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Highlights

  • On Tuesday (13 June 2023), DGL shares hit a fresh 52-week low of AUD 1.130 before closing the session 0.43% lower at AUD 1.170 per share.
  • Since its listing in May 2021, DGL Group has been on an acquisition spree, which has helped the company report higher revenues.
  • However, a few things did not work in favour of the company in 1HFY23. Its profitability was impacted because of higher operating expenses..

Shares of DGL Group Limited (ASX: DGL), a specialist chemicals company that manufactures, transports, stores, and processes chemicals and hazardous waste, have been on a falling spree over the last one year after making an all-time high of AUD 4.490 on 26 April 2022. On Tuesday (13 June 2023), DGL shares hit a fresh 52-week low of AUD 1.130 before closing the session 0.43% lower at AUD 1.170 per share.

Since its listing in May 2021, DGL Group has been on an acquisition spree, which has helped the company report higher revenues. In 1HFY23, the company reported a revenue of AUD 217.2 million, up 52% over 1HFY22 revenue of AUD 143 million. Here is how its revenue has grown since 1HFY21:

 Meanwhile, its net profit grew by 22% year-on-year to AUD 10.4 million, while free cash flow from operations stood at AUD 6.61 million. Its underlying EBITDA stood at AUD 29.7 million, 30% higher than the EBITDA reported in 1HFY22. Worth mentioning here is that 69% of this EBITDA growth was organic, and the remaining came from acquisitions.

DGL's most recent acquisition was made in April 2023. It acquired 100% stake in Triox Pty Ltd, a chemical toll manufacturing company in agriculture and pest control. DGL said Triox's acquisition would boost its agriculture market and chemical manufacturing capabilities.

The company has been focusing on expanding and reinforcing its full-service solution, which includes manufacturing to recycling. Moreover, the company is reinvesting in organic and acquisition growth to render its strategic value. For FY23, it expects to report underlying EBITDA between AUD 71.5 million and AUD 73.5 million. Its EBITDA for 2022 was AUD 65.6 million.

However, a few things did not work in favour of the company in 1HFY23. Its profitability was impacted because of higher operating expenses. In 1HFY23, its EBITDA margin declined by 280 basis points to 13% from 15.8% in 1HFY22. Due to higher inflation, its employee cost increased from AUD 19.5 million in 1HFY22 to AUD 33.5 million in 1HFY23.

Also, to fund its recent acquisitions, the company resorted to borrowing. As a result, its Debt-to-Equity ratio increased from 0.34x in 1HFY22 to 0.46X in 1HFY23.

DGL Group Management

The company is led by its founder and CEO Simon Henry, who owns 53.1% stake in the company. Unlike salaried CEOs, founders happen to have a long-term vision, which usually helps drive the company's growth. With over 50% shareholding by its founder CEO, management interests seem to be aligned with those of shareholders.

DGL’s Stock Price Performance

DGL shares closed 0.43% lower at AUD 1.170 on Tuesday, 13 June 2023. In the last one month, the stock has fallen by ~11.70% and in the last one year, it is down ~57%. On 26 August 2022, the stock hit a 52-week high of AUD 2.980, and its 52-week low of AUD 1.130 was seen on 13 June 2023.

DGL Daily Technical Chart, Image Source: EODHD/Others

Note 1: Past performance is neither an Indicator nor a guarantee of future performance. 

Note 2: The reference date for all price data, currency, is 13 June 2023. The reference data in this report has been partly sourced from EODHD/Others.