Dialight Share Discussion Threads

[jeffian] 24/11/2014 20:13

OK. I think I’ve managed to work out what is going on –
As at 31/12/12 they had net cash of £15m.
During 2013 they generated £6.3m cash from operations and £1.3m from disposals (add to the original £15m and that gives you £23.2m) and spent –
£9.3m capital expenditure (of which £4.4m was product development)
£2.2m tax
£4.6m dividend
Leaves £7.1m cash reported H1/14

During H1/14 they generated £7.3m operating cash (add to £7.1m existing gives £14.4m) and spent –
£3.2m working capital
£1.8m tax
£3.3m capital expenditure (of which £1.5m was for product development)
£3.1m dividend
Leaves £3m cash (£2.8m after exchange rate adjustments)

We are told in the last IMS that there was net debt of £4.2m.

The fact is, they’ve burned the best part of £40m cash over the 22 months from 31/12/12 to 31/10/14. That’s around £1.8m per month. Yes, a proportion of that is capital expenditure but, even then, a slug of that is for ‘product development’ which is presumably an ongoing requirement if they want to keep ahead of developments in the lighting market and the more they grow, the more ‘working capital’ they need. If they carry on at this rate, it seems to me that they’ve got to add around £20m/year of operating cash to existing income to sustain this level of cashflow. Something has to give.

[beeezzz] 24/11/2014 17:19

LOok out halfwit is back....I'll set the dog on you hvs if you continue.

Tom... Couldn't agree more...well run company that continues to innovate and keeps up with modern technology like the cloud.

[hvs] 24/11/2014 17:00

It dont look good.

[tompion] 24/11/2014 16:54

People misunderstand, or pretend to misunderstand, that DIA makes high-end LED lighting assemblies and not 5p LEDs. These products are for a highly regulated market where they are market leaders. Thus the striking year on year growth in this area of their business which should drive the share price over next few years.

[beeezzz] 24/11/2014 15:40

Do you lot actually read the RNS or not it states quite clearly where the funds have gone. Moving on up!!!!!!!!!!!

"The Group's net debt at the end of October was GBP4.2m compared with GBP1m of net cash at the same stage in 2013. The absorption of cash reflects higher working capital due to our growth in Lighting and the increased investment highlighted above."

I think the Ford deal is quite significant, will be a good sales example of the companies superb products.

IC..... I thought you were an idiot and you have proved me right.

[extrap] 24/11/2014 12:59

24-Nov-14 Canaccord Genuity Buy target 1,100.00p

[jeffian] 24/11/2014 10:19

Yes, the two points you mention are indeed "the increased investment highlighted above" but to go from +£15m cash to a £25m loan facility is a hell of an investment! It would be nice to understand when or if these levels of capital expenditure will end.

[pugugly] 24/11/2014 10:13

jeffian:> Have not tried to analyse in detail but a I have always assumed that a significant chunk must have gone on setting up their own sales network in the USA after they parted company with their distributor plus (from memory)did they not set up a new factory in Mexico or the Far East but cannot find details during a quick search of their new web-site ?

Having sold all but a token quantity had dropped below instant radar awareness.

[jeffian] 24/11/2014 09:40

PUGUGLY,

Like you, I usually look at eps, eps growth and P/E ratios in my investment decisions, but I also look at cashflows. I've been caught out in the past by companies which appear profitable but are not! What do you think about my post #2753? Up until 2012, the company was not only profitable and growing, but it also generated plenty of cash and had net cash on the balance sheet. That has reversed to the point where they are net debtors and that trend appear to be continuing. Their explanation that "The absorption of cash reflects higher working capital due to our growth in Lighting and the increased investment highlighted above" rings a bit hollow to me. Can you explain to me, if they're so profitable, where's the cash going?

[pugugly] 24/11/2014 09:20

Having sold most of holding at higher prices considered repuchase of some but based on Investec's note forward p/e still to high given competitive nature of market place and product life (so long we may all (at least the older amongst us) be dead by the time the customer has to replace) [eps in decimals of £ at price of 720p

Historic eps 2013 UNDERLYING 0.316
Estimated eps 2014…………………… 0.373
Estimated eps 2015…………………… 0.485
Forward pe ratio…2014R30;……230;.. 19.3
Forward pe ratio…2015R30;……230;.. 14.8
Historic p/e 2013 22.7


Downside target - thoughts ??

