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Don’t think we’ll see FC target of 200p anytime soon unless a takeover occurs. JDG drops ~ 3% today and SDI. Down ~6% !
Whats happned to old CEO thought he was the reason for growth so far here?
For the record Finncap retain their 200p target price today:
"COO appointment
As intimated at the FY 2023 results in early August, the company has announced the forthcoming appointment of Stephen Brown as Chief Operating Officer (COO), who will join the Group on 28 September. He brings a skillset and experience to the company that should provide the company with the additional management bandwidth to enable it to continue to grow through its buy and build strategy. Stephen has an engineering background, having held a number of senior positions with global product and technology focused businesses. Recent roles include: Group COO (non board) at AB Dynamics and CEO & Operating Partner at BP Launchpad, part of BP. Prior to this, he held multiple leadership roles, including (i) Global Vice President at Romax Technology, (ii) Research and Development Director (Technology and Production business unit) at Vestas Wind Systems A/S, (iii) Technical Director at the Industrial Power Group, part of Rolls Royce Holdings plc and prior to this other executive level roles in early-stage growth companies.
No change to forecasts and we reiterate our 200p target price, at which level the stock would trade on FY 2024E EV/EBIT and P/E multiples of 19.5x and 27.9x respectively, falling to 17.5x and 24.7x in FY 2025E; supported in our view by 14% adjusted EPS growth in FY 2025E, a FCF yield of 4.5% (FY 2025E) and the prospect of accretive acquisitions not yet included in the forecasts."
The new COO has a good track record. ABDP has been an unambiguous success post-IPO, and with senior leadership roles at BP, Vestas and Rolls Royce in addition he has a pretty impressive CV:
Https://uk.advfn.com/stock-market/london/sdi-SDI/share-news/SDI-Group-PLC-Board-Appointment/91886378
So it should - min fair value imo £1.50.
Hopefully a sign that the institutional presentations post-results went well.
Great new article by the Private Punter - looks like further acquisitions are on the way:
Https://martinflitton1.wixsite.com/privatepunter/post/sticking-with-sdi-group-10-08-23
It's starting to roll over now. Finally, a great opportunity to buy in (or top up) may be coming!
Whilst some may not agree with Worldwide T/Sweet unicorn on the other board, there were comments which were worthy of a little consideration, after viewing the decline in SP from 150p after recent update to 120p today.
Finncap have retained their 200p target valuation.
They point out that SDI have the capacity to add between £2.5 to £4m EBITDA to the forecast £13.3m EBITDA for this year. This would obviously increase the forecast 7.2p and then 8.1p EPS nicely.
The share price has already now factored in the known headwinds of (1) the cessation of the one-off Atik PCR sales, (2) the increase in C.Tax rates to 25% this year, and (3) interest rate increases, and is now well below the ratings of its comparators and on a big discount which hopefully has minimal downside from here.
There may or may not be more acquisitions imminently, but I'm pretty sure there will be more in the current financial year. I doubt Ken and Mike are the types to take transformational acquisition risks, but I'd be quite happy with further accretive acquisitions with upside such as that achieved by the likes of Atik and Sentek.
Really surprised at the weakness of this share. “Telegraph” punters won’t be happy!
Results are in line with the trading statement guidance at £11.8m PBT and 9.02p EPS.
Above all it's good to see confirmation that "we remain optimistic for the year ahead and we expect to deliver FY24 results in line with expectations."
Forecasts from Progressive this morning are essentially unchanged, reflecting the cessation of the one-off Atik PCR sales, at £9.7m PBT and 7.5p EPS.
There's decent headroom for further acquisitions this year, so the current year P/E of 16.3 will likely reduce somewhat.
Shame about the Monmouth writedown, but that seems to have been turned around/addressed and Monmouth remains profitable.
Organic growth of 6.4% (excluding Atik PCRs) is pretty decent in the current environment. SDI's P/E is far below that of its sector comparators at 122p and is good value in relative terms.
Results confirmed for next Tuesday - good to see an Investor Meet presentation on 11th August too:
Https://uk.advfn.com/stock-market/london/sdi-SDI/share-news/SDI-Group-PLC-Notice-of-Results-and-Investor-Prese/91706472
SDI May now be approaching value at the current SP
Good to see. Hugely undervalued compared to sector comparator JDG and an extremely well run company on its cheapest rating for a long time.
Good to see another institutional investor taking the opportunity to invest at these levels. Vind Equity crossed the threshold on 12th May with 4.35m shares, the day after the update, so were presumably buying/topping up soon afterwards.
There's not much to be found about them online, but they have invested previously in Ideagen and Porvair, so they have form in investing in successful companies:
Https://uk.advfn.com/stock-market/london/sdi-SDI/share-news/SDI-Group-PLC-Holdings-in-Company/91078433
Monet - he may well have.
Then again, the very next post by Steeplejack offers up an alternative view, Take your pick!
Yesterday’s hastily token purchase by CEO was miniscule in comparison with his exercise and sale of options over the past few years and maybe an attempt to shore up the SP prior to selling his remaining shareholding . Growth has stalled and with no dividend there may be attractive investments elsewhere in an era of high inflation and interest rates. Maybe time to revisit when valuation becomes more appealing . WorldwideT/ Sweet unicorn on the other board may have called this one right !
Agreed, the Chairman's comment seemed a bit odd - they'd clearly flagged the OEM sales as one-off so i kind of assumed that meant, well, one-off! Surprised anyone had anything in their forecasts for sales to that customer.
Main thing for me will be to see what second half free cash flow looks like. Been hard to interpret due to advance payments for orders which then reversed, plus inventory build.
