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Cavendish's post-update research hasn't been posted here, so...
They've reiterated their 175p target price.
They also reiterate their forecasts of historic 5.8p EPS and 7.4p EPS for the current year, i.e a P/E of 8.7 at 64.5p.
They summarise:
"Year-end update – Trading in-line with a stronger H2
The group’s year-end update provides good reassurance, with a strong H2 performance resulting in revenue and profit both ahead of expectations. After recent challenges, trading is responding to management action. A strong cash performance meant net debt held level, despite £3.3m spent on acquisitions. SDI is in a strong financial position to pursue its buy & build strategy. No significant change to forecasts, with potential upside from any accretive deals. The shares offer excellent value, with significant scope for a rerating as investor confidence is progressively restored."
"Valuation.
With recent challenges now responding well to management action, the confirmation that trading is in line should provide investors with greater confidence. With stronger cash flow, the company has good financial flexibility to pursue its buy & build strategy. The shares currently trade on FY25E P/E of 8.6x, which looks exceptional value in our view, and offers a significant opportunity to rerate as confidence develops that the group is on track with its turnaround, plus the opportunity for any acquisitive activity to result in EPS upgrades.
We maintain our 175p target price, offering substantial upside to current levels, with all its near peer group trading at 20-28x FY2 earnings."
IMO this is the best time to buy this diversified technolgy player before it takes off.
Signs of improvements were flagged up recently.
So better be there at the earliest stage possible.
The new issue of Techinvest this weekend said Buy (with the share price at 71p), concluding:
"Profitability and cash generation from operations improved over the second half of the financial year and that seems to have been a key factor in drawing buyers back to the stock following the trading update. Monmouth and Chell Instruments in particular experienced a strong second half, with the former seeing increased clean room and cabinet sales, the latter reporting improved demand for its DAQ product range. Fraser Anti-Static Techniques also saw a pick up in revenues. Scientific Vacuum Services, as expected, saw a slower period of trading after delivering a large contract in the first half o the year.
With cash generation from operations improving, SDI is now well placed to continue its buy and buid strategy following a sticky period of trading which we feel was due primarily to short-term external factors. The broker consensus forecast for the current year is net profit of £8.85m and earnings per share of 7.35p, giving a prospective P/E of 9.7. That leaves the stock looking good value in our opinion. Buy for recovery."
After reading the latest trading update, and various articles from private punter and the like I've decided to jump back into SDI at a 30% discount to my exit price some time ago. I've been impressed by the new CEO, who has quickly identified problems with the existing businesses and introduced some quick wins to get them back on track. He states he will focus on improving cashflow to pay off debt which I think is important before committing to further acquisitions, unless there is an absolute steal to be had. I was also surprised to see that this years financial targets were still comfortable, as I thought there may be further skeletons the closet. Lets hope for a good year of progress at SDI and getting growth back on track.
SDI have been tipped by City Confidential with a 104p target price in their latest issue:
Https://www.cityconfidential.co.uk/cityconfidential-newsletter-may-2024/
Extracts:
"SDI Group – 71.5p
The recent trading statement from the AIM-quoted designer and manufacturer of scientific and technology products has provided reassurance on the results for the year to 30 April 2024. Although these will not be as good as the previous year, the current financial year should see a return to growth once again and, in our opinion, the share price now offers excellent value.
The shares stand on a relatively modest p/e ratio and although there is no dividend the growth prospects more than make up for this. The share price hit 200p in March 2023 and although we do not expect the shares to rise to that level anytime soon, we do think that a rating of 14x the earnings for the current financial year is
achievable. That sets a share price target of around 104p, an increase of 45% over the current level, thus justifying our recommendation of BUY."
"The trading statement released on 20 May covered the period to 30 April 2024 and confirmed that revenues would be in line with market expectations at around £65.9m. This figure includes a first-time contribution from Peak Sensors (acquired in November 2023) and full year contributions from a couple of businesses acquired in July and October 2022.
The second half of the year saw an improvement in both profitability and cash generation over the first half and this enabled net debt at the year end to be maintained at £13.2m despite the company spending £3.3m on acquisitions during the period. It is pleasing to report that the increase in revenue was seen pretty much across the board although Scientific Vacuum Services did see a fall in revenues after delivering a large contract in the first half of the year.
The company is therefore confident that adjusted pre-tax profit for the year will be in the order of £8.0m, which is pretty much in line with market expectations.
Outlook
The company has always maintained that 2024 was going to be a more difficult year as the effects of overstocking by customers (which had benefited earlier years) began to unravel. However, it is pleasing that despite this impact, the company has continued to do well, remaining profitable and also cash generative. It does seem likely that 2024 will be the low point in the current cycle and that revenues and profits will start to increase from the current year."
"The company’s subsidiaries operate in growing end markets and this obviously provides the potential for future growth. The appointment of Stephen Brown as CEO in January also appears to be having a positive effect as he has considerable experience in the industry having held senior positions in prestigious global product and technology focused businesses. Despite the prospects at the group, the shares stand on a relatively low rating and we therefore rate th
Universal Investment GmbH have declared they have a 4.99% stake in SDI, or 5.22m shares:
Https://uk.advfn.com/stock-market/london/sdi-SDI/share-news/SDI-Group-PLC-Holdings-in-Company/93913454
They must be a new major shareholder, as they don't appear on SDI's major holder list as at 10th April:
Https://sdigroup.com/investors/shareholder-information/
The reason for their declaration is that they fell below 5% due to the shares issued on 3rd April, but I can't see any RNS noting their initial stake of 5% or above? Maybe someone else can.
Interesting to see sector comparator JDG fall by 1000p folowing their trading statement today, due to company-specific issues.
Even despite the fall, JDG are still on a forward P/E of almost 27.7....compared to SDI's of 9.9.
