Morning Equity Briefing
DCC
(DCC ID)
Challenging conditions in gaming market but future looks brighter
Caren Crowley
| Closing Price: | 2032c | Rating: | Outperform | 30/06/09 |
FACTS: Home Retail Group, owners of Argos, and HMV have released trading updates (September 9th). Home Retail's trading update covers the 26 weeks to August 28th while HMV's update is for the 19 weeks to September 4th. DCC Sercom is a supplier of consumer electronics (games, DVDs), computer technology and mobile phone accessories to both Home Retail and HMV.
ANALYSIS: Both Home Retail and HMV said that the games market continued to be weak, with the latter reiterating that the World Cup disrupted the pipeline of new entertainment product. However, HMV believes that the games product line-up will be stronger as we head into the key trading Christmas period with new releases from Microsoft and Sony expected. Home Retail reported that sales of computers continued to show good growth. HMV is looking to grow its technology product offering to include laptops, mobile phone technology and accessories.
DAVY VIEW: The trading updates from Home Retail and HMV are something of a mixed bag for DCC Sercom. Although comments on current trading conditions in the gaming market are negative, the outlook for the important Christmas trading period is positive as is recent trade in computers and peripherals.