Momentum in core markets, valuation compelling

The H1 trading update from Diales makes for encouraging reading. Strong momentum within its core markets in Q2 has continued into Q3, leading to confirmation of no change in consensus estimates for adj. PBT/adj. EPS. The valuation is underpinned by the net cash (29% of the market cap), suggesting the operating business is valued at an underwhelming EBIT multiple of 5.6x. The dividend yield, projected at 7.9% currently, remains attractive and offers support for the shares.

The valuation remains compelling, notwithstanding the recent decline in its peer group, and is underpinned by net cash which accounts for 29% of the current market capitalisation.

Our fair value per share of 35p is based on a peer group comparison model, utilising a conservative 25% rating discount.