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Analyst Research Report Snapshot


Charles Stanley: Dialight (Buy)




Charles Stanley Securities


05 Mar 2014





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Time to act? Recent results were very much as expected, concluding a year that had once been expected to deliver a normalised PBT of £25m. Reasons for the material shortfall are well known and the resulting requirement for caution is reflected in both our and consensus forecasts. However, our sum of the parts analysis now shows the Lighting Division to be trading on prospective PERs of 26.1x, 18.1x and 13.6x. These numbers are based on relatively modest revenue growth rates compared to those of the recent past. Much of the rest of the Group now looks to be an unwelcome distraction and we see pressure mounting for management to focus the Group solely on its high growth industrial and hazardous LED markets, to the benefit of the valuation. In the meantime, the search for a new finance director continues and the Group awaits potentially material new business in its re-configured Obstruction Signal Lighting business. We maintain our Buy recommendation and have raised our price target to 1050p. This reflects the strong growth potential, the still minimal penetration of industrial LEDs, together with Dialight's leading products and market position. We believe it is a good time for management and investors to act.

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