Densitron Tech. Share Discussion Threads

[interceptor2] 05/12/2011 15:57

Thanks Norbert Colon

A club well worth gate crashing imv.

ic2...

[norbert colon] 05/12/2011 15:50

Welcome to the club IC2

[interceptor2] 05/12/2011 09:58

After watching these since August and much research, I decided to buy an initial holding today.

What is there not to like about DSN, they have a strong balance sheet with £3.5m net cash, strong growth forecasts with a rolling PEG of 0.15 (future Zulu stock)

They pay a decent dividend and have a wide geographic spread, with untapped prospects in India and China. Plus the trading statement last month was very confident.

ic2...

[lcd interest] 26/11/2011 09:43

Interesting newss opening the factory in India. How many will they employ?

[woodcot] 19/11/2011 20:45

Stock to Watch: Densitron Technologies
By Edmond Jackson | Fri, 11/11/2011 - 00:00

This article is for information and discussion purposes only and does not form a recommendation to invest or otherwise. The value of an investment may fall. The investments referred to in this article may not be suitable for all investors, and if in doubt, an investor should seek advice from a qualified investment adviser.

With markets falling amid eurozone chaos, don't bury your head in the sand. The crisis may weigh over shares for a while but should ultimately prove a useful opportunity to accumulate - so it's worth being alert now, for firms showing ability to prosper in challenged times.

Densitron Technologies (DSN), an AIM-listed developer of electronic displays, is at an interesting stage with management saying in a 9 November update that it is on track not only to achieve expectations for 2011, but also "the remaining two years of the company's challenging three-year growth plan. The company's order book remains strong enabling management to be optimistic about the first quarter of 2012."

This is quite a remarkable claim to the future that the market is understandably taking with a pinch of salt - the shares have since risen just 0.5p to 11p - although if you are too cynical then you rarely seize value. Every recession has a few emerging firms that prosper, with technology change being a key vein.

Find out how you can make a healthy return from cutting-edge firms in our guide to investing in technology.

A forward price-earnings multiple (P/E) possibly as low as five times and dividend yield approaching 8% - that is, if forecasts are realistic - makes it look as if the market is pricing in a good extent of the economic risks and exacting a high yield by keeping the share price lower than it could be.

I would take care for various reasons. It is relatively easy to show attractive P/E and yield numbers when profits are growing from a small base below £1 million; Densitron derives over half its revenue from the UK and continental Europe; and the company has not been immune to previous recessions. While information display systems are now ingrained to modern life, they still represent capital investment which is liable to be affected in a downturn.

More positively, the company now looks stronger after a chequered history involving various top management changes, having disposed of loss makers; touch screen displays are among the growth opportunities; and all but trading-related debt has been eliminated.

At 11p the shares are in the middle of their 4p to 15.5p range in recent years, relative to a net asset value (NAV) just under 6p a share - based on the end-June 2011 balance sheet. The NAV has fallen from over 10p a share following the disposal of an interest in a Taiwanese displays business, involving a payout of 4p a share in cash along with a 1p special dividend, last May. So despite the optimistic trading outlook, the shares have had this aspect of downside protection removed, which puts more emphasis on trusting forecasts.

Company REFS shows Westhouse Securities, Densitron's broker, projecting growth in normalised pre-tax profit from 0.6 million to £1.28 million this year and £1.8 million in 2012, doubling earnings per share this year, then a 33% advance in 2012, implying a forward price-earnings multiple of about six times. Even if the dividend was to grow by 500% this year and 33% next, it would still be covered 2.5 times by forecast earnings. Good going, despite the small base.

It would be more comforting were there independent forecasts, however brokers are unlikely to make the effort for a £7 million company with no major UK institutional shareholders disclosed. 30% of the equity is owned by Peter Gyllenhammer, the Swedish activist investor who has a good overall track record of buying into UK small cap turnaround situations, and being patient. He has done well from the total 5p-a-share special payo

[woodcot] 19/11/2011 20:44

Why has ths thread been removed from it normal place?

Densitron issues encouraging update
09/11/2011 Nick Britton

[woodcot] 16/11/2011 00:34

Why has ths thread been removed from it normal place?

[woodcot] 14/11/2011 00:12

Densitron issues encouraging update
09/11/2011 Nick Britton

[woodcot] 14/11/2011 00:09

Stock to Watch: Densitron Technologies
By Edmond Jackson | Fri, 11/11/2011 - 00:00

This article is for information and discussion purposes only and does not form a recommendation to invest or otherwise. The value of an investment may fall. The investments referred to in this article may not be suitable for all investors, and if in doubt, an investor should seek advice from a qualified investment adviser.

With markets falling amid eurozone chaos, don't bury your head in the sand. The crisis may weigh over shares for a while but should ultimately prove a useful opportunity to accumulate - so it's worth being alert now, for firms showing ability to prosper in challenged times.

Densitron Technologies (DSN), an AIM-listed developer of electronic displays, is at an interesting stage with management saying in a 9 November update that it is on track not only to achieve expectations for 2011, but also "the remaining two years of the company's challenging three-year growth plan. The company's order book remains strong enabling management to be optimistic about the first quarter of 2012."

