Sdi Share Discussion Threads

[dan_the_epic] 11/5/2023 07:16

Wake up and smell the coffee.

FY24 PROFIT WARNING

Finncap have cut their 2024 forecast to only 7.3p and this is on 24x p/e and it's going to get absolutely SMOKED today

-20% on the day quite possible

[hastings] 11/5/2023 07:12

TU out with revenue ahead of broker forecasts, adj profit in-line. Further acquisitions remain on the agenda and looking at the year now in play revenues expected to be ahead of 2023.

[arregius] 03/5/2023 07:08

Tu should be out soon?

[worldwidet] 19/4/2023 16:05

The CEO and a former manager apparently see a good time to exercise share options...

Neither the CEO nor any other executive has bought shares with his own money. On the contrary, they are consistently selling and looking to get rid of their share options.

Mike is a smart guy and brings his hard earned money to the sidelines.

Mike has my utmost appreciation!

He has built a very great company. But a great company is not a great investment at all times.



"RNS Number : 7903W

SDI Group PLC

19 April 2023

SDI Group plc

("SDI", "SDI Group", the "Company", or the "Group")

Exercise of Share Options, Director/PDMR Shareholding and Total Voting Rights

SDI Group plc, the AIM quoted group focused on the design and manufacture of scientific and technology products for use in digital imaging and sensing and control applications, announces that it has issued and allotted a total of 272,868 new ordinary shares of 1 penny each in the capital of the Company ("Ordinary Shares") following an exercise of a number of options.

SDI has been notified that Mike Creedon, Chief Executive Officer, has exercised 178,872 of approved share options at a price of 24.5 pence. Following the exercise and Admission, Mike Creedon will hold 351,372 shares, representing 0.34% of the ordinary shares held. A further 93,996 share options have been exercised by a former employee of the Group.

Application has been made to the London Stock Exchange for the 272,868 new Ordinary Shares to be admitted to trading on AIM ("Admission") and it is expected that Admission will become effective and trading will commence at 8.00 a.m. on or around 26 April 2023.

Following Admission, the total number of Ordinary Shares in issue will be 104,050,044 and the total number of voting rights will therefore be 104,050,044. This figure may be used by shareholders as the denominator for the calculations by which they will determine if they are required to notify their interest in, or a change to their interest in, the share capital of the Company under the FCA's Disclosure Guidance and Transparency Rules."

[worldwidet] 19/4/2023 09:56

@Arregius ... and a sack of rice has just fallen over in china...

[arregius] 19/4/2023 07:23

Atik cameras exhibiting in yokohama

[rivaldo] 14/4/2023 10:25

Progressive Equity have a now almost historic FCF per share of 7.3p to 30/4/23 (affected by working capital build up to address component shortages).

With the unwinding of working capital requirements, they have an FCF per share for this coming year of 11.6p.

That's a current year multiple of only 14.8, which compares rather well with JDG's forward multiple of 30 as quoted above by WorldwideT. Even on the historic multiple SDI is still much better value.

[worldwidet] 14/4/2023 09:23

JDG fwdFCF 20,1mio = 30x fwd FCF Multiple
SDI fwdFCF 5,8 mio = 29x fwd FCF Multiple


However, JDG pays a dividend which they increase constantly and strongly.

In addition, JDG has positioned itself strongly and the management has proven itself over the years and holds a large portion of shares.

JDG is financially more robustly positioned and has stable FCF generation.

At prices around 120p, SDI could be a good entry point to counter the structural problems and the risk of recession with an adequate margin of safety.


this will not end well -->

[rivaldo] 14/4/2023 08:12

Nice £118,000 buy at 167p reported this morning from late yesterday partly explains yesterday's rise.

Worth noting that JDG are on a current year P/E of 26 - now almost 50% above SDI's current year multiple.

[steeplejack] 13/4/2023 12:28

Some fair comments.Inevitably,the pace of growth for all serial acquirers slows.BTR,for example,made a sizeable acquisition in Thomas Tilling to maintain momentum.Hanson acquired Beazer amongst others and Melrose bought GKN.The question is whether SDI makes a quantum leap and buys big.I'm not sure that SDI has the management structure.A sizeable acquisition might prove to be a reverse takeover of sorts.Ultimately,i think that the likes of JDG (thought of highly by Mike C.) might take SDI over.As for the current rating,i think it probably reflects the tougher road ahead.Recession?The jury's out.The IMF seem to think that slowing global growth will usher back lower interest rates.Though the road ahead is clearly more demanding.im not sure its as tough as you suggest.

[nchanning] 13/4/2023 11:40

Buddy , if SDI were to grow its net profit of £10.8m at 28% a year in 10 years time it would be earning £127m a year net profit and we can all retire to a Caribbean island . A modest target of 5% organic growth and 10% through acquisitions would see SDI earning £43 million a year in 10 years time .We already have the perfect comparator in Judges Scientific which has exceeded this growth rate comfortably to double the size of SDI using a virtually identical model in the same industry

[worldwidet] 13/4/2023 11:14

I do not see any relevant risk for SDI in the fact that Mike will eventually retire. Mike is a very smart guy and I trust him to find a worthy successor. It could even be a great opportunity for SDI if Mike were to retire as CEO in the next 5 years and become Chairman of SDI, leaving the operational business to a CEO who is willing to think bigger.

Mike has done great things at SDI and what I write should in no way diminish his achievements!

