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Growth Portfolio: Dicker Data Ltd (ASX: DDR)


Published 15-SEP-2016 00:00 A.M.


1 minute read

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Overview: Dicker Data Limited ("Dicker Data", "the Company") is an Australian company focused on the distribution of hardware. Dicker Data acts as a distributor of leading technology brands, selling to over 3000 resellers across Australia. Dicker Data was founded in 1978 and listed on the ASX in 2011.

Catalysts: Dicker Data is experiencing sales growth has doubled revenues over the past three years. Revenue visibility in the medium- term is strong as the company has established long-term relationships with a number of high-profile customers. Dicker Data is scheduled to distribute quarterly fully-franked dividend distributions yielding ~7%. The Company has consistently paid a dividend since listing in 2011.

Hurdles: Even though Dicker Data is posting consistent revenue growth, earnings have historically been volatile which may affect the company’s ability to pay dividends. With a balance sheet gearing of 3x EBITDA, Dicker Data may be restricted to fund future growth initiatives. While management controls the majority of the stock, the ability of minority shareholders to influence the direction of the Company is impaired.

Investment View: Dicker Data offers profitable exposure to the domestic technology industry. We are attracted to its revenue growth trajectory, relationships to vendors and resellers, and history of dividend distributions. Primary risks include earnings volatility, corporate structure, and balance sheet gearing. While the Company is experiencing organic growth and from its acquisitions, the Company appears well-positioned to continue to reward shareholders via dividend distributions. Offering an attractive mix of capital growth and income we initiate coverage with a ‘buy’ recommendation.


General Information Only

S3 Consortium Pty Ltd (S3, ‘we’, ‘us’, ‘our’) (CAR No. 433913) is a corporate authorised representative of LeMessurier Securities Pty Ltd (AFSL No. 296877). The information contained in this article is general information and is for informational purposes only. Any advice is general advice only. Any advice contained in this article does not constitute personal advice and S3 has not taken into consideration your personal objectives, financial situation or needs. Please seek your own independent professional advice before making any financial investment decision. Those persons acting upon information contained in this article do so entirely at their own risk.

Conflicts of Interest Notice

S3 and its associated entities may hold investments in companies featured in its articles, including through being paid in the securities of the companies we provide commentary on. We disclose the securities held in relation to a particular company that we provide commentary on. Refer to our Disclosure Policy for information on our self-imposed trading blackouts, hold conditions and de-risking (sell conditions) which seek to mitigate against any potential conflicts of interest.

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The information contained in this article is current as at the publication date. At the time of publishing, the information contained in this article is based on sources which are available in the public domain that we consider to be reliable, and our own analysis of those sources. The views of the author may not reflect the views of the AFSL holder. Any decision by you to purchase securities in the companies featured in this article should be done so after you have sought your own independent professional advice regarding this information and made your own inquiries as to the validity of any information in this article.

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