Looking for No-Brainers in the Micro-Cap Space, The Mikro Kap

The Mikro Kap

Looking for No-Brainers in the Micro-Cap Space

Private investor from Croatia focused on finding no-brainer opportunities in the global micro-cap space

Equity Bottom-Up

<ul><li>Hello, Welcome to the third edition of the Mikro Kap Wathclist, a series in which I go deeper into unique opportunities from my watchlist that, IMO, are worth monitoring closely.</li><li>This way, you can act decisively when the moment comes, rather than spending weeks on initial research.</li><li>These kinds of stocks would probably be a part of my portfolio if I were older, more diversified, or both.</li></ul>

Hello, Welcome to the third edition of the Mikro Kap Wathclist, a series in which I go deeper into unique opportunities from my watchlist that, IMO, are worth monitoring closely.This way, you can act decisively when the moment comes, rather than spending weeks on initial research.These kinds of stocks would probably be a part of my portfolio if I were older, more diversified, or both.

Director, RaaS Research Group, Research as a Service (RaaS)

Research as a Service (RaaS)

Director, RaaS Research Group

Insightful Financial Models and Research Analysis

Connect to the right investors through smart and insightful financial models and research analysis.

<div>
<div>
<div>
<div>
<h2>DGL Group Ltd</h2>
<h3>Pandemic proof growth</h3>
<div>
<div>
<div>
<div>
<div class="content-highlight">
<p>DGL Ltd listed on the ASX on 24th May 2021, raising $100m at $1/share with the founder CEO and major shareholder retaining his entire holding. The group is an integrated chemicals business operating in Australia and New Zealand since 1999. DGL offers its customers a full logistics service for chemicals formulation, manufacturing, warehousing, distribution, waste and recycling. The vendors of Chem Pack, acquired by DGL in October 2020, received, under escrow, 9.8m deferred consideration shares at the time of IPO. The IPO funds remaining were used to reduce short-term debt with the balance of $49m earmarked for a new warehouse and systems and future expansion via investment and acquisition. Since IPO, the group has commenced building a new warehouse in Auckland, approved a new facility at Hawkes Bay, acquired the main supplier of labels to the Chem Pack business for $1.55m, acquired the freehold of DGL’s operating base in Victoria, expanded via an acquisition in Townsville, and acquired a West Australian chemical and hazardous waste business.</p>
</div>
<div>
<div>
<div>
<div>
<p><strong>Business model</strong><br>The company has three divisions – Chemical manufacturing, Warehousing and Distribution and Environmental Solutions. DGL sells its own chemical products and manufactures on behalf of customers using DGL and client IP. The company manages manufacture, storage, and distribution of products on behalf of large and small customers with the top ten clients comprising 57% of group revenues of a total of over 1,300 customers during 2020. The group also transports large volumes of chemicals on behalf of clients and recycles batteries and liquid waste, charging for collection and disposal and deriving revenue from sale of recycled waste products. DGL can manage the entire chemical supply chain on behalf of a client or provide components of the production and logistics package as necessary.</p>
<p><strong>FY21 – the year to list and expand</strong><br>Since IPO earlier in the year, DGL has moved rapidly to fill in gaps and geographic coverage with the acquisitions and investment noted above. The company appointed a CFO to assist in managing this expansion and hopes to continue to grow through cross-selling of services to existing customers and through organic growth. The company reported FY21 results ahead of prospectus with sales up 9%, (3% ahead), EBITDA up 46%, (8% ahead) on a pro- forma basis. DGL acquired the Chem Pack business during the year which did not contribute in the first half and benefited from a large debt forgiveness arrangement prior to IPO. Management is confident of exceeding prospectus forecasts for FY22 of $209.7m and NPAT of $10.5m. The company saw no impact form COVID on its business but management of staff exposure risk was significant.</p>
<p><strong>DGL is expanding rapidly in old and new markets</strong><br>Similar chemical manufacturers include Incitec Pivot, Nufarm and Orica however strongly growing small- to- medium- sized companies may be a better comparison. DGL is moving quickly to fill gaps in the coverage of ANZ markets and benefitting from onshoring of chemical production in the face of current shipping delays.</p>
</div>
</div>
</div>
</div>
</div>
</div>
</div>
</div>
</div>
</div>
</div>
</div>





