

3. Heavy reliance on non-IFRS metrics to paint profitability;

4. Mounting lease liabilities and fragile cash flows;

5. Rapid erosion of brand trust through irresponsible consumer practices;

6. Structural weakness of pizza as a category in China (low frequency, non-staple, health concerns).

We believe this company cannot sustain its so-called “high growth story.” Within 12–24 months, DPC Dash will expose severe financial and operational cracks. Its fair value is below HKD 50 per share.

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I. Financial Mirage

1. Same-store sales decline

• FY2024: +2.5% SSSG (vs. +8.9% in 2023).

• 1H2025: –1.0% SSSG, the clearest indicator of demand exhaustion.

2. Average ticket shrinking

• FY2024: AOV fell from RMB 86.8 to RMB 82.1.

• This is not “strategy,” it is a symptom of discount addiction.

3. Non-IFRS reliance

• Adjusted EBITDA margin: 11.5% (FY2024); 12.4% (1H2025).

• True IFRS net profit remains razor-thin once leases, royalties, and HQ costs are included.

4. Leverage and liquidity stress

• FY2024 lease liabilities: RMB 1.37B; net debt: RMB 499M.

• Current ratio: only 0.9.

• Variable rent (5–11% of sales) acts as a negative amplifier in downturns.

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II. The Broken Business Model

1. Expansion-driven, not demand-driven

• Store count surged to 1,198 by mid-2025 (vs. 588 in 2023).

• Yet same-store growth is negative. New stores mask cannibalization.

2. Pizza cannot be a staple in China

• High calorie, high fat, high salt, heavy processed toppings.

• Must be eaten hot; poor fit for delivery + leftover culture.

• Occasional indulgence, not a daily meal.

3. Consumer trust erosion

• Example: “Buy One Get One Free” → delivered a 9-inch instead of a 12-inch pizza.

• Customer service refused apology or compensation.

• This is systemic deception, not a one-off error.

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III. Domino’s HQ at Risk

• HQ collects royalties today.

• But tomorrow, the Domino’s brand in China may be irreparably damaged, leaving HQ with a destroyed market and reputational spillover.

• This is déjà vu of Häagen-Dazs in China: short-term hype, long-term collapse.

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IV. Market & Valuation

1. Competition reality

• Costco: 14-inch pizza for RMB 78 is the “price anchor.”

• Local chains or future entrants can undercut Domino’s with ease.

2. Valuation math

• FY2024 revenue: RMB 4.3B.

• Assume real net margin 1% → Net profit: RMB 43M.

• Apply 10–12x P/E (Hong Kong F&B average) → Fair market cap: RMB 4.3–5.2B (~HKD 5–6B).

• Current market cap: HKD 65–70B.

• Downside >80%. Fair price: HKD ≤ 50/share.

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V. Short Catalysts

1. Consecutive negative SSSG prints.

2. Order collapse when discounts scale back.

3. Wave of store closures.

4. Domino’s Pizza Inc. (DPZ) continues to disclose losses tied to DPC Dash.

5. Consumer backlash (misleading promos, health scandals).

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Conclusion

DPC Dash’s “growth story” is nothing more than a Ponzi-like scheme of expansion, accounting cosmetics, and predatory promotions.

Investors who buy this story will pay for its collapse.

We set a conservative fair value of HKD 50 per share.