Sdi Share Discussion Threads

[kemche] 22/1/2024 11:38

Excellent research mortality. Thanks.

[mortal1ty] 22/1/2024 11:37

FYI in balance sheet distressed scenarios, and in this market, I would suggest 5x EBITDA is likely where it trades on downgraded numbers (if they come).

So, 6.4m EBITDA -> 5x, implies an EV of c. £33m. Take off the £16m net-debt, and you get to a market-cap of £17m.

I am trying to do you all a favour here....

[mortal1ty] 22/1/2024 11:34

I think someone mentioned high gross margins. They are c. 60%. Net-debt to EBITDA now is 1.6x.

If the company got to 2.5x net-debt to EBITDA this business is effectively breaching covenants, and the banks could take ownership.

I think this would only require a £6m miss in revenue given the high gross margins. That is a 10% miss on sales?

Maths -> 10% sales = £6.4m. 6.4m * 0.6 = £3.6m EBITDA hit. That pushes EBITDA down to £6.4m -> 2.5x net-debt to ebitda.

In the nicest possible way holders.... you should really get out now.

[mortal1ty] 22/1/2024 10:58

These shares are going to absolutely crater. I am talking about possibly bankruptcy and rescue rights issue. Seen this so many times before. I honestly would bet my house that this blows up.

Aggressive acquisition strategies + rising debt + management selling shares + downturn in trading + failing to integrate acquisitions properly -> management leaving mess for someone else to sort out.

£13.2m net-debt at the half year. They bought peak sensors for £2.4m. That pushes it up to £16m roughly.

EBITDA of £5m for the HY -> 1.6x geared. Balance sheet becomes a concern above 2x typically.

So basically one more profit warning away from major balance sheet stress. CEO gone.

So next profit warning will be rising debt, falling profits, major panic. Shares half.

[steeplejack] 22/1/2024 08:27

No interest here now.If the CEO steps down unexpectedly its a sensible idea to update on trading or people will suspect the worst.

[isa1m] 22/1/2024 08:24

Not sure I understand. Good news, I think, could have happened sooner.

[worldwidet] 22/1/2024 07:45

The captain leaves the sinking ship.

The way shareholders are treated here is shameful.

[isa1m] 11/12/2023 17:25

Well, the definition of gross margin is a matter of taste, I think. I don't disagree with SDI's definition, but I do dispute that 63% is excellent (given that definition), either for chip shops or for scientific instrument manufacturers. And I do think increasing that margin should be a focus of management, rather than being happy that it held.

[nchanning] 08/12/2023 09:45

Madam that's the definition of gross margin , not including fixed costs . For a manufacturing company 63% is excellent . Restaurants typically have high gross margins and high fixed costs ..

[bookbroker] 08/12/2023 09:34

Is Ken Ford still a big holder here?

[isa1m] 08/12/2023 09:17

@NChanning Google advises that the profit margin of french fries is around 75%.
Like chip shops, SDI does not include labour and overheads within gross margin - fair enough, but flattering. Excluding the lost camera sales at 60%, other gross margins declined.

[my retirement fund] 07/12/2023 21:24

Are they bust yet ?

[isa1m] 07/12/2023 17:48

Wheels have fallen off.
Creedon declined to participate in token ("homeopathic"!) share purchases.
Look forward to watching him provide an enthusiastic case for continuing to take a salary tomorrow.

[nchanning] 07/12/2023 16:37

Disappointing update , those high gross margins come back to bite you when you fall a little short on revenue . But we're probably already in a recession and destocking has been a widespread issue so it's not unreasonable to think that 5p EPS is well below potential and there is a lot of scope to bounce back . 63% gross margins is excellent for a bunch of chip shops and will hopefully produce very positive operational gearing in the rebound

[worldwidet] 07/12/2023 13:46

And again, homeopathic purchases by the managers.
For me, these are desperate attempts to signalise stability.

Trust in the management has been lost. Confirming an outlook only to cut it massively just two months later is a clear sign to me.

Or when you confirm an outlook / figures and then shortly afterwards announce massive write-downs (probably forced by the auditors - my opinion without knowing it).

