very few better-managed enterprises

Fellow DTL shareholders,

At the risk of sounding cheesy, I am approaching a decade-long love affair between myself and this company.

And it continues to surprise me on the upside...and that has occurred through good economic times and bad, even through global financial crises.

This time the company has forecast a 50% to 60% rise in first half pre-tax profit. Just before the FY2010 final result announcement, I was expecting something like 15% to 20% improvement, and when I saw the 30 June 2010 balance sheet (specifically the dramatic 47% increase in inventories, which is a leading indicator of revenue growth given DTL only takes on equipment after firm receipt of orders from customers...refer previous post entitled "Someday all companies will be made this way" [You see, studying balance sheets in detail, is vitally important!]), I suspected it might be even stronger, maybe even 30% higher, but 50% to 60% has made me once again sit up and marvel and just how well managed this company is.

(Oh, and bear in mind that this current 50% to 60% increase is occurring off a strong prior year figure which, itself, was 16% up on its previous corresponding period and that, in turn, was some 12% up on its pcp...in fact, if you landed on earth today from Mars for the first time and had a look at this company's earnings history you would never be able to tell that the mother of all Global Financial Crises had just taken place! Earnings growth has not missed a single beat.)

Every time the CEO talks, I am always reminded not just how acutely in-touch he is with his business, but also how much he CARES for the company and getting it and its people to excel in everything they do.

Many executives talk about best practice and excellence, but very few achieve them like DTL.

Even after the share price jump since the upgrade, the stock is still not at all overvalued, trading on the following valuation metrics:

FCF/EV = 12.2%
FCF/Mkt Cap = 8.1%
EV/EBITDA = 5.6x
DY = 6.6%
P/E = 11.8x

As he always does, John Grant has cautioned "shareholders against projecting these results into the full year."

But I?ve heard him manage expectations like this many times before...it?s a little trick called "Under-promise-and-Over-deliver". Very few CEO's know how to do it, but Mr Grant is a grand master at it.

For the past decade, this company has grown DPS by a compound average growth rate of 24% pa. And without so much as a single penny's recourse to shareholders. That's a simply amazing accomplishment, one that I have not seen matched by any other ASX listed company.

The wealth creation as a result has been enormous.

I think the company will continue to deliver superior returns to shareholders for many years to come: the management team, the culture, the professionalism, the scalability of its business model, its low capital intensity, the granularity of its customer base, the reliability of its suppliers, and the credentialisation of its industry partners will see to that, in my view.

It's one of those Never-Sell businesses, in my view.
In case you can't tell, I remain somewhat satisfied with my investment in DTL. I'm sure other long-term shareholders will understand and share my feelings.

Cameron