Why SDI Ltd Jumped Higher Today

At the time of writing, shares of SDI Ltd [ASX:SDI] are up by 20%, now trading for 60 cents per share. SDI Ltd is Australia’s largest dental manufacturer.

Why did SDI Ltd shares do this?

The company announced its results for the 12 months ending 30 June 2018 (FY2018). Profit after tax was up 1.5% to $5.7m from $5.6m in FY2017.

What now for SDI Ltd?

Here were the numbers:

SDI financial 2018 results
Source: SDI Limited

Sales jumped by 0.6% to $74.5 million over the year. That said, earnings before interest, tax, depreciation and amortisation (EBITDA) fell by 2.8% to $12.1 million. That’s not a great result. To make matters worse, the EBITDA margin remains relatively low at roughly 16%.

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Ms Samantha Cheetham, Chief Executive Officer, commented on the result:

‘We are pleased to return to growth and are particularly encouraged by the strong performance in our non-amalgam products.

‘Our efficiency gains in our manufacturing processes and the continued focus on product development are driving operational improvements and more favourable product mix respectively. We are positioning the company well as we continue to compete in the global dental market’.

The balance sheet improved over the year, jumping by $2.5 million. The company also reduced debt by $1.9 million.

Net cash (cash less debt) stands at $6 million.

Dividend growth SDI

Source: SDI Limited

With free cash flow positive and debt covered by the cash position, dividends are now on the rise. The company is currently developing four new products, which it should launch by March 2019. That could generate a lot of shareholder value in the short, medium and long term ― especially if free cash flow and dividends push higher.

Jason Stevenson,
Resources Analyst, Markets & Money

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Jason Stevenson is Markets & Money’s resource analyst. He shares over a decade’s worth of investing and trading experience across resource stocks and commodity futures and options. He originally studied accounting and finance at Curtin University, where he was awarded a first-class honours degree. His professional background stems across high-net-worth, top tier accounting (corporate finance, tax and auditing), and sell-side equities research. Before joining the team at Markets and Money, Jason worked at boutique firms which advised fund managers and high-net-worth clients on where to invest. Whether it’s gold, crude oil, copper or an obscure metal like vanadium, you can rely on an in-depth analysis in Markets and Money. Jason also brings you extensive macro, political and geopolitical analysis from around the world. He leaves no stone unturned when it comes to telling the truth. Jason is also the lead analyst of Gold Stock Trader, a premium service for investors serious about precious metal stocks. Websites and financial e-letters Jason writes for:


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