Dialight (DIA) has developed a reputation for building up investors’ hopes and then quickly dashing them. In 2017, poor execution once again ensured that the designer of next-generation LED technology failed to capitalise on rising demand for energy efficient lighting solutions.
Unsurprisingly, new chief Marty Rapp chose to blame Dialight’s latest shortcomings on his predecessor. Under Michael Sutsko, the group hatched a plan to cut costs by outsourcing production of its LED designs to US-listed Sanmina in Mexico. The move prompted a number of delays to customer orders as key materials weren’t placed in time during a period of industry-wide shortages. Sanmina’s inability to handle the extra workload triggered a 4 per cent dip in revenues at constant currencies and a 130 basis point contraction in the gross margin.
Dialight has since taken “aggressive action” to resolve its outsourcing issues, sending a group of its most experienced staff to Sanmina’s site on a full-time basis and transferring more complex product types back to its own facilities in Mexico. Mr Rapp is confident that those measures will improve the group’s performance from the second half of 2018 onwards.
Prior to these figures, Peel Hunt expected 2018 pre-tax profit of £16m, leading to adjusted EPS of 31.6p, up from £9.2m and 18.3p in 2017.
| DIALIGHT (DIA) | ||||
| ORD PRICE: | 594p | MARKET VALUE: | £310m | |
| TOUCH: | 580-594p | 12-MONTH HIGH: | 1,115p | LOW: 500p |
| DIVIDEND YIELD: | nil | PE RATIO: | 199 | |
| NET ASSET VALUE: | 233p* | NET CASH: | £12.8m | |
| Year to 31 Dec | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
| 2013 | 131 | 11.2 | 26.2 | 14.4 |
| 2014 | 160 | 15.5 | 29.4 | 15.0 |
| 2015 | 161 | -3.9 | -6.4 | nil |
| 2016 | 182 | -3.8 | -8.4 | nil |
| 2017 | 181 | 3.0 | 4.8 | nil |
| % change | -1 | - | - | - |
| Ex-div: | na | |||
| Payment: | na | |||
| *Includes intangible assets of £13.9m, or 43p a share | ||||
