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Dicker Data (DDR) and Retailers

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Question asked 25/07/2025

Dicker Data (DDR) and Retailers

Hi , congrats on your sensible stand on coal , My solar panels this week have produce not much power and the wind as been slight so I guess explains why business have lost power and lost 100K a day plus the media has gone silent on this . With companies and AI requiring more and more power and our population exploding were are we going to get this power from and will that be a great investment ? , I have a small holding in DDR and want to increase it , Their debt is high should I be concerned with this ? , I took a large profit from JBH and want to find another retailer , I have NCK , SUL , MTS so was looking at AXI or PMV both are looking cheap at the moment do you like either of these companies ? great job last financial year I am happy to be with you for a few more years , Regards , Glenn

Answer

Hi Glenn,

Thanks for thumbs up on coal, fingers crossed were both correct, its looking pretty good this week!

Dicker Data (DDR): we added DDR to our Active Income Porfilio earlier this month believing the stock offers an attractive combination of mild growth, strong yield (~5.5%) plus a catalyst from an AI-driven technology refresh from Australian small businesses. We looked at DDR in more detail back in May, and like the risk/reward on offer around current levels, preferring it to JBH. In terms of debt, total borrowing is ~$350mn which is not too onerous given their earnings of ~$160 million, hence, we are comfortable.
Retailers: like yourself we own Super Retail (SUL), Metcash (MTS), and Nick Scali (NCK) across our MM portfolios hence by definition prefer them, to Accent Group (AX1) and Premier Investments (PMV).
AX1- Accent Group’s deal to run Frasers Group’s Sports Direct business in Australia is interesting although it may cannibalise some existing sales. The stock plunged ~30% in June following a disappointing FY25 trading update, which highlighted weakening sales and shrinking margins. The stock looks ok around $1.50, supported by the Frasers alignment but it’s not yet on our radar.
PMV- a multi-brand retail powerhouse with strategic investments in consumer goods, their brands include Peter Alexander, Smiggle, Portman’s, Dott, and Just Jeans. We think the stocks looking good ~$20.50, trading on 18x while yielding over 6% fully franked. This would be our pick out of the two.

The other sort of similar company we like is ARB Corp (ARB), which manufactures and sells 4wd accessories – we like it at current levels.

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Dicker Data (DDR)

LAST UPDATED 24/07/2025 15:54

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