Dicker Data Limited(DDR)

Team Veye | 24 Mar 2020 ASX - DDR
Dicker Data Limited(DDR)
Call Buy
Investment Duration Long Term
Asx DDR

Dicker Data Limited (ASX: DDR) is engaged in the wholesale distribution of computer hardware, software and related products. The Company operates through two segments: Australian and New Zealand operations. The Company sells its products to over 3,000 resellers. The Company offers account management programs, which include drop-ship delivery program; server and storage presales team, eclipse program for HP business opportunities; extended producer responsibility (EPR) Program for Toshiba notebooks for corporate accounts requiring volume pricing, and imaging and configuration. The Company offers a range of credit options, including direct transfer, credit card (VISA, Mastercard and American Express), and approximately 30 days from a monthly statement credit account. The Company's subsidiaries include Express Data Holdings Pty Limited, Dicker Data New Zealand Ltd and Simms International Pty Ltd. (Profile source: Reuters)

From the Company Reports
FY19 Results

Dicker Data Limited (ASX: DDR) (Company), on 28 February 2020 announced its results for the year ended 31 December 2019 with strong revenue and profit growth, exceeding updated guidance provided in October 2019.

(Graphic Source – Company Reports)

 

The Company delivered strong growth across all key metrics: 

  • Total revenue from ordinary activities was $1,761.3m, up 17.9% 
  • Recurring software revenue $366.5m, up 47.9% 
  • Net Profit before tax $75.8m, up 64.2% 
  • Net Operating Profit before tax $64.1m up 37.5% (excluding profit on the sale of property $12.2m and ESS costs $450k) 
  • NPAT $54.3m, up 67.3% 
  • Dividends paid 27c per share, up 50% 
  • Earnings per share 33.69 cents, up 66.6%

Dicker Data to Distribute Veeam
Global Cloud Data Management Company Appoints New Distributor
The Board of Directors of Dicker Data Limited (ASX: DDR) on 21 January 2020 announced the company’s appointment as a distributor for Veeam in the Australian market. Veeam is the leader in Backup solutions that deliver Cloud Data Management. Effective from 21 January 2020, the new distribution agreement is of an ongoing nature and will grant Dicker Data access to the Veeam product portfolio.

(Graphic Source – Company Reports)

 

Chairman and CEO, David Dicker, Dicker Data Limited, commented that he was pleased to welcome Veeam to its vendor line-up. The company currently had successful distribution practices in place with a number of Veeam’s technology alliance partners such as Cisco, Dell Technologies, Hewlett Packard Enterprise, Lenovo, Microsoft, Nutanix and Pure Storage. These practices will be leveraged to accelerate the uptake of Veeam by its extensive reseller partner base.
Dicker Data was unable to quantify the revenue impact the new partnership will have at this stage, however, Veeam was a strategically significant appointment for Dicker Data in 2020, Dicker added. This new partnership will enable the company to offer new solutions built on technologies from existing and new vendor partnerships in the SMB and mid-market customer segments.

Janet Docherty, Head of Channel A/NZ, explained that bringing the new distributor on board was a natural fit. Partnering with Dicker Data perfectly complemented its business strategy as they share almost every one of their alliance, resale and co-sale vendors with them.

(Chart source: TradingView)

 

Check Point Distribution Agreement
Dicker Data Named as Check Point Australia’s Newest Distributor
The Board of Directors of Dicker Data Limited on 8 November 2019 announced its appointment as Check Point’s (NASDAQ: CHKP) newest distributor for the Australian market. Check Point is a multinational provider of software and combined hardware and software products for IT security, including network security, endpoint security, cloud security, mobile security, data security and security management. The new distribution agreement is effective immediately.
The new partnership with Check Point is one of the largest potential sources of incremental revenue growth for Dicker Data’s Financial Year 2020 (FY20). Whilst they are not able to quantify the revenue that will be generated by this agreement, the current available distribution market for Check Point in Australia is in excess of AUD$100m. The agreement is effective immediately and will continue on a rolling basis.


(Graphic Source – Company Reports)
Globally recognised as a leader in firewall and associated security technology, the Board of Directors view Check Point as a strategic anchor vendor in the enterprise security segment, which is projected to be one of the fastest-growing areas for Dicker Data in FY20.

