Thank you for your well considered comments.
The timeframe and the CAGR really matters. While SDI looks like a 'steady boring compounder', the growth rates vary substantially depending on the starting point and end point. I was surprised by this actually. So if I use EPS as you have, I prefer to use FY20's EPS of 2.85c as a base because of Covid impacted FY21 and LTM. Looking at the returns on that basis:
- 11% since '06;
- 24% since '10;
- 40% since '11;
- 25% since '15;
- 12% since '16;
- 9% since '17; and
- -21% since '18
The other challenge I had with valuing SDI was the free cash flow. I prefer this to earnings anyway. It's been growing decently over a long period, and I am more than happy to remove the dips from currency / crisis issues. But you can also see a big discrepancy between cash from operations and free cash flow - there's a lot of depreciation to cover, which the earnings don't illuminate. On this basis, the FCF yield is around 7% to my mind.
The net equity you mention is around $80m. Or put another way, the tangible book value per share is around 60c - that's a long way from today's share price. And if you consider the past 15years growth from 23c in 2006, it's been growing at 6.6% CAGR. Personally, I doubt that this will increase to ~$1.65 by FY23.
I think the 6-7% CAGR from here is the historic average, plus ~3% dividend yield. There could be some share buy backs or new acquisitions - they have to do something with the increasing cash balance eventually. And from a risk perspective, I think to the downside it's about margin compression, and to the upside it's about FOREX improvements and new product development.
I wrote more about it on FinTwit and there was some good discussion around it. I definitely think this is not a bad investment, and just trying to get my head around a good entry point and a fair estimate of future returns. Really appreciate your feedback and inputs.
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Last
93.0¢ |
Change
0.000(0.00%) |
Mkt cap ! $110.5M |
Open | High | Low | Value | Volume |
93.0¢ | 93.0¢ | 93.0¢ | $42.91K | 46.14K |
Buyers (Bids)
No. | Vol. | Price($) |
---|---|---|
1 | 5973 | 93.5¢ |
Sellers (Offers)
Price($) | Vol. | No. |
---|---|---|
96.5¢ | 3 | 1 |
View Market Depth
No. | Vol. | Price($) |
---|---|---|
1 | 5973 | 0.935 |
1 | 12199 | 0.930 |
1 | 116 | 0.925 |
2 | 13000 | 0.920 |
1 | 6146 | 0.915 |
Price($) | Vol. | No. |
---|---|---|
0.970 | 6203 | 1 |
0.980 | 6000 | 1 |
0.990 | 6999 | 3 |
1.000 | 10344 | 1 |
1.010 | 108150 | 2 |
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