DGL Group Ltd
Pandemic proof growth





DGL Ltd listed on the ASX on 24th May 2021, raising $100m at $1/share with the founder CEO and major shareholder retaining his entire holding. The group is an integrated chemicals business operating in Australia and New Zealand since 1999. DGL offers its customers a full logistics service for chemicals formulation, manufacturing, warehousing, distribution, waste and recycling. The vendors of Chem Pack, acquired by DGL in October 2020, received, under escrow, 9.8m deferred consideration shares at the time of IPO. The IPO funds remaining were used to reduce short-term debt with the balance of $49m earmarked for a new warehouse and systems and future expansion via investment and acquisition. Since IPO, the group has commenced building a new warehouse in Auckland, approved a new facility at Hawkes Bay, acquired the main supplier of labels to the Chem Pack business for $1.55m, acquired the freehold of DGL’s operating base in Victoria, expanded via an acquisition in Townsville, and acquired a West Australian chemical and hazardous waste business.





Business model The company has three divisions – Chemical manufacturing, Warehousing and Distribution and Environmental Solutions. DGL sells its own chemical products and manufactures on behalf of customers using DGL and client IP. The company manages manufacture, storage, and distribution of products on behalf of large and small customers with the top ten clients comprising 57% of group revenues of a total of over 1,300 customers during 2020. The group also transports large volumes of chemicals on behalf of clients and recycles batteries and liquid waste, charging for collection and disposal and deriving revenue from sale of recycled waste products. DGL can manage the entire chemical supply chain on behalf of a client or provide components of the production and logistics package as necessary.
FY21 – the year to list and expand Since IPO earlier in the year, DGL has moved rapidly to fill in gaps and geographic coverage with the acquisitions and investment noted above. The company appointed a CFO to assist in managing this expansion and hopes to continue to grow through cross-selling of services to existing customers and through organic growth. The company reported FY21 results ahead of prospectus with sales up 9%, (3% ahead), EBITDA up 46%, (8% ahead) on a pro- forma basis. DGL acquired the Chem Pack business during the year which did not contribute in the first half and benefited from a large debt forgiveness arrangement prior to IPO. Management is confident of exceeding prospectus forecasts for FY22 of $209.7m and NPAT of $10.5m. The company saw no impact form COVID on its business but management of staff exposure risk was significant.
DGL is expanding rapidly in old and new markets Similar chemical manufacturers include Incitec Pivot, Nufarm and Orica however strongly growing small- to- medium- sized companies may be a better comparison. DGL is moving quickly to fill gaps in the coverage of ANZ markets and benefitting from onshoring of chemical production in the face of current shipping delays.













Australia

DGL Group Limited of Australia operates as a chemical supply chain management company. The Company offers specialty chemical formulation and manufacturing, warehousing and distribution, waste management, and environmental solutions. DGL Group serves customers worldwide.

Price Gauge
52-week Range	0.00 - 0.00
Market Cap (USDm)	0.00
P/E	0.00
Dividend (Yield)	0.00

DGL Group (DGL AU)

Playing With Fire

Hello, Welcome to the third edition of the Mikro Kap Wathclist, a series in which I go deeper into unique opportunities from my watchlist that,...

The Mikro Kap

DGL Group Ltd: Pandemic Proof Growth

DGL Group Ltd Pandemic proof growth DGL Ltd listed on the ASX on 24th May 2021, raising $100m at $1/share with the founder CEO and major...

Research as a Service (RaaS)

Price Gauge

52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)