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Dixons carphone Fundamentals

Investec Buy 367.95 368.40 395.00 395.00 Reiterates

Confirmation of Promotion to the FTSE100

Q1 2014-15 Trading Statement

Group

· Merger of Dixons Retail and Carphone Warehouse completed on 7 August 2014
· Integration progressing well with stores-in-store performing ahead of plan
· Dixons Carphone plc to join the FTSE 100 on 22 September

Dixons Retail

· Strong performance in the UK and Ireland with like-for-like sales up 4%
· The Nordics delivered a solid performance, against tougher comparatives, with like-for-like sales up 1%
· Encouraging performance from Greece with like-for-like sales up 6%

Carphone Warehouse

· CPW like-for-like sales down, as anticipated, by 6% due to a particularly strong performance in the prior year (+13% like-for-like) and difficult market conditions in Spain
· Further postpay market share gains in the UK, improved postpay mix and higher ARPU
· Completion of sale of Virgin Mobile France expected prior to interim results

Exane BNP Paribas Outperform 362.50 369.00 375.00 450.00 Retains

Deutsche comment on P4U going into administration:
"This has played-out more quickly than we had expected, given that P4U had supply contracts running until February 15 with Vodafone and September 15 with EE. We believe Dixons Carphone will continue to be an important distribution channel for the mobile network operators, and it is well placed to capture Phones 4 U’s market share. This could boost outer-year profits by 10% or more.
EE has previously indicated it wants fewer, deeper relationships with third party distributors. We do not expect any change to EE and Dixons Carphone’s relationship. They already have a supply contract agreement in place, and we believe that Dixons Carphone’s c1100 points of sale (once Store Within a Store has been rolled out) represents a valuable channel to the MNOs. Earlier this year DC signed a new long term distribution agreement with Vodafone.
At this stage it is unclear whether an administrator would attempt to operate Phone 4 U's 720 stores through the profitable Christmas period. This is likely to hinge on whether it can maintain supply in the short term from the MNOs. P4U generated LTM gross profit of £330m (including 1.578m contract connections), and Carphone's market share is around 20%, so taking its natural market share could add c£65m gross profit. Even with some higher operating costs, this could add 10-15% to Mar-16 group profits. Given the close overlap in retail proposition of Carphone and P4U, it could take an over-proportional share of the business. P4U operates concessions within 160 Dixons (Curry's/PCWorld) stores, which generates around £8m/2% of Dixons Carphone's profits. Today’s news could lead to more rapid Store Within a Store conversions. It could also enable DC to deepen its relationship with Samsung, which had franchise agreements with both companies.
Our 400p TP is based on DCF (WACC 9.1%, RFR 4.5%, ERP 4.5%,TG 1.5%), while a bull case with higher synergies achieved is 440p. This bull case, as we set out in our initiation report (An electric combination, 19 August), allows for some profit growth at Carphone Warehouse UK due to higher 4G profitability, but does not include anything for changing competitive landscape. The stock trades on CY15 (ie largely pre-synergies) P/E of 15.2x versus the UK Retail Sector on 14.0x."

Dixons Carphone set to save 800 Phones 4U jobs

Dixons Carphone Strategy Update

The Company will host a strategy update for analysts and investors in Oxford, commencing at 10.00 am (UK time) today. Management will present the strategy for the Group, followed by a store tour including a new Carphone Warehouse store-within-a-store. A live webcast and a copy of the presentation will be available on the Company's corporate website, www.dixonscarphonegroup.com. No update on current trading will be provided during the presentation.


Next announcement

The Company will publish its Q2 trading and interim results on 17 December 2014.