Finncap have reiterated their 175p target price.
They also reiterate their forecasts of historic 5.8p EPS and 7.4p EPS for the current year, i.e a P/E of 9.4.
Progressive Research maintain their forecast of 7.3p EPS this year - a couple of extracts FYI:
"Solid update reflects strong second half
SDI Group’s trading update for the year ended 30 April 2024 is in line with current guidance for FY24, with good momentum heading into FY25. This reflects the hands-on approach under the new CEO, addressing short-term issues that had led to underperformance in some businesses. The underlying portfolio performed well in terms of profitability and cash generation, with improved trading in a number of businesses. The increased cashflow in H2 and significant headroom within its banking facilities leave SDI well placed to continue its buy and build strategy."
"Encouraging start to the year and forecasts maintained for FY25.
Performance was strong in the second half from a number of businesses. Atik Cameras received a large OEM order in November. Monmouth, following internal reorganisation, experienced increased clean room and cabinet sales. Chell Instruments experienced improved demand for its DAQ product range. Fraser Anti-Static also saw a pick-up in revenues. Sales at SVS are inherently lumpy with a slower H2, having delivered a large contract in H1. We leave FY25 estimates unchanged at this stage and look forward to further detail at the July results.
▪ FY24 delivered and strategy on track.
SDI delivered a solid performance in FY24, despite some continued disruption to ordering patterns and the well-flagged end to its large Chinese OEM contract within Atik Cameras. Most importantly, it has continued to do what we expect of it, successfully delivering on its buy and build strategy, coupled with underlying profitable growth and strong cash generation."
Great to see SDI trading nicely in line with expectations, no major surprises, the likes of Monmouth recovering nicely etc.
That confirms 5.8p historic EPS is in the bag. Progressive Research have this morning left their current forecast unchanged at 7.4p EPS.
That's a current year P/E of only 8.6.
Plus there's the prospect of more acquisitions given the following:
"The Group's cash generation from operations improved over the second half which leaves us well placed to continue our buy and build strategy."
One would hope at such a cheap multiple that the recent rally will continue (though there might be some profit-taking by those who bought for short-term gain).
Given 7.4p forecast EPS there's potential for the share price to rally to say 100p as a nice round number for starters.
Already up another 2p today on a quiet Friday to 63p.
Cavendish's forecasts are for historic 5.8p EPS, with a rise to 7.4p EPS in the current year.
Hopefully the trading update will confirm that trading for the year just ended was in line. If the outlook is merely cautiously encouraging too, then there could be a big relief rally given a current year P/E of only 8.5, whereas on such a low multiple any downside should be relatively limited.
Moving up nicely now, rising 3.5p, witha 33,800 share buy just now paying the full 59p offer price - which hopefully implies not much stock around.
Loads of little buys the past few days has given the share price a slight rise...for a massive 62k sell goes thru a few days before TU?
SDI have confirmed on their web site that the trading update will be on the 20th - next Monday.
Which is I suppose mildly encouraging for the optimists here since Monday updates are on the whole more positive than (say) Friday updates!
Plus if anything was materially wrong then SDI would have been obliged to announce something already:
Https://sdigroup.com/investors/financial-calendar/
It wasn't 200p + in a high interest / high inflation environment. The price started tumbling from that high once it become clear inflation was materializing and the business had a fair bit of debt and no cash for acquisitions. It's been on a downturn for a couple of years now. Throw in the lack of director buys and the major forecast misses / write-offs in the last year or so and it's guesswork as to what fair value is here and whether they can get back on track. The next trading update which should be due anytime soon will be telling.
Agree and industrial demand in their key sectors is depressed, so cant see it improving anytime soon. Back to 30's perhaps.
christ this share is an absolute stinker, i knew i should have sold out on the first rns of bgf accumulating shares, given the buying volume it was barely holding the 70s, they were clearly holding it up. absolutely ****ed with an avg buy in at the mid 80s, how the **** this ever did over 200p in a high interest/inflation environment boggles my mind
News of yet more institutional buying.
BGF Investments have now gone above 13% with 14.375m shares. So they've bought another 1.24m shares in the last week and almost 3m shares in the last three weeks:
Https://uk.advfn.com/stock-market/london/sdi-SDI/share-news/SDI-Group-PLC-Holdings-in-Company/93504938
Good to see the CEO buying another 14,000 shares at 71.25p:
Https://uk.advfn.com/stock-market/london/sdi-SDI/share-news/SDI-Group-PLC-Director-PDMR-Shareholding/93500745
BGF Investment Management are still buying. They now own 12.62%, or 13.134m shares - so they've bought another 1.66m shares in just the last two weeks:
Https://uk.advfn.com/stock-market/london/sdi-SDI/share-news/SDI-Group-PLC-Holdings-in-Company/93455058
FYI Octopus AIM VCT2's results this morning had this to say:
"SDI Group disappointed a couple of times over the year due to the end of a contract with Atik cameras, which had been lucrative over the Covid period. However, we are encouraged by the recent change in the management team and the new CEO comes with a wealth of operational experience in the sector."
Completely agree with what you are saying coffee to clarify. By growth I meant showing that the existing businesses can be run profitably and return to organic growth. The last thing SDI need to do right now is more acquisitions IMO. They need to steady the ship, pay down debt and then go again only when they have proven the existing businesses are being run well otherwise it's pointless. Still don't think the SP will get anywhere near £1.20 in the short term though. It's not cheap on current metrics at this price, and if there is any hint of missing the already reduced forecasts then it will get hammered.
Someone just paid 75p afterhours
Plus theres an uncrossing trade for 75p as well.
£1.20 in its sights ...
November 2023 share price £1.20.
December 2023 £1.10
Couple of weeks ago 60p