DNP.WA · Dino Polska 35.74 PLN -0.06 (-0.17%) 2026-SEP-18 11:04 EST

Dino Polska runs small supermarkets in Polish towns and has grown by opening hundreds of new stores a year. Last month the letter cut it to hold because competition is increasing; this month the portfolio sheet itself finally says hold too.

The numbers on the sheet still look like a buy — about 29% below estimated fair value and cheaper than its usual multiple. The rating is a judgement that rivals will slow the store-opening engine that made the business special, and the 1 September letter already named it as a position to cut.

Dino Polska builds and runs small supermarkets across Polish towns, funding new stores from its own cash flow. For years this archive used it as the model of the perfect business — high returns on capital, and somewhere to reinvest every zloty it earns.

It is now the third name marked for reduction, on expected growth of about 10% a year, described as among "the least satisfactory" in the portfolio. Nine days earlier it had also been cut from buy to hold on increasing competition. Both changes point at the same thing: the reinvestment runway that made it special is narrowing, and a compounding machine without a runway is just a retailer.

There is a second, quieter reason it may not survive the new rules. The letter states that the portfolio will invest in "developed countries only", and Poland is classified as an emerging market by most index providers. Dino is the only holding that clearly falls outside the new boundary, and the two facts are stated in different sections without ever being connected.

Dino Polska runs small supermarkets in Polish towns, opening new ones relentlessly out of its own cash flow. It has been the archive's favourite illustration of the ideal business: high returns on capital and somewhere to put every zloty it earns.

It is downgraded from buy to hold this month "due to increasing competition" — the first time in this archive that a rating is cut for a reason about the business rather than the price. That is the important part. A reinvestment machine is only as good as the runway in front of it, and competition arriving in those towns attacks the runway directly, not the multiple.

One caveat for the reader: the downgrade is stated twice in the text, but the portfolio spreadsheet in the same issue still marks Dino a BUY, and it still appears in the post's list of nineteen owned names on Buy. The stance recorded here follows the explicit downgrade.

Dino Polska runs mid-sized supermarkets in Polish towns, close to where people actually live, and it builds them itself. There is nothing clever about the business — that is the argument for it. Groceries near your house are hard to disrupt, and the company opened 345 new shops in the past year while growing revenue 15%.

Over the same year the shares fell more than 40%, and they now trade at the lowest valuation in the company's history. Nothing in the numbers explains that: profits per share have grown 19.3% a year for a decade and the returns on the money it invests are comfortably above 15%. The explanation offered is attention — as the article puts it, nobody wants a boring Polish grocer while a rocket company is available at ninety times its sales.

The arithmetic of the case is given in full, which is rare here. Expect about 2.4 zloty of earnings per share in 2028; put a normal 20 times multiple on that and the shares would be worth 48 zloty against 28.7 today — roughly 70% higher, or more than 20% a year. The risk is contained in the same sentence: it depends both on the earnings arriving and on the market being willing to pay a normal multiple for them again.

Dino Polska runs mid-sized supermarkets in small Polish towns and villages — places the big chains have not bothered with. It has grown by opening more of them, year after year.

The bullish evidence here is a building. Dino is putting up a 45,000 square metre warehouse in Zawiercie — freezers, cold store, dry storage — and paying for it entirely out of its own cash, no borrowing. Nobody builds a distribution centre that size unless they intend to keep opening the stores it will supply.

The reason it is only a "Strong" and not a top-tier conviction is one number. Sales in stores that have been open more than a year grew 4.4%, while food prices themselves rose 4.7%. If your prices go up more than your sales do, you are selling fewer actual goods than last year — the growth is inflation, not customers. There is also a union complaint alleging the company used CCTV illegally to monitor staff productivity, which is a governance flag rather than a financial one. Set against that, the shares are near the cheapest they have ever been.

Dino Polska runs mid-sized supermarkets in Polish small towns and villages, close to where people live.

The market has been worrying about the wrong number. Sales at existing stores barely grew at the start of 2025 — 0.5% in the first quarter — and that is what knocked the shares. Slegers' point is that for a business still covering the country, existing-store sales are not the growth; new stores are. And in 2025 Dino opened 345 of them, almost one every day, a record.

Over ten years its cash flow has compounded at nearly 76% a year, which is what a rollout looks like while the map is still filling in. At about 19 times earnings against a five-year average of 25, he calls it "the Costco of Poland" and keeps buying.

The thing to watch, unstated here, is when the map runs out. On that day like-for-like growth stops being a distraction and becomes the only number there is.

Dino Polska runs mid-sized grocery supermarkets in Polish small towns and villages, close to where people live, and has been opening them at an extraordinary rate.

The worry in 2025 was that sales at existing stores had almost stopped growing — the measure retailers call like-for-like — which is usually the first sign a chain has saturated its market or is losing to a competitor. Slegers concedes the number and answers it twice. First, the rest of the business swamps it: total revenue still grew 14.9% over nine months because the new stores more than make up for the flat old ones. Second, the country itself is the tailwind — Poland's income per head has gone from roughly a third of Britain's in 1995 to four-fifths today, and has grown about ten times faster than the UK's in real terms since 2019.

Worth noting what that second argument commits him to. The case now depends on Poland continuing to converge on Western Europe, which is a macro bet rather than a company one — and it is exactly the exposure his own September 2026 rule change (developed markets only) later rules out.

Dino Polska is a fast-growing supermarket chain in Poland, still majority-owned by its founder. Slegers uses it as his example of the rarest and best kind of business — a "golden goose" that earns a high return on the money it invests and can plough almost all of its profits back in at that same high return, compounding for years. (Most highly profitable companies, like Apple, eventually generate more cash than they can reinvest and end up buying back stock instead.) Its US-listed line trades over-the-counter as DNOPY; the row uses its Warsaw ticker (DNP.WA) because the plain symbol "DNP" belongs to an unrelated US fund.