By the 3rd of October DNB’s two tech strategies had performed as follows:
- The Long Only DNB Technology: + 25.05% % YTD in EUR
- The Long Short DNB TMT Absolute Return: - 2.38 % YTD in EUR
Apple used its annual September event to announce a new generation of iPhones, new iPads and new Apple Watches. Apple Arcane, the company´s gaming service, launched on September 19th in 150 countries. The company now says that Apple TV+ will start rolling out on November 1st and, like Apple Arcade, will cost USD 4.99 per month for a family subscription. As an additional advantage, all new iPhones, iPads, Macs and AppleTVs will come with one year of AppleTV+ for free. The upside for Apple is clearly in services, not iPhones. After more than a decade since the first iPhone was launched most of the obvious dramatic improvements have been made and the scope for radical innovation is limited – as is also the willingness of users to pay even more for new phones.
Gaming sector is one of our biggest overweights at the moment. In our view, there are many positive themes driving the sector: (1) Digital distribution improves ASPs by around 30% benefiting margins (2) Shared architecture across PC and consoles reduces porting costs (3) Console backwards compatibility changes console game growth from cyclical to secular and (4) Streaming could expand addressable market. We believe the market is underestimating the positive margin effect of new distribution models and we expect the sector cyclicality to fall significantly in the future. Our biggest holdings Square Enix and Nintendo also trade on an undemanding valuation of 2020 P/E (ex-cash) of 15x.