DAVY VIEW

DCC has delivered good operating profit growth through the first quarter. We expect to make no changes to our underlying assumptions for the group, which highlights the resilience of DCC’s operating model given the boarder backdrop of macro uncertainty. The disposal of Kent Pharma, while small in the context of the group, demonstrates management’s ongoing focus on deploying capital into higher return areas. This will further sharpen the strategic focus within DCC Vital. The stock is trading on 18.9x 2020 P/E with very material balance sheet optionality (net cash 2020E: £46m).