As long as organic growth is positive and free cash flow roughly tracks profits then buy and build works well, and in fact compounds over time with higher profits and cash flow leading to larger acquisitions and higher profits and so on.
“ Whilst we have previously highlighted to the market that the Atik PCR OEM sales were of a one off nature, it is disappointing that there are not likely to be any more PCR camera or other product sales to this customer”
I don’t get why the Chairman would say that at this point in time. It almost suggests they were expecting follow on business, even though the market had been told it was one-off related to the pandemic.
Perhaps my interpretation but seemed odd to me.
The year end update is nicely in line with expectations.
The £69m revenues are actually well ahead of Progressive's £66.1m forecast and Finncap's £66.5m, and £11.8m PBT is bang on th average of the two forecasts.
Finncap's new target price is 200p, with 7.3p EPS forecast this coming year reduced due to the Atik PCR camera contract ending.
Good to see supply chain issues being resolved and forecast continued rising revenues despite the finsihing of PCR business, which actually Progressive had already modelled in their forecasts and everyone knew about, so I'm not sure why Finncap were including them at all.
This year should see more acquisitions which are currently unmodelled in forecasts, and I suspect Finncap's forecasts are conservative as they usually are.
SDI's multiple at 175p remains less than JDG's even on the new forecast, so is reasonable in relative terms at that level.
The share price will probably drop somewhat, but SDI remain a quality company and I suspect will announce acquisitions sooner rather than later.
Nice £118,000 buy at 167p reported this morning from late yesterday partly explains yesterday's rise.
Worth noting that sector comparator JDG are on a current year P/E of 26 - now almost 50% above SDI's current year multiple.
Excellent news for SDI in yesterday's Budget, particularly since they're based around Cambridge:
Https://www.standard.co.uk/business/budget-2023-life-sciences-lab-space-jeremy-hunt-b1067705.html
Https://citywire.com/funds-insider/news/spring-budget-hunt-offers-life-sciences-a-hand-after-svb-collapse/a2411884
Extracts:
"According to real estate consultancy CBRE, life sciences firms last year signed for around 800,000 square feet of office and lab space in the golden triangle of London, Oxford and Cambridge. It said conditions are in place for that to increase in 2023."
"The government hopes to boost the UK’s life sciences sector with the offer of tax relief for companies that spend 40% or more of total expenditure on research and development, chancellor Jeremy Hunt said in today’s Budget.
The relief is aimed at high-growth, loss-making companies, mostly based across the UK’s ‘golden triangle’ of Oxford and Cambridge universities and the Crick Institute in London."
"Hunt’s other initiatives announced today include providing an extra £10m in funding over the next two years for the medicines and healthcare products regulatory agency to accelerate patient access to treatments."
"The government also plans to boost the supply of commercial development, in particular lab space, to support the needs of research and development and drive investment into high-value industries across England. It also plans to re-establish a railway line between Oxford and Cambridge and in May, a line between Bedford and Cambridge to boost productivity and innovation."
This morning's givernment announcement of a new Science and Technology Framework includes plenty of funding which should benefit SDI at some point:
Https://www.gov.uk/government/news/plan-to-forge-a-better-britain-through-science-and-technology-unveiled
Some extracts:
"£250 million investment in 3 truly transformational technologies to build on the UK’s global leadership in AI, quantum technologies and engineering biology, so they can help a range of industries tackle the biggest global challenges like climate change and health care. This forms part of our commitment to the 5 technologies within the science and technology framework, which also includes semiconductors and future telecoms"
"up to £50 million to spur co-investment in science from the private sector and philanthropists to drive the discoveries of the future, subject to business cases. The government is already talking to Schmidt Futures, a philanthropic initiative of Eric and Wendy Schmidt, about additional support of up to $20 million as part of this work"
"a £50 million uplift to World Class Labs funding to help research institutes and universities to improve facilities so UK researchers have access to the best labs and equipment they need to keep producing world-class science, opening up entirely new avenues for economic growth and job creation"
a £10 million uplift to the UK Innovation and Science Seed Fund, totalling £50 million, to boost the UK’s next tech and science start-ups who could be the next Apple, Google or Tesla"
SDI are presenting live via Sharesoc in London on March 29th:
Https://www.sharesoc.org/events/sharesoc-growth-company-seminar-london29-march-2023/
A few quick thoughts about Chell Instruments further to SlickMongoose's earlier post about them. Chell should experience a sharp recovery as the aerospace sector gathers steam again. But there's been some interesting recent news flow from Chell which I suspect hasn't been posted here, particularly this first story:
Whats emerging in engineering in 2023?
Https://www.chell.co.uk/news/2023/whats-emerging-in-engineering-in-2023
"Chell in 2023
Here at Chell Instruments, 2022 was an exciting year, supporting engineers with many new projects – and a number previously delayed by the pandemic.
2023 looks set to be another exciting year, with many sectors now back to a new-normal and keen to deliver the engineering innovation the world demands.
We ourselves have a number of key new product launches planned for 2023 and are set to be involved in supporting exciting projects in sectors including aerospace, motorsport and pharmaceuticals."
Chell Instruments help German company trailblaze electric jet aircraft:
Https://www.chell.co.uk/news/2022/chell-instruments-help-german-company-trailblaze-electric-jet-aircraft-
Changes to F1 ground effect rules drive demand for Chell Instruments DAQ range:
Https://www.chell.co.uk/news/2022/changes-to-f1-ground-effect-rules-drive-demand-for-chell-instruments-daq-range-
Chell Instruments highlights of 2022:
Https://www.chell.co.uk/news/2022/chell-instruments-highlights-of-2022
"As you can see, we’ve had a busy and eventful year.
And, next year looks set to be just as exciting and successful with a number of new product launches, exciting projects and key collaborations."