DCC â€“ Solid result across all divisions but we see limited upside. â€œHOLDâ€
DCC reported their half year results to the end of September this morning.
The results were solid with reported revenue for continuing operations of Â£6.45 billion, a 17.1% increase versus last year and c.5% ahead of analyst expectations. EBITA was Â£122.5 million, in line with consensus and adjusted EPS was 96.4p, 16.1% ahead of last year. Additionally, management maintained net debt at c.Â£112 million and increased the dividend by 10% to 40.89p.
DCC LPG had an excellent H1 reporting revenue of $502 million. 36.5% ahead of last year, with operating profit increasing 19.2% to Â£44.1 million. Following the completion of the acquisitions of Shell Hong Kong & Macau and Retail West, DCC LPG will operate in nine countries and is well positioned to continue its expansion in both current and new geographies.
DCC Retail and Oil recorded a solid performance, increasing revenue 15.5% to Â£4.3 billion and increasing operating profit by 8% to Â£42.2 million. The integration of ESSO Norway and Dansk Fuels was also completed over the period.
Revenue growth was more muted for DCC Healthcare but operating profit managed to grow 11.6% to Â£22.6 million.
DCC Technology achieved stellar revenue growth, increasing revenue by 19.8% to Â£1.4 billion and growing operating profit by 25.8% to Â£14.2 million. The growth was primarily driven by acquisitions.
The companyâ€™s balance sheet continues to be in stellar shape and the Groups net debt to EBITDA multiple was c.0.6x.
DCC currently trades on 19.5x next yearâ€™s earnings, 12.5x EV/EBITDA and offers a 1.9% dividend yield. We feel the stock is fully valued at the moment and reiterate our recommendation â€œHOLDâ€
Darren McKinley, CFA
Senior Equity Analyst