 
Stock Overview
Sector Technology Hardware & Equipment
Risk Low
Market Cap 665.15m
Daily average Volume 211,832
EPS (FY) 0.337
PE RATIO 12.17
Yearly Dividend Yield  6.83%
Target Price (s) $7.00-$8.00
Stop Loss $3.00
Recommendation Buy
52 weeks High 8.09
52 weeks Low 3.77
Directors Mr David Dicker
Non-executive Directors Ms Fiona Brown
Ms Leanne Ralph

Veye’s Take
Dicker Data’s Software growth is being driven by ever-increasing subscription and recurring product lines, recurring revenue increasing 47.9% from $248m to $367m. The Company had exceptional operational scale efficiency during 2019. It improved both revenue and margin quality. Dicker Data’s operating cost growth was restrained and improved to 4.9% of revenue resulting in 67% of gross profit growth flowing through to operating profit. The 15 new vendors added during the FY18 and FY19 accounted for incremental revenue of $29.9m in FY19. Existing vendors (FY17 and prior) grew at 16.9% on PCP, as existing vendor relationships were leveraged to gain access to new product lines or increased share. Dicker Data’s new partnership with Check Point is one of the largest potential sources of incremental revenue growth for Dicker Data’s Financial Year 2020 (FY20). The current available distribution market for Check Point in Australia is in excess of AUD$100m. The company continues to increase working capital investment in strategic product lines. Despite this, net debt has only increased by $4.3m YoY, with leverage being maintained and its ability to service debt improving. Dicker Data had strong dividend growth of 63.4% with total dividends paid 33.0cps for FY19 (FY18 20.2cps). The stock retraced from the earlier point of multiple tops. Although it may fall further from this point in view of the global sentiment, the stock can have the potential of giving good returns in the short to medium term. Veye recommends a "Buy" on “Dicker Data Limited” at the current price of $4.42

Disclaimer

Veye Pty Ltd (ABN 58 623 120 865) authorised representative (AR No. 001261006) of Global Merces Funds Management Ltd holds Australian Financial Services License (AFSL No. 460883). Veye is authorised to share only generic financial views through its website, reports and newsletters without keeping into consideration your personal financial needs or investment objectives. Although Veye takes utmost care about the accuracy of the content and ensure that the information is gathered and processed through reliable resources but it is recommended for you to seek professional advice from your financial advisor or stockbroker before acting on any of our content or taking a final decision on your investments. Veye Pty Ltd advises it’s users to pursue investing as a long-term goal. Stocks are subject to real time changes therefore all the information we share represents our views at the date of publishing and we request our readers not to interpret our reports as direct recommendations. Future Performance of any Security/Financial Product cannot be assured basis its past performance. The securities and financial products we study and share information on in Veye Reports may have a product disclosure statement or other offer document associated with them. You should obtain a copy of these before making any decision about acquiring the security or product. You can refer to our Terms & Conditions and Financial Services Guide as per your convenience. Veye Pty Ltd confirms that the employees and/or associates of Veye Pty Ltd do not hold positions in any of the financial products covered on the website on the date of publishing this report (mentioned on the website).


Disclaimer

Veye Pty Ltd (ABN 58 623 120 865) authorised representative (AR No. 001261006) of Global Merces Funds Management Ltd holds Australian Financial Services License (AFSL No. 460883). Veye is authorised to share only generic financial views through its website, reports and newsletters without keeping into consideration your personal financial needs or investment objectives. Although Veye takes utmost care about the accuracy of the content and ensure that the information is gathered and processed through reliable resources but it is recommended for you to seek professional advice from your financial advisor or stockbroker before acting on any of our content or taking a final decision on your investments. Veye Pty Ltd advises it’s users to pursue investing as a long-term goal. Stocks are subject to real time changes therefore all the information we share represents our views at the date of publishing and we request our readers not to interpret our reports as direct recommendations. Future Performance of any Security/Financial Product cannot be assured basis its past performance. The securities and financial products we study and share information on, in Veye Reports, may have a product disclosure statement or other offer document associated with them. You should obtain a copy of these before making any decision about acquiring the security or product. You can refer to our Terms & Conditions and Financial Services Guide as per your convenience. Veye Pty Ltd confirms that the employees and/or associates of Veye Pty Ltd do not hold positions in any of the financial products covered on the website on the date of publishing this report (mentioned on the website).