Sdi Share Discussion Threads

[superadams] 13/6/2021 10:36

Backwoods - is the site in the Bridgewater area ??

[backwoodsman] 12/6/2021 19:39

I drive past Monmouth's new site every week. I think a billboard with their name has only recently been put up. I might take a photo next time and see if I can post it here.

[rivaldo] 11/6/2021 09:08

Cheers Hastings, excellent write-up as always.

Great to see Danske Bank declaring a 3%+ interest here too. Certainly an indication of SDI's fast-increasing heft and reputation.

[fillspectre] 11/6/2021 07:40

Thanks Hastings. Despite the recent achievement of £2 share price still a long term hold for me. My best performing share. Fils

[petewy] 10/6/2021 16:31

Good read Hastings. Thnks

[hastings] 10/6/2021 15:33

Write up that May be of interest Https://martinflitton1.wixsite.com/privatepunter/post/sdi-group-catching-up-10-06-21

[sweetunicorn] 10/6/2021 13:11

SDI is increasingly getting the attention of strong and long-term investors on a global investor level. Another step to reduce the small cap valuation discount compared to the peer group.

Danske Bank

#MultipleExpansion

RNS

SDI Group PLC - Holding(s) in Company

[sweetunicorn] 10/6/2021 07:40

It is a very theoretical assumption because the markets tend to be inefficient for SC in general and for serial acquirers in particular in the young phase. But I personally think prices around or above 300p 8/22 are realistic. I personally anticipate a strong FY21 and expect growth over the broad growth factors for FY22 of 25-30%. In addition, I see potential arising from further moderate multiple expansion as the market prices out the SC discount and SDI's valuation aligns with the peer group mean.

But I don't really like these short-term thoughts on SDI, which is why I will hold back here. I am very long-term oriented and consider SDI a very long-term investment.

There is a very large potential via the smart buy and build strategy.

SDI has a portfolio of companies oriented towards less cyclical sectors. There are strong cross-selling effects and scalability. Regional expansion and expansion into adjacent sectors, which can be implemented via add-on or platform acquisitions, provide further strong growth opportunities.

SDI generates a significant proportion of its revenue from recurring regular sales.

The stable and constantly increasing CAshflows are also predominantly achieved in a broadly diversified manner across various sectors and regions and in rather less cyclical sectors, which should ensure that the CAshflows remain consistently high over a full economic cycle.

Serial acquirers, especially in the early and still very dynamic growth phase in which the broad growth factors are in expansion (change YoY %), are real compounding monsters. With high profitability (ROICE over 20%), the strongly rising FCF can always be reinvested in high-quality acquisitions and thus further accelerate the compounding rate and thus growth.

The problem that many investors have is that conventional valuation methods have problems valuing the potential of future acquisitions and the resulting crosselling and scalability potential of such powerful, predominantly M&A-driven growth machines (organic growth at SDI is nevertheless extremely robust and high at ~8%).

I think we will continue to see 1-2 acquisitions/FY at SDI in the long term.

However, these are my personal assumptions. They only show a brief outline of my valuation.

I am heavily invested in SDI. Always check the information yourself. Everything I write is NOT an investment recommendation!

[fillspectre] 09/6/2021 23:21

Sweetunicorn in post 1140 you wrote "....this results in a share price potential of ~70% for the next 14 months....". Does this mean currently you are working on the assumption of a target price of around 320p to 340p by end of August 2022? Fils

[sweetunicorn] 09/6/2021 12:17

Personally, I think HAlma is definitely valued very high and the risk/return ratio is therefore not adequate for an investment. A great company is not a great investment at any price.

However, when I look at SDI as a whole and compare the future potential with the strong growth factors to the average peer group valuation, I find that SDI is still very attractively valued.

However, to recognise SDI's great long-term potential, it is necessary to study the business model - company/subsidiary, management/people and target markets in detail and to consider the stage in the company's growth cycle. I think SDI, as an extremely potent serial acquirer/compounder, will still create very very high shareholder value.

I have written numerous posts on SDI on my Twitter account.

