SDI Group plc
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Description
SDl Group specialises in the design and manufacture of niche analytical technology products for use within digital imaging and sensing and control applications across life sciences, healthcare, astronomy, precision optics, measurement instrumentation, clean room and art conservation markets. The group operates a well-established buy and build strategy, with organic growth supplemented by earnings accretive acquisitions of complementary businesses that have established reputations in global markets.
Our view
SDI Group historically funded acquisitions largely through issuing equity. However, management prefers to acquire using internal funding and the group has mostly self-funded its acquisitions since 2018. Growing free cash generation should enable SDI Group to fund future acquisitions from internal cash flows and increase the group’s borrowing capacity, reducing the likelihood of the group issuing equity to maintain its successful acquisition strategy.
Recent Research
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Financial Summary
Year end: April (£m unless shown)
| 2019 | 2020 | 2021 | 2022 | 2023 | |
|---|---|---|---|---|---|
| Revenue | 17.4 | 24.5 | 32.6 | 35.3 | 37.7 |
| Adj EBITDA | 4.0 | 6.0 | 7.7 | 7.8 | 8.5 |
| Fully Adj PBT | 3.0 | 4.3 | 5.8 | 5.9 | 6.8 |
| Fully Adj EPS (p) | 2.8 | 3.4 | 4.8 | 4.8 | 5.4 |
Profit & Loss
Year end: April (£m unless shown)
| 2019 | 2020 | 2021 | 2022 | 2023 | |
|---|---|---|---|---|---|
| Revenue | 17.4 | 24.5 | 32.6 | 35.3 | 37.7 |
| Adj EBITDA | 4.0 | 6.0 | 7.7 | 7.8 | 8.5 |
| Adj EBIT | 3.1 | 4.6 | 6.3 | 6.2 | 6.7 |
| Reported PBT | 2.1 | 3.3 | 4.0 | 4.6 | 5.4 |
| Fully Adj PBT | 3.0 | 4.3 | 5.8 | 5.9 | 6.8 |
| NOPAT | 3.6 | 5.8 | 5.3 | 5.2 | 5.6 |
| Reported EPS (p) | 2.0 | 2.6 | 3.2 | 3.8 | 4.3 |
| Fully Adj EPS (p) | 2.8 | 3.4 | 4.8 | 4.81 | 5.43 |
| Dividend per share (p) | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 |
Cash Flow & Balance Sheet
Year end: April (£m unless shown)
| 2019 | 2020 | 2021 | 2022 | 2023 | |
|---|---|---|---|---|---|
| Operating cash flow | 3.6 | 5.2 | 6.3 | 7.3 | 8.0 |
| Free Cash flow | 2.2 | 3.0 | 4.0 | 5.4 | 5.9 |
| FCF per share (p) | 2.4 | 3.1 | 4.1 | 5.5 | 6.0 |
| Acquisitions | (6.8) | (5.2) | (5.8) | 0.0 | 0.0 |
| Disposals | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 |
| Shares issued | 2.4 | 0.1 | 0.3 | 0.0 | 0.0 |
| Net cash flow | (2.2) | (5.4) | (1.1) | 4.6 | 5.5 |
| Overdrafts / borrowings | (4.1) | (9.3) | (9.3) | (5.3) | (1.3) |
| Cash & equivalents | 2.5 | 5.3 | 3.3 | 4.2 | 5.6 |
| Net (Debt)/Cash | (1.6) | (4.0) | (6.0) | (1.1) | 4.2 |
Nav & Returns
Year end: April (£m unless shown)
| 2019 | 2020 | 2021 | 2022 | 2023 | |
|---|---|---|---|---|---|
| Net asset value | 17.1 | 20.1 | 24.0 | 28.3 | 33.3 |
| NAV/share (p) | 17.6 | 20.6 | 24.5 | 28.8 | 33.9 |
| Net Tangible Asset Value | 0.8 | 3.9 | 3.6 | 3.7 | 3.6 |
| NTAV/share (p) | 0.8 | 4.0 | 3.7 | 3.8 | 3.6 |
| Average equity | 14.8 | 18.6 | 22.0 | 26.2 | 30.8 |
| Post-tax ROE (%) | 20.4% | 23.4% | 26.5% | 22.7% | 22.0% |
Metrics
Year end: April (£m unless shown)
| 2019 | 2020 | 2021 | 2022 | 2023 | |
|---|---|---|---|---|---|
| Revenue growth | 40.6% | 32.9% | 8.3% | 7.0% | |
| Adj EBITDA growth | 51.5% | 28.7% | 1.0% | 9.2% | |
| Adj EBIT growth | 48.4% | 36.7% | (1.2%) | 8.2% | |
| Adj PBT growth | 43.7% | 34.2% | 1.9% | 13.8% | |
| Adj EPS growth | 21.2% | 38.6% | 1.1% | 12.9% | |
| Dividend growth | N/A | N/A | N/A | N/A | |
| Adj EBIT margins | 18.8% | 19.3% | 17.6% | 17.8% |