Dialight plc ‘Positive outlook of margin expansion & multiple revenue growth drivers’ says Investec, Scott Cagehin


Dialight plc (LON:DIA), the global leader in sustainable LED lighting for industrial applications, have now published its full year results for the year ended 31 December 2021. DirectorsTalk Managing Director Darren Turgel caught up with Scott Cagehin, Equity Analyst, Industrials at Investec to discuss the news.


1. What are the highlights from the full year 2021 results?
Dialight has reported much improved FY results. We see the key highlights as: high revenue growth (+17% underlying to £131.6m), gross margin expansion (+710bps to 35.7%), and a return to operating profitability (operating profit of £4.5m is a £10.9m swing from FY20). The underlying cash performance is strong and the order book is growing (order intake +24% year-on-year).

2. Looking ahead, why should investors consider Dialight plc?
The outlook is positive in tone. Dialight has made a good start to the year, with order intake ahead of the same period y-o-y and a strong order pipeline. Management expects further strong progress in FY22, driven by revenue growth and improved margins, despite current supply chain and cost inflation headwinds. Looking ahead we identify multiple revenue growth drivers, compounded by its customers’ ESG agendas. Margins should expand on a leaner cost base and the balance sheet is strong (FY22E net debt/EBITDA comfortably <1x).

3. What are your forecasts and valuation for the business?  

We have new forecasts as follows: FY22E – revenues £155.0m (from £145.0m, +6.9%), operating profit £10.0m (unchanged), EPS 20.0p (20.4p, -2.1%) / FY23E – revenues £162.8m (£152.3m, +6.9%), operating profit 14.0m (unchanged), EPS 30.0p (29.8p, +0.5%). The shares trade on a FY23E PE of 9.8x and EV/EBITDA of 5.1x with a FCF yield of 7.1%, we view these valuation multiples to be attractive.

Dialight PLC (LON:DIA) is the world leader in LED industrial lighting technology with millions of LED fixtures installed worldwide.

The company’s LED products are providing the next generation of lighting solutions that deliver reduced energy consumption and create a safer working environment and support its customers’ ESG agendas.

Dialight enable industrial customers operating in demanding environments to reduce their energy costs, maintenance costs, and carbon footprint while maximizing the safety and productivity of their facilities.

From their signature High Bay line to their versatile Linear fixtures, The company offers the largest selection of rugged, cutting edge products to suit virtually any industrial application.

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