[trident5] 09/6/2021 12:06

Maybe Halma is over-priced?
There's always an assumption with these comparisons that it's the lower priced company that isn't being valued correctly.

[sweetunicorn] 09/6/2021 11:53

SDI can be compared well with Halma because of the very similar structures... let's do a quick evaluation comparison on a forward PBT basis. ...

SDI is trading at 21x fwd PBT (profit before tax) (based on the very conservative forecast of SDI management from the last TU with forecast FY22 PBT 8.7m GBP). Whereas I personally believe SDI to have a forward growth factor of 25%-30%.

Assuming 15% profit growth for Halma over the next 12 months, which I personally find very sporting given the lack of acquisitions/M&A growth and 5y PBT growth of ~10% p.a.), this gives Halma an estimated FY22 pre-tax profit/PBT of ~GBP307m, which at the current share price means Halma is trading at 33 times fwd PBT at about half the growth factor of SDI!

Personally, I think the huge potential of SDI is still misunderstood by the market because investors regularly fail to recognise cross-selling effects, scalability and opportunities for regional expansion as well as the impact of future acquisitions in such high-performance serial acquirers.

An intelligent buy and build strategy offers almost unlimited upside growth opportunities through regional and sectoral expansion.

No investment recommendation! Data and figures must always be checked by the investor!
Note: I am very heavily invested in SDI! ... and therefore probably extremely biased ;-)

[steeplejack] 08/6/2021 09:23

Very useful post Sweetunicorn.Cash flow criteria is best when it comes to evaluating an acquisitive company like SDI and your numbers support the recent share price rise.

[sweetunicorn] 08/6/2021 08:13

The market is taking steps to reduce the strong valuation discount to the peer group. SDI has more than twice the average growth across the broad growth factors of the peer average, but is still trading at a significant valuation discount to FCF BAsis. Serial acquirers should always be valued on an FCF basis. Currently, the market is trading SDi at a Fwd FCF factor of GBP 5.5m for FY21. I expect a FCF FY21 of GBP 7m. This would mean that SDI is currently trading at MC/FCF 28x (peer group average is 36x). If I assume 35% FCF growth for FY22, which is very conservative, and factor out the COVID support for FY22 (SDI 5y FCF growth ~100%), I arrive at a fwd MC/FCF for FY22 of 21x at current prices. If one assumes that the market will grant SDI a peer average multiple as it matures, this results in a share price potential of ~70% for the next 14 months until the publication of the FY22 figures. In the long term, SDI management expects organic growth of ~8% and additional M&A growth of ~20%. I assume long-term growth across the broad growth drivers of ~25% p.a.

I have written a few things here about SDi...



Posts are not investment recommendation. Check information yourself.

[rivaldo] 08/6/2021 08:10

Probably a combination of both, but much more so the former rather than the latter imo.

[arregius] 08/6/2021 07:17

Is SDI re rating or market anticipating another acquisition?

[az4hr] 07/6/2021 17:02

hoping £2 can act as a nice support

[johndoe23] 07/6/2021 12:02

200p now being printed

[petewy] 07/6/2021 10:49

Is there any ceiling to this share or is the sky the limit.

[arregius] 07/6/2021 10:29

2£ today?

[jonut] 07/6/2021 09:59

I note that SDI has broken the pattern of falling from the open until mid day and rising after 1pm. Seems to be the case for the last week or so; but not today.

[our haven] 07/6/2021 09:54

Very encouraging from where it left off Friday. I cannot find any specific reason so I will just have to sit back and enjoy the ride. :)

[hastings] 07/6/2021 09:41

Nice to see the shares heading higher this morning. Had a nice catch up with Synoptics last week and heard more on how that business is going. I'll pop a write up later in the week, but suffice to say, it's another part of SDI that's going well.

[bigbigdave] 07/6/2021 09:32

Looks like a breakout and ATH to me :o)

[rivaldo] 07/6/2021 08:31

Fillspectre, I genuinely have no idea why there was specifically such a sudden outbreak of buying on Friday pm - and it seems to be continuing now, with SDI up another 2.5p and buying coming in at the full 194p offer price.