Ann: Trading Update, page-43

Good on you for buying the stock at such a low price and reaping the rewards now. I wish I could go back in time and have done the same. Unfortunately, many people, including myself, are not in the same situation as you. It’s easier to achieve 50% earnings growth from $1 million to $1.5 million, but growth tends to slow as the company gets bigger. And no company can grow its earnings forever.

To make my point, with the current PE around 28x, for DTL to achieve a 20% earnings growth for the next two years, they would need to generate roughly $52 million in profit in FY25, and then $62 million in FY26. Is it possible? Absolutely. But the question is, what are the chances? And how much are you willing to pay for this potential growth?

Past earnings and achievements don’t necessarily justify future growth. At least, that seems to be the market’s view right now, as reflected in the recent price drop.