Ann: Acquisition of Australian Petro Chemical Storage, page-370

Hi guys,

Some ideas from brief Redox report reading.

1. DGL has end customer penetration for crop portection and other chemical products. In general end price only goes up when cost is high, and not going down much when cost is lower. Lower material cost is a plus in my opinion. For contract manufacturing side, maybe DGL only makes a certain margin on it, so there is not much different to higher or lower raw material price. I remember Simon said DGL doesn't stock materials for future price, the inventories are all customer orders.

2. Ocean freight is high, I personally believe DGL will benefit from this as they are a logistics company.

3. Volume has increased, which is a good sign for full capacity manfuacturing and logisitcs.

4. Redox mentioned the material price is improving on the 2nd half, so the gross profit margin for own branded products may be lower than 1H.

I don't see red flags on DGL from Redox report, and I can see why Redox valuation is much higher. Thier ROIC is just much better than DGL at this moment, even they are on so little debts. DGL is investing heavy for the future. Hopefully Simon's strategies bring us fortunes.

Please share thoughts.