Dexion (DEX)

[tommy]

Here is another stock for da fundamentalist investors like me who don't mind a bit of illiquidity: A profitable and growing logistics company called Dexion (DEX) that is still very undervalued (PE:9).

http://www.dexion.com.au/www/welcome.cfm

I bought some DEX recently, I must be the only idiot buying stocks in the current market, like a greedy kid in a candy shop [}]

As always, please do your own research before making crazy investment decisions.

Annual Report
http://stocknessmonster.com/news-ite...E=ASX&N=404464

Full Year Results Presentation
http://stocknessmonster.com/news-ite...E=ASX&N=400930

Wilson HTM Report
http://www.dexion.com.au/login/pages...EX20060420.pdf

Dexion Limited
AGM confirms positive outlook

21 April 2006
$1.25
BUY

Recommendation

We retain a BUY recommendation on Dexion, and endorse a 12 month
share price target of $1.40 p/share.
Dexion confirmed a positive outlook for FY06 at its AGM yesterday.
Trading conditions remain healthy and the current order book of $74M has increased $6M since the start of the year. Management�fs forecast of delivering NPAT growth of 10% plus in FY06 provides a positive indicator of the underlying growth for the business. We remain comfortable with our FY06 NPAT growth forecast of 18%. Dexion remains a BUY.

Key Points
- Dexion held its AGM in Sydney yesterday and confirmed a positive outlook for FY06, driven by continued strong demand for storage solutions.

- Enquiries and demand for new business remain healthy. The current order book of $74M has increased $6M since the start of the year and compares to $57M this time last year.

- The Company also provided an update on a number of initiatives which are expected to improve service delivery levels and provide a platform for future growth, including the newly created commercial (ie. office) storage business and three year expansion plan for Asia and the Middle East regions.

- Dexion also confirmed that it continues to seek appropriate acquisitions. We believe these are likely to be small bolt-on acquisitions to the commercial storage business, along the lines of the small add-on acquisition of Spacemaster Office Systems earlier this year.

- The Company remains confident in delivering FY06 NPAT growth of 10%
plus. Our forecasts remain unchanged and assume FY06 and FY07 NPATgrowth of 18% and 10% respectively.

- The positive earnings outlook is supported by the strong order book, as well as a positive industry outlook driven by ongoing demands of industry to invest in warehouse and logistics infrastructure in order to expand operations and improve supply chain efficiencies. We understand demand from the third-party logistics sector remains particularly strong, supporting the view of an ongoing trend for restructuring of supply chain management within Australia.

- Dexion is a solid business providing specialist products and services for industrial and commercial storage/logistics infrastructure. There is a cyclical element to Dexion�fs business, however the earnings outlook over the forecast period remains positive.

- Our share price target of $1.40 p/share reflects a FY06 EV/EBIT multiple of 7.5x, providing an implied PER of 10x.

- We retain our BUY recommendation.

Security/Capital Details
ASX Code DEX
Market Cap $65 M
Issued Shares 54.1 M
Avg Mth T�fover 2.03 M
12 Mth High #8211; Low $1.22 - $0.88

Key Data/Ratios #8211; FY 2006
EBITDA / Sales 8.1%
EBIT / Sales 7.0%
Net Debt / Equity 35.6%
Interest Cover 17.6 x
ROE 51.2%
EPS Growth 18.2%
PEG Ratio 0.50 x
NTA / Share $ 0.26
DCF valuation $ 1.46
12 Mth Price Target $ 1.40

Earnings outlook
Our forecasts provide compound EPS growth of 18% in FY06 and 10% in FY07. Our earnings forecasts are summarised in the table below.

Earnings summary
Y/e: 31 Dec FY04 FY05 FY06e FY07e FY08e
Sales Revenue $M 96.8 131.0 156.9 170.8 182.6
- growth % 24% 35% 20% 9% 7%
COGS $M -76.1 -105.4 -127.2 -138.9 -148.6
Gross profit $M 20.9 26.2 29.6 3

[OneUp]

quote:Originally posted by tommy
I bought some DEX recently, I must be the only idiot buying stocks in the current market, like a greedy kid in a candy shop [}]

What's the old Buffetism?

"Be fearful when others are greedy, and greedy when others are fearful"

[tommy]

quote:Originally posted by OneUp

quote:Originally posted by tommy
I bought some DEX recently, I must be the only idiot buying stocks in the current market, like a greedy kid in a candy shop [}]

What's the old Buffetism?

"Be fearful when others are greedy, and greedy when others are fearful"

Hi Oneup,

Hehehe... glad you're not the only one taking a contrarian approach[:I]

Although I'm nowhere near skilled nor refined in my stock-picking skills as the Oracle of Omaha, I think there are clearly some stocks that will become more attractive as the market becomes increasingly volatilte: low PE, dividend-paying stocks with solid performance and growth potential.

[wns]

Good company.

Almost bought some when they were $1.50 last year.

Wishing I had. Nevermind.

[tommy]

Glad I wasn't the only one who made money out of DEX, though I sold out a while ago...

Share price has stagnated for the past few months http://bigcharts.marketwatch.com/int...w.x=0&draw.y=0

Kimberly Clark contract didn't spike any interest which was surprising, perhaps because everyone is chasing the resources sector these days and few people are interested in boring but solid logistics firms like DEX
[:o)]

A good stock to accumulate on any weakness

[tommy]

DEX ready to gain momentum?

http://bigcharts.marketwatch.com/int...w.x=0&draw.y=0

Acquisition still not factored into DEX share price:
Announcement: Dexion acquires NZ office storage equipment manufacturer


Dexion Limited, Australia�fs leading storage solutions and integrated systems supplier, today announced it has entered an agreement to acquire the business of Audeo Group Limited, a New Zealand commercial office storage manufacturer, for NZ$13.5 million on a debt free basis.

