Ann: Trading Update, page-84

I have read the commentary in this thread, and as usual I have enjoyed some interesting and thoughtful contributions from posters like @MarsC @madamswer and Just_a_guy.

My consideration has been whether to add to my position in SDI and average down, or whether there is a better home for my capital elsewhere. There are a few options that I am considering and its always tricky making comparisons and trying to decide which is the best decision.

My calculations for SDI still indicate a valuation in the range of 60-80c even allowing for a drop in earnings and cash flow this year. Ofcourse that analysis is based on the assumption that the negative growth can be turned around in 18/19 and continue positively albeit at a conservatively low rate.

So at the mid 40's I see significant upside, offset by the potential of more downside if Mr Market doesnt like the HY figures - even though they shouldnt surprise now, the market has a habit of forgetting it was warned about an earnings cut and treating the news as a surprise.

That implies it might be wiser to wait and see what happens when the HY results are released in Feb and perhaps then wait until the full year results. Ofcourse, Mr Market can surprise and rerate the business over that time period and an opportunity will have been missed to pick up more at such a discount to value!

I guess I will go away and think a bit more about my other options and see what I can flesh out in my decision journal!