This is quite a remarkable claim to the future that the market is understandably taking with a pinch of salt - the shares have since risen just 0.5p to 11p - although if you are too cynical then you rarely seize value. Every recession has a few emerging firms that prosper, with technology change being a key vein.

Find out how you can make a healthy return from cutting-edge firms in our guide to investing in technology.

A forward price-earnings multiple (P/E) possibly as low as five times and dividend yield approaching 8% - that is, if forecasts are realistic - makes it look as if the market is pricing in a good extent of the economic risks and exacting a high yield by keeping the share price lower than it could be.

I would take care for various reasons. It is relatively easy to show attractive P/E and yield numbers when profits are growing from a small base below £1 million; Densitron derives over half its revenue from the UK and continental Europe; and the company has not been immune to previous recessions. While information display systems are now ingrained to modern life, they still represent capital investment which is liable to be affected in a downturn.

More positively, the company now looks stronger after a chequered history involving various top management changes, having disposed of loss makers; touch screen displays are among the growth opportunities; and all but trading-related debt has been eliminated.

At 11p the shares are in the middle of their 4p to 15.5p range in recent years, relative to a net asset value (NAV) just under 6p a share - based on the end-June 2011 balance sheet. The NAV has fallen from over 10p a share following the disposal of an interest in a Taiwanese displays business, involving a payout of 4p a share in cash along with a 1p special dividend, last May. So despite the optimistic trading outlook, the shares have had this aspect of downside protection removed, which puts more emphasis on trusting forecasts.

Company REFS shows Westhouse Securities, Densitron's broker, projecting growth in normalised pre-tax profit from 0.6 million to £1.28 million this year and £1.8 million in 2012, doubling earnings per share this year, then a 33% advance in 2012, implying a forward price-earnings multiple of about six times. Even if the dividend was to grow by 500% this year and 33% next, it would still be covered 2.5 times by forecast earnings. Good going, despite the small base.

It would be more comforting were there independent forecasts, however brokers are unlikely to make the effort for a £7 million company with no major UK institutional shareholders disclosed. 30% of the equity is owned by Peter Gyllenhammer, the Swedish activist investor who has a good overall track record of buying into UK small cap turnaround situations, and being patient. He has done well from the total 5p-a-share special payo

[valhamos] 10/11/2011 13:03

Not sure of your logic; a company that grows whatever the economic outlook attracts a share price premium over others that are merely cyclical

[lcd interest] 10/11/2011 09:43

even if the comapny continues to grow, the global economic outlook will prevent the share price increasingly dramatically, surely..

you might have to wait 10 years

[woodcot] 09/11/2011 23:46

Valhamos, spot on, broker forecast regarding dividend are .006p this year, .002p already paid. 2012 forecast is .008p.

This on my average share price of 2.5p is a fantastic yield, plus sooner or later I can see the share price heading for 20p

[valhamos] 09/11/2011 20:45

heartylaugh

Not sure of the correlation between a sub two pence eps and the size of my holding. Surely the key thing is the relationship between the eps and the share price giving a prospective P/E of 5.5 as well as the growth in eps year on year. My view is that this gives an idea of the impact of a possible re-rating of this stock in the months ahead which has been underlined by today's statement. Such a re-rating would be of interest to any holder regardless of the size of his holding.

But since you asked, I have 300k

[investopia] 09/11/2011 13:47

It's polite to show how big yours is, first, heartylaugh!

[heartylaugh] 09/11/2011 13:22

Valhamos, are you prepared to disclose the size of your holding?

[valhamos] 09/11/2011 12:51

Took the opportunity to add first thing, in effect ploughing back the dividends received earlier in the year. The company seems to be brimming with confidence and looks cheap based on forecasts for this year (eps 1.48p) and next (eps 1.97p).

[investopia] 09/11/2011 11:50

Agreed. This is the Gyllenhammar side at the top of its game, I reckon.

[clocktower] 09/11/2011 09:59

The board have done a first class job for investors and look set to continue with positive statements like they have issued today. I expect this will return to new ground before long.

[investopia] 09/11/2011 09:50

Yep, it's all good. Holding.

[owenski] 09/11/2011 08:47

Still holding here, good statement, ditto Mouse.

[battlebus2] 09/11/2011 08:08

Bought a few on the back off that statement, looks way undervalued imv.

[michaelmouse] 09/11/2011 08:04

Woodcot - Yes, it's an excellent trading statement with short and medium term growth story still in tact. Pays a very respectable and rapidly increasing dividend. I'm happy to hold, add and be patient. True value will come out eventually.

Michael.

[norbert colon] 15/10/2011 10:34

Having researched this company I have finally bought in at 11p. It has all the metrics of a great company: high gross profit margin, low debt, cash on balance sheet, low depreciation / interest charges and pays a divi etc.

I am not 100% sure about competitors and would be pleased if anyone has done any research on their main competition.

Thanks Nobby