These impressive full-year results from
But a closer look at the different business divisions reveals this wide disparity in growth rates. While group-wide revenues rose 12 per cent last year, Dialight saw sales flatline or decline in three out of its four principal markets for lights, including traffic signals, obstruction signals and components divisions. Worse, 2013 isn't expected to get better for those segments. However, weakness here is not a problem as along as Dialight's key industrial lighting division continues to make up for faltering markets elsewhere.
Dialight first entered the hazardous and industrial light market in 2009 and the barriers to entry are relatively limited, but given these applications offer energy costs savings of more than 50 per cent to customers, and guarantee uninterrupted lighting for upto 10 years, robust demand here is unlikely to dim for many years yet. In fact, last year revenues in industrial lighting surged 72 per cent to £45.6m and operating profits more than quadrupled to £8.6m.
Broker Peel Hunt forecasts adjusted EPS of 52.3p in 2013 (from 41.2p in 2012), rising to 63.6p in 2014.
|ORD PRICE:||1,195p||MARKET VALUE:||£385m|
|TOUCH:||1193-1197p||12-MONTH HIGH:||1,249p||LOW: 831p|
|DIVIDEND YIELD:||1.1%||PE RATIO:||28|
|NET ASSET VALUE:||196p*||NET CASH:||£15.0m|
Don't get us wrong - Dialight is a great business with very competent management and we expect profits to keep rising strongly. But, with the shares now trading on a punchy 23 times forward earnings forecasts, and on 19 times 2014 estimates, we think the good news is largely priced in. Hold.
Last IC view: Hold, 1,054p, 24 Jul 2012