Canaccord Genuity Buy 421.05 419.80 - 500.00 Initiates/Starts

26 Nov 2014 Dixons Carphone DC. Canaccord Genuity Buy 421.05 419.80 - 500.00 Initiates/Starts

GF - see post 16! :-)

27 Nov 2014 Dixons Carphone DC. Citigroup Buy 0.00 418.50 480.00 480.00 Reiterates

28 Nov 2014 Dixons Carphone DC. Deutsche Bank Buy 423.00 423.00 400.00 465.00 Reiterates

SP Target 465p

Zac Mir says this morning that Tiger Global my still be short of these

or may not be of course :-)

I can't see them short now , not with wheeling & dealing that's in the sector now, and they say Dixon's could have very good sale's over Christmas

Interim results 2014-15 (31 weeks to 1 Nov 2014)

A strong half year for our new company with pro forma Headline profit before tax up 30%


Highlights

• Group H1 like-for-like revenue up 5%; Q2 like-for-like up 9%, with stable gross margins in H1
• Market share gains across electrical and mobile businesses in the UK & Ireland, Nordics and Greece
• Netherlands and Germany remain challenging but action underway to review and restructure
• Group pro forma Headline PBT of £78m (2013: £60m), up 30%
• Group pro forma Headline EBIT of £100m (2013: £85m)
• Headline basic EPS from continuing operations 7.1p (2013: 3.2p)
• Statutory loss before tax from continuing operations £20m (2013: loss of £27m) after non-Headline charges of £100m, statutory basic EPS from continuing operations loss of 4.7p (2013: loss of 5.4p)
• Interim dividend of 2.5p, payable in January 2015
• Integration progressing well and now expected to deliver a minimum £80m of synergies by 2016-17, one year ahead of plan
• Disposal of Virgin Mobile France completed on 4 December 2014 with net cash proceeds of £104m

on the back of those numbers, DC should be chirpy this morning, but therefore guaranteed to dump :-)

Investec hikes Dixons Carphone price target after interims

Maiden interim results from recently merged Dixons Carphone (DC) prompted Investec analyst Alistair Davies to raise his share price target from 395p to 465p.

Davies reiterated his ‘buy’ recommendation for the electrical and phone retailer after half-year earnings before interest and tax came in at £100 million and profits before tax hit £78 million. Both were well ahead of consensus forecasts of £79 million and £58 million.

Dixons Carphone shares gained 14.5p or 3.4% to 441p.

‘[There is] no change to full-year 2015 estimates but estimates look underpinned and we upgrade full-year 2016/17 profits before tax by 2.5%/4% respectively, reflecting earlier realisation of synergy benefits,’ he said.

‘Dividend yield is c.2% but free cash-flow increases in full year 2016 estimates potentially offer scope for further shareholder returns.’

http://citywire.co.uk/money/the-expert-view-dixons-carphone-bhp-billiton-and-xaar/a790134?ref=citywire-money-latest-news-list#i=2

Put these 3 retailers in your Christmas stocking
By Harriet Mann | Thu, 18th December 2014 - 11:38
Put these 3 retailers in your Christmas stocking General retailers rely on consumers having a little bit of extra cash in their pocket, especially as the lights and the tinsel go up before Christmas. This is make-or-break time for the high street, and after a slow autumn due to warmer weather, they have a lot of catching up to do.
UBS now expects faster growth in UK households' disposable income next year, fuelled by a 50% slump in the price of oil. Although bad news for oil producers, consumers benefit from lower petrol prices and utility bills. Food is also getting cheaper and fixed rate mortgages have also fallen to record lows. That's why UBS pencils in household cash flow growth of 4.5% in 2015, versus this year's 3.6%. That must spell good news for the high street.

Of course, political risks are looming. As General Election fever takes hold, more focus will be drawn to proposals to tackle the deficit and its impact on consumer confidence. And sterling hasn't been as healthy lately, hit by delays to possible interest rate hikes. "Total reliance on lower oil prices could also be risky," says the broker. "We believe it could easily reverse."

Still, over Christmas, UBS prefers the hard-line retailers, especially given the impact of warmer weather and higher operational gearing. Their top picks include Home Retail (HOME), Dixons Carphone (DC.) and Debenhams (DEB).

Both Home Retail and DC also have robust self-help strategies to supplement the macro tailwinds. In the clothing space we think Debenhams offers a degree of resilience to the increased promotions seen elsewhere, albeit off a very low base.
However, the slow start to the period is expected weigh on both Marks and Spencer and Next (NXT), with other clothing retailers likely to struggle, too. Non-food sales at M&S (MKS) are set to fall by 4% in its third quarter and UBS has shrunk its full-year pre-tax profit forecast by £10 million, although the medium-term gross margin upside looks intact.

