Dialight and Aureus Mining
Those of you following the trades table will have noticed two new buys this week following the sale of KBC that was looking to be a longer term prospect than I would have liked…
Dialight (DIA) is a LED manufacturer that has seen its SP rise spectacularly particularly in in 2010/11. Its products save clients’ money, so it has not been affected adversely by cutbacks to public sector customer budgets.
The SP has been testing 800p for the last 10 months. There is some volatility as this share is now ‘on the radar’. The SP had trickled down towards the end of 2010 to 685p and provided a great buying opportunity, it returned to 800p+ within a fortnight. It struck me that the recent drop to 770p would also be short lived, so I bought in,( perhaps a bit too soon?) I’m hoping for a break through the 800p barrier. The company is no longer ‘cheap’ with a P/E ratio of 32, but has solid finances and has established regular dividend payments whilst ploughing back a third of its profits for future growth.
I see the share as a hold, but with the possibility of some short term selling and buying along the way.
Aureus Mining (AUE) was formed in April 2011 when super successful African Aura Mining was split into Affero Mining and Aureus Mining, separating its iron ore and gold mining activities. Since the split the shares have performed less spectacularly, with Afferro only now coming back to its start level. Aureus recently has begun to move, gaining over 20% this month hitting 90p at one point.
Singer Capital has said that “given the quality of Aureus’ assets, we think the shares should be valued above most of its peers and using a per ounce value in line with its peers gives Aureus a net asset value of 102p”..
This alone implies around 20% upside to my buy price and with more resources being proved, increased production and likely rising gold prices, the company becomes an attractive takeover target. All in all, a very positive outlook.
Thanks to Troglotrader for putting me on to this one…
Doug
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