2022 will be the year for DIPD
Dipped Products potential upside is easily above 100 Rs.
CURRENTLY TRADING AT 4-5 PE. A RARE DIAMOND STOCK IN CSE THAT IS OPERATING IN A GROWING MARKET AND YET AT A LOW PE. ( INDUSTRIAL GLOVES AND SPECIAL PURPOSE GLOVES GROWING AT 150% YEAR ON YEAR)
Post covid mania the revenue is still growing and PROFITABILITY while declined is still at attractive figures. Granted the supernormal profit that DIPD earned due to covid is no longer there, however DIPD was never noted to be only a medical glove manufacturer. They have a wide variety of products. It simply pivoted to capture an opportunity with medical gloves and now is back to its normal line of business which is industrial gloves which is growing rapidly.
THE CONFIRMATION OF DIPD BEING HIGHLY UNDERVALUED AT THIS PRICE CAN BE VERIFIED BY FOREIGN INVESTOR GROUPS. INDEPENDENT FOREIGN INVESTOR FORUMS SUCH AS INVESTING AND SIMPLYWALLSTREET CLEARLY INDICATE THE SHARE IS GROSSLY UNDERVALUED.
DIPD is investing heavily with a one billion rupee investment into capacity expansions despite the current economic conditions of the country. While most other companies have cut down and competently eradicated any form of capital expenditure, DIPD has doubled down. This clearly indicates the company has understood how to navigate the turbulent economic conditions of the country and capitalize on the good future prospects of its products.
DIPD IS A CLEAR VALUE ADDITION EXPORTER AND NOT A COMMODITY EXPORTER. THIS CREATES A STRATEGIC ADVANTAGE FOR THE COMPANY AND REDUCES THEIR EXPOSURE TO PRICE WARS AND ABILITY TO HAVE A PREMIUM PRICING STRUCTURE.
Consistent dividend yield of 8% and above (Paid for over a decade) DIPD is one of the few companies in Sri Lanka that has paid a consistent dividend for the last decade. So an investor of DIPD can stand to enjoy both capital gains and a steady flow of good dividend income. Currently well above one year bank fixed deposit rates.
EXPORT PRESENCE TO 70 COUNTRIES, HUGE DOLLAR INCOME EARNER.
The largest problem the company is currently facing is escalating costs, revenue is growing (can be verified by quarterly reports). The company has found a solution to this and has greatly increased local raw material sourcing capabilities with projects such as "Firstlight". This reduces import dependence on raw materials and further increases profitability of the company. Approximate savings of 15 Million USD due to project Firstlight.
Consistent Foreign buying of DIPD as well as increasing quantities among large players. Almost all of the selling being done is by retailers. TOP 100 shareholder list confirms that educated investors are silently accumulating the stock at bargain prices from uneducated retailers. Once the retailer selling is done, the price of the share will drastically increase due to no bargain selling.
Floating of the dollar will drastically impact the company positively. This will greatly increase the profitability of the company. Company net exposure of Dollar income ( Dollar revenue) to dollar expenses ( Dollar imports of raw material and other costs) is positive by 45% based on published research reports.
Economic sanctions on Russia will favorably impact DIPD, as several countries western countries such as Germany a major exporter of industrial gloves to Russia will be unable to do business due to economic sanctions. DIPD product range is highly sought after in Russian market for industrial use.
Unlikely yet possible reasons .
Global Political/Economical shocks can trigger the possibility of DIPD being aquired by a large international player or enter into strategic alliances. Global manufacturers will start to consider setting up disaster recovery sites in neutral countries to reduce their risk in case of a full blown war between Russia and the West. DIPD is an innovative value addition company that cannot be easily replicated. This will make the company highly sought after for glove products.
Acquisition by large players in the world such as Top Glove. Top Glove earned super normal profits during covid and will certainly be under pressure by shareholders to try and replicate the profits in the coming financial years. Mergers and acquisitions is one strategy that Top glove and use. Dipd is a notable player in the glove market. The possibility while unlikely still lingers.
On a final note, think about DIPD logically.
1. DIPD is a share that is a huge dollar earner. Best way to hedge the risk of the current economic crisis of the country.
2. Has an innovative and good product line that has global demand.
3. Operates in a market expected to grow by 150% (Glove market both special purpose and industrial)
4. 8% Dividend Yield, that has been paid for over 10 YEARS! 2 to 3 dividend payments a year.