SDI: Remember to Brush Your Teeth

[duncan22]

Anyone out there have any opinions on this. I accidentally entered their code while looking for a different stock but ended up liking what I read. Revenue and profit up 10%.

I am still on board this one. Pie Funds recent substantial holder.

Good write up here: https://www.shareidea.com.au/idea/20160615/sdi-sdi-ltd

[cloggs]

Good write up. Thanks.

[DarkHorse]

"SDI’s peers like Coltene (SWX:CLTN), Dentsply Sirona (NASDAQ:XRAY) and Shofu Inc (TYO:7979), all trade on forward multiples of 18-23x, yet SDI trades on ~9x FY17 earnings. The market is yet to price in the favourable market tailwinds and the significant progress the company has made in it’s higher margin, higher growth product ranges. As a result, SDI looks attractively priced and well positioned for a re-rate as the market recognises the growth being achieved by the company's newer products."

Tremendously comprehensive write-up here: http://www.capitalhmanagement.com.au...07/26/sdi-ltd/
These guys have achieved outstanding results so far (another of their holdings Wingara shot up today ), very happy to hold with them and now also Pie as substantial holders.

[DarkHorse]

Up 10% on 2016 results out today:

FY16 HIGHLIGHTS Sales revenue up 8 per cent to $74.1 million
 Profit after tax up 22 per cent to $7.6 million
 EBITDA up 25 per cent to $15.4 million
 Dividends increase by 43 per cent
 Cash increased by $1.0 million
 Borrowings decreased by $1.4 million

Note in Australian dollar terms sales were up only 1.7%. However, the transition from amalgam to higher margin products continues:

Glass Ionomer sales increased by 28.2 per cent, Composites by 15.6 per cent, Whitening by 22.9 per cent,
Equipment by 5.0 per cent, and Amalgam sales decreased by 7.5 per cent. Global demand for non-Amalgam
products is increasing and although SDI experienced significant increases in its non-Amalgam sales, these were
offset by the decline in Amalgam sales, which represented 34.1 per cent of the company’s total sales.

Still debt free (net cash), on low multiples, and not far below the 100 million mcap mark which would put it on the radar of small cap funds.
Also a good hedge against market downturns, with high leverage to any drop in AUD against USD.

Anyone else holding - or decided against? Be great to hear your thoughts.

[Joshuatree]

Unnoticed, unloved, unrecognised..... no more. Valued at a PE of 10 by one.Liquidity the only issue maybe. Will look to buy back in.
ps wasn't aware of a new CEO; this has been the game changer/catalyst imo for the family run business which had been promising much for years but never quite reaching its potential.Now it has.

[mark100]

Unnoticed, unloved, unrecognised..... no more. Valued at a PE of 10 by one.Liquidity the only issue maybe. Will look to buy back in.
ps wasn't aware of a new CEO; this has been the game changer/catalyst imo for the family run business which had been promising much for years but never quite reaching its potential.Now it has.

Not really a new CEO JT. She was joint CEO with her father. He is now stepping down to Chairman and Sam, the daughter, assumes the role in her own right. How much of an influence he will be remains to be seen but hopefully there will be a heft pay cut.

Discl: Held

[Joshuatree]

Thanks mark ; i know your research is of the highest standard so appreciate the correction; still hope the new young broom keeps up the momentum.Great to hear from you; thought you'd gone for good. Unfort the few of us on here int in Aus stocks feel a little like that at times.

[mark100]

Thanks mark ; i know your research is of the highest standard so appreciate the correction; still hope the new young broom keeps up the momentum.Great to hear from you; thought you'd gone for good. Unfort the few of us on here int in Aus stocks feel a little like that at times.

I'm still on hotcopper and try to read sharetrader every couple of days. Not enough time to post on 2 sites these days!

I think SDI is making an attempt to improve their Investor Relations. Probably because of pressure being applied by some shareholders but also because the Sam is more receptive to this than or father was. I think he might have got turned off after he took a similar path in the early 2000's only for the stock to boom and then crash when progress disappointed.

[Joshuatree]

Trading Update
Downgrade. S/P down 26%.Dodged a bullet there by being too slow on the uptake prevoiously.

[levin123]

Trading Update
Downgrade. S/P down 26%.Dodged a bullet there by being too slow on the uptake prevoiously.

It looks like the market misinterpreted this announcement?

The announcement reaffirms FY17 guidance, but states that 6 month results to December will be between $2-2.5m, compared with $3m last FY. But due to historically strong 2H's the company remains confident of hitting targets.

However the price has tanked 33% on close.

From the update: There has traditionally been a skew in earnings favouring the 2nd half of the financial year, due to seasonality in the regions that the Company operates in. This year SDI expects an even greater skew because of the impact of currency. The Company expects net profit after tax to be in the range of $2-$2.5 m compared with $3m for the first half of financial year 2016.

Has the market taken that $2-2.5m figure to be full FY17 forecast? A quick careless glance over could construe this due to the way it's worded.

Or has the price just been trading at a large multiple due to expected growth, and now that guidance is wobbling, the market is reacting accordingly?

Considering taking a punt.