Audeo was established in 1921 and operates through two divisions Precision and Optim. Precision is the number one brand for commercial office storage and workstations in New Zealand. Optim provides project management services for office fit-out, particularly to government and larger organisations. The business employs 140 people. The company has annual sales of NZ$32m and in the 12 months to 31st March 2007 made a profit (EBIT) of NZ$2.1m.

Dexion expects to complete the purchase of Audeo, effective 1st August 2007. The price is subject to a net asset adjustment upon the finalisation of the completion of accounts.

Managing Director of Dexion Limited, Mr Peter Farmakis, said �gAudeo complements the recent purchase of Elite in Australia and provides Dexion with a meaningful presence in the commercial workspace market that we can learn and leverage from. There are many longer term synergies to be derived on both the revenue and cost side for both businesses.�h

The purchase of Audeo is the sixth acquisition undertaken by Dexion since the company listed in April 2005.

Dexion Limited will announce its half year result to 30th June 2007 on 13th August 2007.

[tommy]

Acquisition! Yay!

EBIT of RMB 7 million is just over AUD1 million, so that should be added to the bottom line. Together with the NZ acquisition, DEX will add more than 3 million in terms of EBIT, yet this has not been reflected in its share price. Madness!! FY2006 full-year EBIT was 13 million, so that extra 3 million accounts for almost 25% increase. Current PE is 15, market cap is 186 million. Still undervalued, if you do the maths (DYOR!).


26th July 2007

Announcement: Dexion Expansion in the People�fs Republic of China


Dexion Limited is Australia�fs leading integrated storage and automated systems provider, and today it announced that it has entered into an agreement to acquire 100% of the business of Shanghai Xiao Bao Storage Systems Equipment Co Ltd, for RMB 22 million (approx. $3.5m) on a debt-free basis.

Xiao Bao was established in 1992 and has built a strong customer base. It manufactures steel pallet racking and shelving for industry and retail.

Xiao Bao employs a team of about 150 people. In the 12 months to December 2006, Xiao Bao reported revenues of RMB 52 million and EBIT of RMB 7 million.

Dexion expects to complete the acquisition of Xiao Bao by 1st November 2007, after which the -business will be renamed Dexion China. The purchase is subject to completion of due diligence, finalisation of legal contracts and regulatory approvals.

Dexion�fs Managing Director, Peter Farmakis, said �gDexion is increasingly an international business, and the purchase of Xiao Bao complements Dexion�fs existing manufacturing and sales facilities in Asia and the Middle East. Further, it facilitates Dexion�fs strategy of creating manufacturing centres of excellence in strategic locations around Asia Pacific to ensure its customers enjoy consistency of quality at the most competitive prices.�h

The purchase of Xiao Bao is the seventh acquisition undertaken by Dexion since the company listed in April 2005.

Dexion Limited will announce its half-year result to 30th June 2007 on 13th August 2007.

[mamos]

Hi Tommy,

What do you think they will report for the HY?

How much of that $3m EBIT will be recognised in the CY07 results? Is it the total amount despite the acquisitions only occurring partly throughout the year.

Do you have any concern about the level of debt?

I agree that the fundamentals for logistics are strong espeically in Asia / Middle East

[tommy]

Hi mamos,

I believe DEX will not recognize the revenue from the new acquisitions this half year, but expect them to do so in the second half.

Debt is high indeed, so they might do a placement again in the near future if they want to continue their acquisition drive? mmm... let's wait and see.

That said, PE still looks reasonable considering their growth profile and the nature of the industry in which it operates, especially considering the management's decision to expand into China.

Personally I think upward pressure on the share price is building albeit on low volumes
http://bigcharts.marketwatch.com/int...w.x=0&draw.y=0

and confirmation of its profit target being met will blow the lid off.

Nice defensive play with plenty of room for growth IMHO. I was hoping for it to fall a bit but the share price didn't budge at all during the market downturn (bummer!)
_____________________

31st July 2007

Announcement: Dexion Acquires Logistics ConsultancyAnnouncement: Consultancy


Dexion Limited, Australia�fs leading storage solutions and integrated systems supplier, today announced it has entered an agreement to acquire the business of Darroch Consulting Limited, a consultancy specialising in the distribution of products through the entire supply chain, for $1.75 million.

The company was established in 1992 and has grown and developed into a well established and respected brand in its field throughout Australia and New Zealand. The business employs 8 people and is based in Auckland.

The major consultancy activities of the company include:
- Distribution centre and warehouse design
- Design of fully integrated material handling systems
- Selection and installation of warehouse management software
- Supply chain management projects

Dexion expects to complete the purchase of Darroch Consulting, effective 1st September 2007. The company will continue to operate under its current brand name, Darroch Consulting Limited.

Managing Director of Dexion Limited, Mr Peter Farmakis, said �gDarroch Consulting brings to the Group a team of high quality engineering based consultants with a commercial and strategic vision.�h

The purchase of Darroch Consulting is the eighth acquisition undertaken by Dexion since the company listed in April 2005.

Yours faithfully
T. Clayton
Company Secretary Dexion Limited
ABN 92 105 330 041
23 Tattersall Road, Kings Park NSW 2148
T: +61 2 9830 5000 F: +91 2 9830 5165
www.dexion.com.au

[mamos]

Hi Tommy,

Yeah I saw that acquisition too. I like the profile of their acquisitions fit in well with the existing company.

The debt level is the only things that concerns me. I would much prefer if it was debt free as then it could leverage its balance sheet for further acquisitions at no dilution to SH's.