Monday 25 February 2013

Dialight (DIA.L)

Although I invest mainly for income, from time to time I come across interesting smaller companies like Dialight which I bought into for my sipp around 3 years ago.

Increasingly, the main focus of the company is Signals/Illumination which addresses the increasing demands for energy efficient lighting solutions through the use of high brightness LEDs (light emitting diodes) and utilisation of a number of associated technologies. Areas of business include Traffic and Rail Signals, Obstruction Lights and Solid State Lighting products.

The LEDs' 90% energy efficiency over conventional lighting means the cost is recuperated in two years or less, on an industrial light guaranteed to last at least five years.
Here's a link to the company website -

They have today announced 2012 full year results which appear to have been well received as the share price has risen around 2%. Revenues increased 12% to £115m, and profits increased from £15.5m to £19.7m - the board are confident to propose a 35% increase in dividend from 10p to 13.5p and have more than doubled the 6.6p paid in 2009. At 1185p, the shares will yield just over 1% - definitely a 'jam tomorrow' share for income seekers.

Here's a link to a summary of the results - dialight preliminary results

The lighting segment of the business is growing very quickly - this year, sales increased from £26m to over £45m and contribution to profits increased from £2m last year to £8.6m in 2012.

To quote from the results:
"Since early 2009, when Dialight's first industrial light was introduced, the strategy has been to focus on sizeable niche markets with defensible barriers to entry. These deliver strong returns for customers through the application of the most current LED technology. Our focus has been to provide products which address the heavy industrial market and in particular those applications which demand the use of lighting which is rated for use in hazardous locations.

The value that Dialight's products bring to this market applies as well to the installed base of industrial lighting as it does to brand new installations giving an addressable market size in the tens of billions of pounds globally. Our sales of £45.5m are tiny in relation to the available market and, bearing in mind that Dialight is the pioneer of LED lighting for industrial applications, the opportunity for superior growth exists for years to come."

I like the progress and will continue to hold for the long term as the prospects appear very bright (excuse the pun!)

This is a top 5 holding for fund manager, Mark Slater who runs MFM Slater Growth Fund (ranked top performing fund over 3 years out of 300 funds in 2012).

As ever, DYOR....

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