SDI Limited

SDI Details

1HFY21 Key Results Highlights: SDI Limited (ASX: SDI) is a manufacturer and distributor of dental restorative materials, whitening systems, and other dental materials. As of 10 June 2021, the market capitalisation of SDI stood at ~$112.92 million. SDI reported revenue of $36.8 million in 1HFY21, down by 8% YoY due to shipping constraints and ongoing pandemic restrictions faced in the UK and other direct export markets. Its EBITDA and NPAT stood higher at $8.7 million and $4.6 million, up by 21.8% YoY and 30.9% YoY, respectively. SDI announced a fully franked interim dividend of 1.50 cents per share in 1HFY21. SDI held a cash balance of $11.059 million and no debt on its balance sheet as of 31 December 2020.

Key Financials from FY2016-FY2020; (Analysis by Kalkine Group)

Key Risks: The company faces the risk of product shipping backlogs into multiple overseas markets. It faces the threat of foreign currency changes due to the devaluation of the Australian dollar (AUD) vs Brazilian and other currencies. 

Outlook: SDI estimates sales of $79.6 million for FY21, up by 18% YoY due to the growth in whitening and aesthetic products and return of normal trading conditions. It estimates NPAT between $7.5-$8.5 million for FY21. SDI has completed the strategic review on its Brazilian operations and is progressing on its implementation.  

Stock Recommendation: The stock of SDI gave a positive return of 15.06% in the past three months and a positive return of 17.17% in the past six months. The stock is currently trading higher than the 52-weeks’ average price level band of $0.665-$0.975. The stock of SDI has a support level of ~$0.844 and a resistance level of ~$0.977. Considering the high trading levels, the decline in revenue from FY18-FY20, lower cash receipts from customers for 1HFY21, current trading levels, we suggest investors to book profit and give a ‘Sell’ rating on the stock at the current market price AUD 0.955 (as on June 10, 2021, 12:43 AM (GMT+10), Sydney, Eastern Australia).

SDI Daily Technical Chart, Data Source: REFINITIV  

Osteopore Limited

OSX Details

AGM Results Announced: Osteopore Limited (ASX: OSX) is medical technology manufacturer of innovative regenerative implants mainly designed through its patented technology for bone healing across various therapeutic areas. As of 10 June 2021, the market capitalisation of OSX stood at ~$51.59 million. On 28 May 2021, OSX announced the results of its Annual General Meeting. It passed all resolutions via poll except resolution five (5), which was cleared through a special resolution. 

CE Mark Approved Expanded Product Range: On 10 May 2021, OSX announced the grant of CE Mark certification for its seven new designs, all sizes of Osteomesh, Osteoplug, and Osteostrip, and extended product shelf-life by 2-3 years. The CE Mark estimates to cater to an addressable market of over $115 million for the expanded product range.

Q1FY21 (March Quarter) Key Takeaways: The company posted record revenue of $318,103 in Q1FY21, up by 21% YoY.  Its gross margins improved to 68.2% in the March quarter, up by 29% on pcp. In February 2021, OSX entered a cooperation agreement with Terumo Blood and Cell Technologies, USA, to co-promote their complementary regenerative products in Asia-Pacific. During the quarter, OSX received the Patent EP 3218019 B1 from the European Patent Office (EPO) and was granted Australian Application No. AU 2019236702 B2 from the Australian Patent Office (APO). It held a cash balance of $7.9 million as of 31 March 2021.

Key Financials from FY2019-FY2020; (Analysis by Kalkine Group)

Key Risks: The company faces the risk of delay in seeking regulatory approvals and introducing new products. It bears the ongoing threat and disruptions caused by the COVID-19 pandemic. 

Outlook: The company will assess the impact of the European Medical Devices Directive (MDD) certification obtained in April 2021 for the expanded product range on its European business development. It plans to estimate the scope and extent of the certification in due course and release an update. Besides, OSX will attend the 14th Asian Congress on Oral & Maxillofacial Surgery (ACOMS) in Singapore from 4-6 June 2021 to promote the sales of its dental products.

Stock Recommendation: The stock of OSX gave a negative return of 7.29% in the past month and a negative return of 15.23% in the past six months. The stock is currently trading towards the 52-weeks’ low level of $0.400. On a TTM basis, the stock of OSX is trading at a price to book value multiple of 3.8x, lower than the industry average of 5.7x, and thus seems undervalued. Considering the current trading levels, healthy balance sheet, increase in top line in 1QFY21, decent outlook, valuation on TTM basis, and associated risks of COVID-19 uncertainty in different operating markets (Europe, Singapore, Australia), we give a ‘Speculative Buy’ rating on the stock at the current market price of $0.445, up by 1.136% on 10 June 2021.

OSX Daily Technical Chart, Data Source: REFINITIV

Note 1: The reference data in this report has been partly sourced from REFINITIV.

Note 2: Investment decision should be made depending on the investors’ appetite on upside potential, risks, holding duration, and any previous holdings. Investors can consider exiting from the stock if the Target Price mentioned as per the Valuation has been achieved and subject to the factors discussed above.

Technical Indicators Defined: -

Support: A level where-in the stock prices tend to find support if they are falling, and downtrend may take a pause backed by demand or buying interest.

Resistance: A level where-in the stock prices tend to find resistance when they are rising, and uptrend may take a pause due to profit booking or selling interest.

Stop-loss: It is a level to protect further losses in case of unfavourable movement in the stock prices.

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