For those that read Markets Live, you'll note my commentary about revenues and over-valuations on Dialight (LSE: DIA). I've been short now for give or take 4 months. Its the type of company that had no basis to be valued anywhere near the £400M Market Cap it was, or 1200 pence.
So Dialight PLC Trading Update 08th January 2014 for today comes as no surprise with net of £7M cash, burning around 660K a month so far on the previous year. With the update they clearly state EBITDA of around £14M. So we're looking at around 315 pence per share, or thereabouts as the target or Five times earnings.
One question I have is, which surprised me, their November update being positive, Dialight Interim Management Statement 07th November 2013 (IMS) albeit cash was £1m and that's increased to £7M. I have a suspicion this is based on selling down stock and not restocking...but the next set of results will confirm this. Reading through the IMS you'll note that DIA were reliant on the Q4 trading as their model is weighted towards this. This has not occured, furthermore, their staffing has doubled in December 2013. Admittedly they've recouped their cash from inventory but with higher costs and reduced revenues....hmmm
Atb Fraser
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