Next has remained aloof again with its focus on full price sales and service levels, and we think full-year 2015 should be stable. However, there could be more cautious comments and the first half full-year 2016 outlook on 30 December given tough comps, and we rein back our expectation of profit growth here by around 4%.
This article is for information and discussion purposes only and does not form a recommendation to invest or otherwise. The value of an investment may fall. The investments referred to in this article may not be suitable for all investors, and if in doubt, an investor should seek advice from a qualified investment adviser.

Dixons Carphone plc (DC.) Ordinary 0.1p

HL COMMENT (17 DECEMBER 2014)

Half year results: Targeted cost savings at the newly merged company are expected to materialise a year ahead of schedule. Management's target of a minimum £80 million of synergies by 2017-18 has now been brought forward by one year to 2016-17. The fall of Phones 4U appeared to play its part in boosting revenues (group H1 like-for-like revenue up 5%), while free warranties on products such as high-end TVs also further contributed. Economic recovery for its core UK and Irish markets also appeared to aid performance, whilst its newly separated business services division (Connected World Services) reported a doubling in pro forma revenues.
Less favourably, stores in the Netherlands and Germany are being closed, while market pressures in Spain were reported. Management noted that "Life has been tougher for our smaller European phone businesses who are strategically less able to be robust in the face of market changes and we are in the midst of restructuring and reviewing these operations."
In all, merger cost savings are being squeezed, the repositioning of its overseas operations remains ongoing, while management initiatives to improve customer satisfaction appear to be generating success. For now, with high street competition further reduced and the company remaining a potential beneficiary of the expected growth in the so called 'internet of things', analyst consensus opinion points towards a strong buy.

Read more share research from Hargreaves Lansdown

Highlights:
Group first half like-for-like revenue up 5%. Second quarter like-for-like up 9%.
Group pro forma headline or adjusted profit before tax of £78 million (2013: £60 million), up 30%. Statutory loss before tax from continuing operations £20 million (2013: loss of £27 million) after non-headline charges of £100 million.
Management now expects to deliver a minimum £80 million of cost savings by 2016-17, one year ahead of plan.
Interim dividend of 2.5 pence per share, payable in January 2015.

Negative Points:
Stores in the Netherlands and Germany are being closed. Management noted that "In the Netherlands the market proved to be much more challenging than anticipated." Pro forma headline revenue in Northern Europe in the first half was down 8%.
The group noted that "our Spanish business was negatively impacted by market pressure." Pro forma headline revenue in Southern Europe in the first half was down 15%.
Competition from the likes of Amazon will prove no less intense.
For Carphone Warehouse, concerns regarding the outlook for mobile phone sales have previously been expressed. Many consumers now possess a smartphone.

Positive Points:
Targeted cost savings at the newly merged company are expected to materialise a year ahead of schedule. Management's target of a minimum £80 million of synergies by 2017-18 has now been brought forward by one year to 2016-17.
Overall group for first half like-for-like revenues rose by 5%. Second quarter like-for-like revenues grew by 9%.
Pro forma revenue in the first half in the UK & Ireland increased by 8%. Management noted that "the business benefited from the closure of Phones 4U." The group pointed to a particularly good performance in high-end TVs, aided by a number of initiatives including free warranties.
In Spain, the company has recently started a relationship with Telefonica to distribute the products and services of Movistar in its stores for the first time.
Connected World Services (CWS), its business services division, reported separately for the first time. The business looks to leverage the company's core expertise and systems to provide solutions for other companies. Pro forma revenue of £79 million were reported (2013: £41 million) with the increase predominantly reflecting the revenue from its Samsung Experience Stores which launched in the second half of last year.
The group is disposing of non-core operations. The disposal of Virgin Mobile France completed on 4 December 2014 with net cash proceeds of £104 million.
Dixons Carphone intends to adopt a dividend policy in line with Carphone's previous dividend policy. An interim dividend of 2.5 pence per share was declared