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Research Tree provides access to ongoing research coverage, media content and regulatory news on DIXONS CARPHONE PLC. We currently have 11 research reports from 2 professional analysts.
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DIXONS CARPHONE PLC
DIXONS CARPHONE PLC
Business remains strong; pressure on profitability
02 Jan 17
Dixons Carphone reported H1 FY16/17 results slightly ahead of our estimates. Lfl revenue increased by 4% (Q2 FY16/17: +4%, Q1 FY16/17: +4%; our estimate: +3.3%), on the back of strong demand for mobile handsets, white goods and other consumer electronics in the UK (+5% lfl vs our estimate: +3.5%; c.65% of the group’s revenue). Despite tough competition, the Nordics clocked organic sales growth of 2% (Q2 FY16/17: +2%; Q1 FY16/17: +2%; our estimate: +2.5%; c.27% of the group’s revenue). In Southern Europe, lfl revenue growth slowed to +1% in Q2 FY16/17 (vs Q1 FY16/17: +13%; our estimate: +5%; c.6% of group revenue), reflecting a more stable economic environment in Greece after exceptionally strong demand for air-conditioners in the first quarter. FX tailwinds (+6% yoy; weaker pound vs the euro and Norwegian krone) and positive scope impact (+1% yoy; acquisition of InfoCare Workshop business in November 2015) propped up the total revenue growth to +11% (Q2 FY16/17: +12%, Q1 FY16/17: +9%; our estimate: +1.5%). Despite strong revenue growth and acquisition synergies, the EBIT margin remained largely unchanged at 3.1%, mainly due to competitive pressure in the Nordic region. However, a one-off tax credit of £16m underpinned the reported net profit by c.45% (£125m vs £86m in Q1 FY16/17, our estimate: £92m). Moreover, the company announced a strategic partnership with SSE (an energy supplier in the UK) to provide connected home services (includes linking of home appliances with broadband and providing repair/maintenance services) to five million SSE customers using the ‘honeyBee’ platform. An interim dividend of 3.5p per share (+8% yoy; payable in January 2017) was also announced by the company. Management has not witnessed any adverse impact of Brexit on UK consumer demand to date. However, it remains cautious of the uncertain times ahead.
15 Dec 16
Yellen yesterday delivered a dose of reality to the market! It was not the FOMC's unanimous decision to hike short-term rates by 25bp, taking federal-funds rate range to between 0.5% to 0.75% due to near full employment as inflation creeps toward the target level, that was the surprise but the fact officials are now predicting three similar moves during 2017. Furthermore, the Fed stuck to its forecast for three further hikes in both 2018 and 2019, in the process nudging its long-run target for fed funds back up to 3% from 2.9%. The net result was for the already surging US$ Index to spike to a 13-year high, rising by 0.7% during the Asian session while also reaching a 20-month peak against the Euro. US equities took fright, having got close to testing the 20,000 barrier on Tuesday, the Dow Jones suffered its worst drop since October, with broad sector-wide selling knocking all principal indices similarly. Macro data due from the States this afternoon may provide further grounding for the Fed Chair's aggressive decision, with release of Consumer Prices, Jobless Claims and the Philadelphia Fed Business Outlook Survey; beyond this, of course, is the understanding that Trump's 'Make America great Again' campaign was predicated on his ability to ensure the working class vote that powered him to the White House can deliver both the employment and wages boost required to make his vision a reality or, presumably, he will pay the price. Asian equities followed the US lead, with almost all regional bourses under pressure, led sharply by the Hang Seng as the US$-based territory's central bank followed the Fed's lead by also raising rates, knocking its recently booming property shares in the process. The Nikkei stood out from the crowd with a fractional gain, as traders focussed in on the benefits of US$ strength against the Yen for it's export dependent businesses. Today London will receive both the Bank of England's interest rate decision and MPC Minutes. No change in the figure itself is expected, but yesterday's higher than expected November inflation data does suggest that Brexit devaluation effects continue to filter through, against which it must be realistic to expect a slightly more hawkish tenor coming through the text in order to keep a floor under Sterling. The ONS will also release Retail Sales figures, while the CML provides lending data and the CBI publishes its Industrial Trends Survey. UK corporates expected to release earnings or trading updates this morning include Bunzl (BNZL.L), Centrica (CNA.L), Go-Ahead (GOG.L), Petrofac (PFC.L), PZ Cussons (PZC.L) and SyQic (SYQ.L). Traders will also be keeping a cautious eye on oil prices despite yesterday's encouraging US crude inventory report, with Iraqi government reports suggesting plans to increase its exports in January while Libya also restarts operations at its key oil fields, creating further doubts as to OPEC's ability to enforce the wide-ranging international production cuts agreed earlier this month. London is seen opening nervously this morning, with the FTSE-100 expected down some 15 points during early trading.
