Investment: DCC holds long-term attractions

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The Independent Online
DCC, the Irish industrial holding company, rewarded investors yesterday with better than expected first-half group profits, which rose by 32 per cent to Irpounds 17.2m. Although the shares soared 70 Irish pence to 490p on the results, many analysts still believe the company is attractive, particularly for investors who want exposure to the "Celtic Tiger".

With niche operations in the healthcare, food, energy and computer distribution sectors, and a forward p/e of 12, there is a feeling that the shares were "oversold" after reaching a high of 710p in May.

The City is impressed with DCC's management and likes its collection of operations with steady earnings streams, mainly within Ireland. However Jim Flavin, chief executive, is expanding the group's healthcare and computer operations internationally. Also, its "localisation" business - the adaptation of computer applications for non-English-speaking markets - has led to growth into Europe, the US and Asia. This has made the group's computer division, SerCom, the company's most profitable, with earnings up by 58 per cent in the first half of this year.

The main cloud is uncertainty about the Irish economy. But with interest rates falling sharply, near double-figure annual GDP rises look set to continue. If the Irish economy avoids the bust that some predict, DCC looks a good long-term buy.