ASX:JLG
Johns Lyng Group Ltd
Investment Summary
The fund managers believe that recent developments surrounding Johns Lyng Group Ltd (JLG) reflect a challenging short-term landscape. Following their exit from JLG at a price of $5.96, they noted elevated risks due to market expectations related to the U.S. strategy and expressed concerns about lower-than-expected earnings results for FY24, which have since led to a significant decline in stock price, closing at approximately $3.75. In their opinion, the guidance for a soft FY25 has resulted in downward revisions in consensus estimates and a derating of the valuation multiple. Nevertheless, they see potential in FY26, highlighting the directors' share purchases as a positive sign. As a result, they remain cautious, expecting continued volatility in the short term due to the lack of immediate growth prospects. They intend to monitor the situation closely.
Commentary From The Managers
Endeavor Asset Management
31 Aug 2024
$3.65
- Endeavor Asset Management revisited their investment thesis following JLG's weaker FY24 earnings report.
- JLG's stock fell 37% by the end of August, closing at $3.75 per share from $5.97 in July.
- The company's guidance indicated a soft FY25, leading to downward revisions in consensus estimates.
- Valuation multiple derating occurred as market expectations were not met.
- Looking ahead, FY26 may present a significantly stronger outlook for JLG.
- Directors purchasing shares on the market post-results is a positive sign.
- Endeavor Asset Management remains cautious, sitting on the sidelines due to short-term volatility and lack of near-term growth.
Endeavor Asset Management
31 July 2024
$5.96
- Endeavor Asset Management sold their investment in Johns Lyng Group (JLG) due to elevated risk surrounding market expectations on the US strategy.
- The fund manager remains positive on the long-term thesis associated with Australian market share gains.
- There is potential for growth into new regions, but current risks prompted the exit.
- Endeavor plans to revisit Johns Lyng following the release of their earnings later this month.
- Concerns were raised that earnings may miss market expectations.
Please note: The completeness, accuracy or current status of the investments referenced are not guaranteed.