Strong results once again
26 Sep 16
Dixons Carphone released Q1 FY16/17 results ahead of our estimates as well as market consensus. The lfl revenue increased by 4% (vs Q4: +5%, Q3: +5%; our estimate: +2.9%) on the back of strong performance across all geographies. The UK & Ireland retail business was up 4% (vs Q4: +4%, Q3: +5%, our estimate: +3%; the adverse impact due to store refurbishment was offset by sales transferred from store closure program), largely driven by robust demand of white goods (majorly built-in appliances), TVs (mega-site and 4K TVs) and mobile phones. The strong demand of air-conditioners in Greece propelled the lfl revenue growth to +13% in Southern Europe (vs Q4: 0%, Q3: 9%; our estimate: +2%). In Nordics, the lfl revenue was up +2% (vs Q4: 9%, Q3: 3%; our estimate: +3%) on the back of positive momentum in the kitchen business (extended product ranges). The FX tailwinds (+5%; largely due to depreciation of GBP vs Euro and Norwegian Krone) pushed up the total revenue growth to +9% (vs Q4: +5%, Q3: +5%; our estimate: +1.1%). The CWS business continued strong momentum (+42% at CER vs FY 15/16: +26%, FY14/15: +67%). The roll-out of sprint stores has progressed well (currently 31 stores; 130 planned by Christmas), complemented with the ‘honeyBee’ software implementation undergoing across the stores. Also, the management signed an additional distribution agreement with TalkTalk to manage direct channels (indirect channels only previously). The company also updated about the launch of a new e-commerce platform for Carphone Warehouse and the 3-in-1 property program across the UK (completed 278 stores out of total planned 323 SWAS stores by end of FY16/17) Lastly, management has shrugged off any detectable impact of the Brexit vote on consumer behavior in the UK and is optimistic about the future performance.
09 Sep 16
"Overnight markets ended mostly weaker in relatively quiet trading. The principal drivers were yesterday's decision by the ECB to leave its €1.7 trillion stimulus package unchanged and a continuing sell off of technology stocks, following Apple's launch of its rather less than inspiring iPhone 7 and Hewlett Packard Enterprise's plan to spin off and merge most of its software operations with the UK's Micro Focus international (MCRO.L). As a result, the NASDAQ took the biggest hit amongst the main US equity indices, while elsewhere energy stocks took confidence from the largest one-day gain in the benchmark Nymex contract for almost six months after the US Energy Information Administration data revealed the steepest fall in crude stockpiles since 1999. Interesting also, the Fed Funds futures appear to finally be forming a consensus regarding rate expectations, with bets now indicating the chance of a September rise has fallen to just 24%, while expectation of one in December is now put at 60%. The Hang Seng was the only winner amongst Asia's major equity markets, celebrating news that the Chinese regulator had finally confirmed it will allow domestic insurers to invest in Hong Kong-quoted shares through a trading link with Shanghai. This further opening follows last month's go-ahead for the Shenzhen-Hong Kong Stock Connect, which is due to open by the end of this year and create a second portal for foreign investors looking to access China's US$6.5tn equity market. This news was tempered on the Composite index, however, as CPI data released for August showed prices slowing for the fourth month in a row and remaining firmly below Government target. The UK this morning is expected to provide Trade Construction figures, while EU finance ministers will meet in Bratislava to discuss, amongst other things, the ECB's continuing policy inaction. The Fed's Eric Rosengren is scheduled to make a speech this afternoon which could further help traders firm expectations regarding the FOMC meeting now due in less than two weeks. Corporates due to release earning figures this morning include Comptoir Group (COM.L), Richoux Group (RIC.L) and JD Weatherspoon (JDW.L). Investors will also remain sensitive to further disclosures regarding North Korea's reported fifth nuclear test this morning and the planned meeting between Saudi, Algerian oil ministers and OPEC's general secretary. The FTSE-100 is seen modestly weaker, losing perhaps 10 points in opening trade." - Barry Gibb, Research Analyst
Strong performance in Q4; Brexit mires the near-term
03 Aug 16
