Good morning!

After what feels like a manic week, it's nice to have a Friday that isn't bulging with news flow.

Following on from my comments yesterday on US markets, Facebook finished down 19% and is now trading at a forward P/E ratio 21x (using Stocko numbers). That's low enough to get me interested. So I'm tempted to have a dabble.

The NASDAQ fell by 1.4% yesterday, and is up by 26% over the past year (according to Bloomberg). So the end of the world has not arrived yet, despite all the scary headlines!

Today we have:

Scientific Digital Imaging (LON:SDI)

  • Share price: 44.55p (+10%)
  • No. of shares: 90 million
  • Market cap: £40 million

Final Results

This is an acquisition group making niche scientific products.

I last covered it in January, at the interim results statement.

At the time, I said it looked fairly valued. The share price has gone on to increase by an additional 50% since then! It's making fresh all-time highs today.

My concerns have centred around SDI's increasing share count. The pace at which the share count was increasing made it extremely difficult to predict the future of the company and the likely returns for existing shareholders, in my view.

However, it has been suggested that growth in the share count is going to slow down now, and that future strategy could be more along the lines of Judges Scientific (LON:JDG) (i.e. using some debt from HSBC and internally generated cash flows to fund deals, rather than relying primarily on new equity).

Let's now take a look at these results:

  • revenue increases from £10.7 million to £14.5 million. 31% of the revenue growth is organic, so by my calculations the organic revenue growth is £1.2 million.
  • gross margin improves to c. 66% (SDI has been collecting companies that have a supplier/customer relationship, so this is unsurprising)
  • operating profit nearly doubles to £1.8 million, or £2.1 million before one-off costs and share-based…

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