Dino (DNP.WA): Set up into 3Q26: deflation in fresh remains a headwind, will better purchasing conditions offset?

We see 3Q26 as the near-term catalyst for the Street to reassess Dino's margin profile. Prolonged food deflation and still-declining pork prices lead us to cut our 3Q26E LFL forecast by 90bps to 0.3% (implying downside versus BBG consensus at 1.5%); however, we expect a relief in gross margin (+75bps) as Dino benefits from improved purchasing conditions (suppliers are funding a large proportion of promotions in fresh categories, and in the pork category in particular the producer price deflation is particularly beneficial for Dino). We keep our forecasts for FY26 largely unchanged and PT intact at PLN 30/share. With our estimates slightly below Consensus, we believe the Street is already accounting for the imminent rise in food inflation in 4Q26, and the pace and magnitude is the key risk factor, as well as the scope to sustain benefits in purchasing amidst still heavy competition in the sector. We rate the stock Underweight.