Dixons Carphone (DC) released Q4 and FY15 results (ending 30 April 2016) broadly in-line with our estimates. In Q4, lfl revenue increased by 5% (vs Q3 16: +5%, Q2 16: +3%), largely driven by strong growth in the UK (Q4 16: +4% vs Q3 16: +5%, Q2 16: +4%) and a sequential improvement in the Nordic region (Q4 16: 9% vs Q3 16: 3%, Q2 16: 0%; led by white goods, mobile and laptops). South Europe clocked flat growth due to a strong comparable (Q4 15: +8%) and the phase-out of the laptop promotion scheme by the Greek government in the current year. For the full year, a strong performance in the retail business and market share gains across all geographies underpinned the organic revenue growth of 5% (vs FY14: +6%; our estimate: +5.3%). In the UK, strong demand for white goods and mobile phones drove lfl revenue up by 6% (vs FY14: +8%; our estimate: +6.5%). Similarly, the Nordics clocked organic growth of 4% (vs FY14/15: +4%; our estimate: +3%) despite intensifying price competition and macro-economic challenges. In Southern Europe (FY 15/16: +4%, FY14/15: -5%; our estimate: +4%), the weak demand for TV and laptops was offset by strong purchases of white goods and tablets (especially in Greece). Furthermore, connected world services (CWS) continued the robust growth momentum (FY 15/16: +26%, FY14/15: +67%) on the back of new/renewed contracts in the support services business (EE, RBS, TalkTalk). However, fx headwinds (3% yoy; devaluation of the Euro and Norwegian Krone vs. GBP) and a negative scope effect (2% yoy) resulted in flat total headline revenue. The headline EBIT margin was in-line with our estimate of 4.8% (+60bp yoy), largely driven by operational efficiency in the UK (+90bp yoy) and merger synergies (single head office, one logistics and repair centre in the UK and the roll-out of 276 Carphone Warehouse SWAS stores). DC plans to roll-out c.150 new sprint stores across the US in FY16 (500 stores by FY18) and expects the JV to contribute $40m-$50m of annual EBIT by FY19. Additionally, the management plans to introduce a new e-Commerce platform for Carphone Warehouse, open a distribution centre in Sweden, and launch a new home services division across the UK. The management declared a final dividend of 6.50p, raising the full year total to 9.75p (+15% yoy).
Pre-close update: Lift in FY17 guidance yet again, benefit of improved operating leverage
28 Feb 17
boohoo has continued to trade strongly in the final two months of the year to February. As a result management are increasing FY17 guidance at the sales and EBITDA levels in this morning’s pre-close trading update. Headline sales growth is now expected to be c.50%, ahead of the previously guided range of 46% to 48% given on 10th January. This results in a 1.5% increase in revenue forecasts. The EBITDA margin is now expected to be at the top of the previously guided range of 11% to 12% as the business benefits from operating leverage. This drives a 5.2% upgrade to our estimate. Further guidance on FY18 will be given at the FY17 results on 26th April. We also note that the Nasty Gal acquisition is expected to complete today as per the RNS on 9th February.
N+1 Singer - Morning Song 22-02-2017
22 Feb 17
CORETX (COR LN) Contract wins and new Lifestyle facility | Gooch & Housego (GHH LN) Solid Q1 trading plus earnings enhancing acquisition of StingRay Optics | NCC Group (NCC LN) Further issues in Assurance | PCI-PAL (PCIP LN) Strong H1 underpins positive outlook | UBM (UBM LN) Results | Verona Pharma (VRP LN) Phase IIa RPL554 add-on trial to tiotropium commenced
The Slide Rule
12 Jan 17
What is The Slide Rule? The Slide Rule has been designed to dramatically simplify the identification of the best companies in the UK small/mid-cap sector by making a quantitative assessment of the relative potential of each company. At its core, The Slide Rule aims to identify those companies that create genuine shareholder value through strong returns on capital and solid growth, but also present a value opportunity with the potential tailwind of earnings momentum. Companies are assessed within a Quality, Value, Growth and Momentum (QVGM) framework.
Just getting going
23 Sep 16
Just Eat is the leading digital marketplace for takeaway food delivery and has benefitted from a significant first-mover advantage. The company has disposed of its non-core assets and is now fully focused on building bigger and better businesses in its remaining territories. Management has demonstrated successful strategy execution and discipline to date and we believe that the right people are in place to drive significant profitability improvements going forward. We therefore retain our Buy recommendation but increase our price target from 641p to 734p.
Acceptance of all-cash offer by Kindred Group
23 Feb 17
32Red has agreed an all cash takeover by Kindred, at 196p per share. Together with an approved 4p dividend, this represents a 32.4% premium to last month’s average. This equates to 10.6x EV/EBITDA and 14.3x P/E for 2017, a small premium to the larger peer group. Given 32Red’s brand strength, regulated bias and growth momentum, this appears justified.
Flying faster, higher, stronger
24 Feb 17
IAG released it FY results which were marked by a strong growth in profit after tax (+29%), despite the slight decrease in revenues (-2%). On top of the increasing dividend (FY: €0.235 per share), the company has announced a share buy-back of €500m to take place in 2017. The group also expects, as in 2016, operating profit growth in 2017.