In addition, sloppy RNS publication with incorrect data which then have to be corrected later in another RNS. All this says a lot about the way managers work!



Just as clear as the massive sales by management before the collapse of the share price

The COO buys shares for probably less than a month's salary. Does that look like conviction or should it be more tactical buying?

These small micro purchases are irrelevant. My opinion

This is relevant:

% of common shares held after purchase

Ken Ford 0.87%.

Stephen Brown 0.01 %.

Amitabh Sharma 0.03 %.




Is this what conviction looks like in your own company?





As a note:

Cavendish still forecast GBP 8.3m for FY24 in the analysis of 8 August 2023. 3 months later in the analysis of 7 November 2023 only an FCF FY24 of GBP 7m (-15%). In the current analysis of 7 December 2023, i.e. one month later, the same analysts forecast FCF FY24 of only GBP 3.4 million (-50%).

Make up your own mind about this!
Data without guarantee. Check the figures for yourself.





I have nothing more to write here and am taking SDI off my watch list. No matter where the price goes, this company is not investable for me. So I have nothing more to contribute here. Good luck to all.

[gdjs100] 07/12/2023 08:51

I don't have a position, before you start casting aspersions

[worldwidet] 07/12/2023 08:38

Don't question me, question the credibility of executives who sell massive amounts of shares and have no desire to be invested in the company. Executives who confirm an outlook about 2 months ago that they massively cut a short time later.

Ask yourself whether these executives really have their business under control because the coming recession will demand everything from them.

Do you think SDI management has the overview and the skills to steer the company through a dynamic economic downturn lasting several years?

how blind did you have to be not to see this coming? when the auditors force management to make massive write-downs, the surprise among the bulls will be great again. I put 1 and 1 together. The acquisitions were far too expensive and if they collapse organically, massive write-downs will have to be made!

I wish you good luck.

My personal opinion, for which you are of course welcome to hate me. But there's really nothing more for me to say here!

[gdjs100] 07/12/2023 08:31

Wondered when you'd show up.

[worldwidet] 07/12/2023 08:07

So now we have reached the phase of profit warnings and downward forecast adjustments, as I have been expecting for months. The next phase will be a massive write-down of the value of the overly expensive acquisitions.

FCF will continue to collapse massively and acquisitions will no longer be possible. Organic growth will turn into organic shrinkage and M&A growth will come to a complete standstill.

50-60p will possibly provide an entry point when the fog clears and the recession has washed the corpses out of the cellar (write-offs have been made and it becomes clear how valuable the SDI business really is).

Just my personal opinion but I seem to have been right for over a year.

[hastings] 07/12/2023 07:58

Warnings are always unwelcome, but it happens unfortunately, particularly in a tough economic climate. I seem to recall even Judges having previously been down that path.

[our haven] 07/12/2023 07:54

Based on the results, agree that we will be looking at a markdown this morning. The market is bound to be disappointed, much like myself.I will hold as there is a small bit of light at the end of the tunnel.

[rivaldo] 07/12/2023 07:34

Well, H1 results are pretty mediocre and the outlook sees destocking, hopefully temporary, causing a downgrade for this year.

Cavendish now see 5.7p EPS this year, rising to 7.5p EPS next year. They've reduced their target price to 175p (from 200p).

Cash generated by operations increased nicely to £3.3m and net debt is stable, so there's still plenty of headroom for acquisitions, with one already added post H1 and more "under review" so perhaps coming to fruition soon.

Probably to be marked down this morning, but looking at 7.5p EPS going forward, with further earnings-enhancing acquisitions likely, the multiple isn't particularly expensive at today's starting price of 108p.

[hastings] 07/12/2023 07:26

Very disappointing to see the warning this morning after such a recent in-line update.I suspect the market will be somewhat unforgiving today!

[rivaldo] 04/12/2023 11:41

Interims will be out on Dec 7th per today's RNS, with an Investor Meet the next day.

Good to see no caveats, so we should be able to expect results at least in line with expectations as previously confirmed in the AGM update on 29th September.