[itchycrack] 24/11/2014 08:44

Added to my short on that spike first thing this morning.
Back to 700p already! Some support should be around this level, otherwise down to 580p as next stop. All IMHO of course :-)

[texaspete2] 22/11/2014 20:54

Jeff, it is a concern, i only got as far as looking at half year results, admin expenses increased by 1.4m, 8m draw down on banking facility and gross profit increased less than sales, not great, see why the shorters have done well

[hvs] 22/11/2014 18:37

It dont look good.

[jeffian] 22/11/2014 16:04

When you 2 have stopped bickering, I wonder if anyone can shed any light on the point I raised in 2745? Where is the cash going? I have tried to track cashflows from 2011 to date. The business used to be highly cash-generative peaking at £15m net cash at the end of 2012. Since then it has gone continuously downhill to the extent that they had net debt of £4.2m at the end of October and that trend looks to continue. Indefinitely? Looking at each period, there are huge figures of several £m coming out of cash each period, described simply as "Capital expenditure" and "capitalised development costs". This is not sustainable in the long term. At some point, they either have to increase gross profit to cover this capital expenditure, or cut it. Can anyone more accountancy-minded tell me what's going on?

[itchycrack] 22/11/2014 13:26

I used to think you had some minor intelligence but obviously not.
You always get the hump when you're wrong, never like to admit someone else might actually be right. Can't be wasting time with losers - FILTERED!

[beeezzz] 22/11/2014 12:03

I couldn't care less what you get up to for the simple reason you don't know if I have taken profit so good luck with your DOH!!!!!!!!!!!!!!!!!

Your very quick to criticize when they don't agree with your opinion on cbuy.. which is why your a complete idiot.

[itchycrack] 21/11/2014 21:47

Stupid comment to make as you don't know my actual positions DOH!
That 350% has taken a beating then from 1400p if that's all you have left! Most professionals would have had a trailing stop to lock in profits, but looks like you've given most of them back, and the're dropping daily, probably zilch by the time these stop falling! Oh dear!

[beeezzz] 21/11/2014 17:11

If you like charts so much just take a look at the upside.....OOOOOOOO very illiquid stock so little selling or buying has an exaggerated reaction on SP, wait and see:::: say good bye to your profits here very soon.

I'm up over 350% here and over 150% on Cbuy so who's making the money...not you.

[itchycrack] 21/11/2014 16:58

Yes, but by much less than my short here! :-) :-)
Predicted 700p and almost did it in a week, chart looking very weak now, to be honest can easily sub 600p or lower, but hey, you just keep on buying :-)

[beeezzz] 21/11/2014 16:03

Who says I'm loosing money....I expect your investment in Cbuy is in the red...LOL

Not sure how long this deal has been in the pipeline but no announcement...worth looking thou.

[itchycrack] 21/11/2014 14:56

That's fine beeezzz - you keep loosing money and I'll keeping making it! Thanks for transferring your cash to me, very kind of you!

[jeffian] 21/11/2014 14:31

One of the (very!) few I've called right. I was in from the Roxboro days and got out at the top when it looked very expensive and growth stalled. Getting interested again now as growth seems to have been restored - profits up 22% at H1 and forecasts same growth for full year (37.2p eps) and 48.66p in 2015. The one thing that concerns me is cashflow. They had £15m net cash at the end of 2012, £7.1m net cash at the end of 2013, at 30/6/14 it stood at £2.8m and in the latest IMS they say they have....net debt of £4.2m. What's that all about?!

[itchycrack] 21/11/2014 13:14

WTF are you on about!!!!! Seriously!!!! Get real!!!!
Classic lines "I'm here for the long term", "big buyer in the background"
Mr Market is up big, DIA is down, Mr Market is trying to tell you something!
PMSL!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!! :-) :-)

[beeezzz] 21/11/2014 12:47

Looks like MM's picking up cheap stock, stop losses being triggered IMO....large buyer in background.