Recommendation MDI’s profitability has improved quite significantly over the last two years year due to accelerated top-line growth, and it is now trading at 12.9x forward P/E. The balance sheet is strong, with net cash of $85M. The trailing twelve-month cash flow of $117M, grew by around 23% compared to $95M last year. The increased growth was mainly driven by the continued adoption of electric vehicles and electrification markets leading to increased demand from copper and battery metals customers.
Based on consensus estimates, sales are expected to grow by 16%, while EPS is expected to grow by 39% next year and then normalize to around 3%- 5% growth thereafter.
The company also announced a share repurchase programs recently which we like. Overall, solid momentum in the fundamentals, and given the reasonable valuation, we would be comfortable buying at this price. The sector outlook we think is also improving. (5iResearch)