Last Update 05 Jun 26
Two solid earnings pillars emerging
Q4 FY3/26 results update
Sustained earnings momentum – The key takeaway for FY3/26 results is that Duskin is on the right trajectory to improve returns, with record-high segment profitability at the Food Group and the Direct Selling Group showing a convincing moderation in earnings decline. The outlook for FY3/27 is for continued progress, particularly with relatively low YoY hurdles for the Direct Selling Group, which had booked upfront costs related to case-equipped mop cleaners; we believe the Food Group will continue to generate high returns despite one-time IT system costs. Targets set for FY3/28 in the medium-term business plan appear challenging in parts, yet we believe the company is on a solid earnings trend.
More predictable earnings profile
Earnings recovery potential at Direct Selling Group – A strategic focus on new customer acquisition and the development of new offerings is having a positive impact on the Direct Selling Group segment, with the Clean Service business (focused on mop rentals) seeing sales remain relatively flat YoY. The Care Service and Other businesses saw YoY sales growth, indicating that sales volumes can recover despite challenging market conditions, and highlight the segment’s potential as a renewed earnings pillar.
Food Group continues to perform – The ‘Mister Donut’ operation continues to perform strongly, driven by a combination of increasing average customer spend and new store openings. The outlook for FY3/27 appears firm in our view, with high margins expected despite IT system costs and a potential slowdown in new store openings.
Valuations – Based on our revised earnings estimates, the shares are trading at an estimated PER FY3/27 of 18.7x (on +6.5% OP growth YoY), dividend yield of 3.2%, and current PBR of 1.2x.
Full report here
Q3 FY3/26 results update
Making headway – Q1-3 FY3/26 results underlined the robust and sustained performance at the Food Group, and indications of improvement at the Direct Selling Group. While it is too early to state that Duskin has two stable earnings pillars in place, we believe progress is being made. The Direct Selling Group remains under scrutiny, with the core Clean Service continuing to experience declining sales YoY. However, strength across Care Service and Others more than offset the decline, driving overall sales growth. Q3 FY3/26 segment profitability was also flat YoY, despite investment costs. Overall, the performance supports the latest strategy for acquiring and retaining customers.
Stable dual earnings base still evolving
Focusing on East China – The Food Group continued to drive earnings, maintaining high profitability despite one-time costs related to the 55th anniversary of the ‘Mister Donut’ chain. The company has announced it will re-enter the Chinese market through a master franchise agreement with a local partner; we believe this initiative could become a meaningful growth driver in the medium term.
Challenges remain – The Direct Selling Group needs to demonstrate resilient topline growth, challenging the structural decline thesis and transforming to a stable cash compounder. Initiatives include price revisions and the introduction of new products and services. We believe this could support a reassessment of the business’s long-term earnings trajectory.
Valuations – Based on our unchanged earnings estimates, the shares are trading at an estimated PER FY3/27 of 20.6x (on +11.7% OP growth YoY), dividend yield of 2.9%, and current PBR of 1.4x.
Full report available at this link
Description: Duskin operates a residential and commercial services franchise specializing in rental mops and mats, and a coffee and doughnut restaurant chain called ‘Mister Donut’, with both businesses having a dominant domestic market share.
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