Thanks very helpful, in terms of currency tailwinds meant more...

Thanks very helpful, in terms of currency tailwinds meant more in terms of north american sales, ausd usd rates have been a 70-80 cent trading range for 2 years and is currently at the high end of the band but this is still far below parity and they are still not getting any traction in terms of increased revenue in that territory.

@suhm ,

Yes, US sales have tracked pretty flat over the past few years. The US is SDI's legacy amalgam market. Virtually all its sales in the US, until just a few years back, have been from amalgam, so for them to have even held their own their, given amalgam's decline, is not insignificant, I don't believe.

I know that are gaining traction with non-amalgam products in North America; its just we can't see the growth because it is a mere pinky finger relatively to the size of the rest of the body which is atrophying (if you'll pardon the somewhat unfortunate decomposing corpse metaphor).


Good to see that amalgalm is no longer the largest sector but it is still a significant contributor to the bottom line. Seems a bit like telstra and the disappearance of the fixed line revenue. SDI just need some sweetheart NBN equivalent deal. South America could be the rabbit out of the hat if the local distribution alters supply dynamics."

Your Telstra analogy is quite an interesting one; the only difference between Telstra and SDI is that, Telstra's non-Fixed Line businesses, i.e., its new-aged, funky and sexy stuff (NAFASS), namely mobile and broadband, aren't growing, whereby SDI's NAFASS (i.e., non-amalgam) is growing at rates close to double digits in local currency terms. [*]

So, once fixed line earnings for Telstra disappears, what you are left with is a business that doesn't grow, as witnessed by Tesltra's revenues being almost exactly the same as what they were a decade ago, whereas SDI's Revenues are today over 60% higher.


[*] Of course, the laws of maths dictates that, when you have two products, A (a fast growing one) and B (on that is undergoing obsolescence decay), the faster A is growing relative to B contracting, the sooner you get to the point when B no longer matters. So for Telstra, the grinding down of the fixed line business will be a feature of that company's financials for the next decade, but for SDI is a year or two people will be asking, "Amalgam? What's that?"

Unlike most participants in the market who are trying to jag the daily/weekly/monthly little highs and lows of share price charts, I adopt a business owner mindset when it comes to investing in the stock market.

So, when I look at a company like SDI, I think of it in the following context:

Here is a little business that has been around since the 1970s. It has seen economic booms, busts, wars, famines, floods, droughts, all sorts of governments, high A$, low A$, etc. etc. and through all this it has continued to do its thing, year-in, year-out, designing products for people's teeth, manufacturing them, putting them in little packets and boxes and then selling them in Australia and in various other parts of the globe, all the while growing revenues making profits and paying dividends.

Not just that, but when I reflect on what has happened to SDI's Revenue composition, there is something that I find quite remarkable:

About 10 or 15 years ago, virtually all of SDI's revenues would have been derived from the selling of amalgam.

Over that time frame the product went from being the company's core product, to virtually obsolete. Think of that for a second: One day we are selling widget XYZ; ten years later no one wants it any more. That's a pretty big deal, in anyone's books, I'm sure.

If that sort of dramatic change in industry dynamic happened to other companies, I'll wager that the vast majority of them would be in far worse financial shape today, and many would have ceased to exist.

By contrast, SDI's Revenue and NPAT are today almost 3 times higher than they were 15 years ago, despite its main product basically going extinct over that period. And, notably, that has been achieved without recourse to shareholders for a single cent.

Maybe it's just me, but I think that is somewhat of a statement of the kind of animal we are dealing with here.

Sure, it's not the most pristine business in terms of earnings stability, and - as you can see - it is prone to getting whip-lashed badly by currency fluctuations.

But if you are able to see through the periodic currency-induced bashings (which never have a lasting impact) then it is times like these that provide the opportunity to purchase SDI's growing cash flow streams at a value of 40c in the dollar of intrinsic value, rather than 50c or 60c.

Which is what I am merrily doing today.
(Nothing silly; just sensible purchasing at a rate of 10% of volume)


"i'd watch to see if pie funds offloads the rest of their holding as the free float for SDI isn't that big and they seem to dump stock aggressively at times relative to the market cap and liquidity of shares they hold"

As for what Pie Fund (or anyone else) does is not something that I think one should concern oneself with. I believe firmly that one's long term prosperity is too important for one to be takings one's cues from others.