Not sure if many of you follow PET but would love some input on what puzzles me. Although not perfect comparisons they do somewhat work in the same kind of industry as SDV - water clarification.
Today - PET announced CY2019 Revenue to be 25.1M - with guidance for CY2020 Revenue to be 50-70m. (Of note PET management are somewhat known to over-promise and to then under-deliver.) Also of note is that as a majority of PET's revenue come from projects in China, it's SP and consequently MC has felt the weight of the recent Corona Virus recently. PET current market cap: $420 Million
SDV with their recent two acquisitions of ProSol and Highland Fluid Technology combined with their existing internal operations are now looking at a revenue run rate $40-$45m in CY2020. This albeit is based on the HFT acquisition to achieve its milestone hurdle of $20m USD in CY2020 however it must be achievable based on it being set in the first place. SDV current market cap with diluted HFT shares: $110 Million
Now I know they are not perfectly comparable but what am I missing here? To me it seems Scidev has much better diversification through its multiple verticals with several, global clientele. Also although profit margins are somewhat superior for PET (50% compared to around 30% for SDV) to me this is offset by Scidevs superior growth prospects. Also beneficial to SDV is how difficult it is to disrupt existing solutions in its industry, the fact Illuka signed a 3 year contract with them as well as the sheer amount of trials in their pipeline is a testament to SDV's preferable technology.
From my comparison I see no reason that SDV should not be trading at a $200+ Million valuation just based on what we currently know. Any news of other big successes and even that will look to small.
What am I missing here?
SDV and PET are commonly thrown into the same basket as 'water stocks' but what is the reason for such vastly different valuations?
Also what I think is of value is the difference of management, Utting continues to kick goals whereas PET management seem to be somewhat over-optimistic in their promises.
Would appreciate anyone's input or comparisons of other companies operating in comparable areas.
SDV Price at posting:
79.5¢ Sentiment: Buy Disclosure: Held
A personalised tool to help users track selected stocks. Delivering real-time notifications on price updates, announcements, and performance stats on each to help make informed investment decisions.
(20min delay)