However, SDI faces very significant structural challenges that roll ups and serial acquirers inevitably bring when they get bigger.

SDI's organic growth has slowed massively in recent years. The extreme growth has mainly been supported by the special factors of Covid in combination with some good smaller acquisitions.

Now, however, SDI is struggling to increase FCF strongly enough because organic growth is cooling off too much and there is too little liquidity available to turn the M&A hamster wheel faster.

With what liquidity should SDI make 6-8 acquisitions per year to keep M&A growth at 205 and how can SDI integrate all the companies with the existing structures into the group to get organic growth back into the high single digits?

When interest rates are close to zero, as they have been in recent years, and companies can obtain credit very cheaply and consumers are in a spending mood due to cheap money, the economy and companies can grow well.

But the general conditions have changed by 180 degrees.

Companies pay interest rates of 5-6% and consumers sometimes no longer get loans at all or only at very high conditions.

The highly liquid bond markets have priced in a deep recession for the next 8-16 months, which I personally think is very likely.

SDI's organic growth has already been severely curtailed over the last 3 years in a well performing economy and SDI is struggling to generate free cash flow.

I think in a recession, when companies massively cut back on capital expenditure and consumption collapses, SDI will experience even bigger problems in FCF generation, which will have a very negative impact on M&A opportunities and thus M&A growth.

SDI is dependent on an ever faster turning M&A hamster wheel and I do not currently see the structures and the financial framework to turn this M&A hamster wheel faster in order to be able to maintain the growth target of ~28% p.a. announced by management, which is currently expected by investors at prices around 160-180p.

It remains exciting. But I see a strong recession coming at a price of 160-180p and that is not priced in.

My personal opinion.

[steeplejack] 13/4/2023 09:44

Mike Creedon is 62 and i think it unlikely he would leave SDI for another company after some 13 years of hard graft.The board has been strengthened by the appointment of Ami Sharma as CFO.He was previously at Ultra Electronics,a very well run company.At some stage,Mike Creedon might contemplate retirement.Thereagain,the original Melrose team ie David Roper etc didn't go til 70.

[tkamp] 12/4/2023 15:44

SDIs dependence on Mike definitely is a weakness and him holding little stock in the company compounds that concern. IMO his potential leaving of the company at some point is the biggest risk I see for SDI

[buffetteer] 12/4/2023 15:31

Munger & Terry Smith say companies tend to be worth their return on capital over time . SDI’s is lower than normal… currently at 22% .
22x suggests we’re cheap on under 18

[steeplejack] 12/4/2023 13:54

Excellent note.Definitely worth a read.Well balanced viewpoint.I like the insights into management.Mike C. comes over as a very likeable,down to earth guy but clearly he is primarily responsible for a highly successful acquisition policy over the last decade.Despite his modesty that the group would be able to motor on without him,the essence of the group is his skill in identifying and integrating acquisitions.It isn't unusual that one man is so key in serial acquiring groups,examples are BTR's Owen Green,Norman Ireland or Hanson's James Hanson,Gordon White.So,sorry Mike but if you fell under a bus,SDI would drop significantly!The stock looks fairly valued around 160-180p

[gdjs100] 12/4/2023 10:09

It's not unduly critical. It's a good description of the company, followed by an attempt at a DCF calculation which are pretty useless in the real world.

[worldwidet] 12/4/2023 09:53

A very detailed but also somewhat more critical analysis of SDI.


SDI Group plc - Deep Dive

[hastings] 07/4/2023 06:36

Happy Easter all, next update from the company will be sometime in first two weeks of next month.

[rivaldo] 17/3/2023 10:28

Per post 1804 the benefits from the government's new and additional funding/tax breaks in the Budget accrue to SDI's existing and potential customer base, particularly around Cambridge, and thereby back to SDI (rather than specifically directly to SDI itself - I suspect WorldwideT has rather misunderstood the point).

More coverage here:



"The chancellor also announced ambitions for the UK to become a “life sciences superpower,” which included the announcement of an enhanced credit that SMEs who spend 40% of their expenditure on research and development can claim a credit worth £27 for every £100 they spend.

Louise Ward, partner at Charles Russell Speechlys, who works with a number of businesses in life sciences, said: "Labelled by Jeremy Hunt as the “largest life sciences sector in Europe” and a sector that received more inward investment than any other last year, Mr Hunt unveiled a number of measures that could assist in the making the Government’s dream of the UK being a Science Superpower a reality.

“New investment zones to be situated in proximity to universities, already a favoured model for life sciences clusters, could open up new areas of the UK to this burgeoning sector. The new R&D tax credits scheme will be welcomed by small and medium sized companies. Additionally, a pledge to reform the regulation and approval of medicines, could see rapid approval for companies whose products have already gone through the US or European system and quickly open the UK as a new market.”

[worldwidet] 16/3/2023 19:05

Rivaldo:"Excellent news for SDI in yesterday's Budget, particularly since they're based around Cambridge:"

"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."


loss-making companies ....

Rivaldo and the ... Excellent news for SDI ....

We will see how excellent the next 1-2 years will be for SDI and the companies in Europe.

[rivaldo] 16/3/2023 10:40

Excellent news for SDI in yesterday's Budget, particularly since they're based around Cambridge:





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."

[worldwidet] 15/3/2023 10:32

bulls... are you really sure you are in a new bull market?