ASX:LBL
LaserBond Ltd
Investment Summary
The fund managers believe that LaserBond Ltd (LBL) has faced significant labour and supply chain challenges that affected its performance, leading to disappointing results in recent periods. Despite these setbacks, they maintain confidence in the management team, known for their honesty and competence, to navigate these short-term issues effectively. Although LBL's recent reports showed flat revenue and a 38% decline in profit, resulting from complications within the underperforming Products division, managers acknowledge potential improvements in the Services segment. The fund managers express cautious optimism, noting management's first instance of providing firm numerical guidance for future performance. However, trust has been strained, resulting in a decision to sell a portion of their position with plans to reinvest once confidence is restored and signs of recovery emerge.
Commentary From The Managers
Mereweather Capital
28 Feb 2025
$0.41
- Mereweather Capital reported that LBL faced flat revenue and a 38% decline in profit.
- The recent results followed two poor halves, influencing investor confidence.
- Management clarified challenges within the Products division, heavily tied to two key OEM customers.
- The Products segment is affected by multiple factors over 18 months, leading to a long-term cyclical downturn.
- Despite growth in the Services segment, higher input costs and growth investments impacted gross margins.
- Management remains optimistic for future growth but faces skepticism from the market.
- For the first time, management provided firm numerical guidance for upcoming results.
- Mereweather Capital sold a portion of its position to repurchase shares later when trust in management is restored.
- Investment strategy will be reassessed based on clear signs of cyclical improvement.
Mereweather Capital
30 Aug 2024
$0.59
- Mereweather Capital updates its investment thesis on LaserBond Ltd (LBL) noting ongoing labour and supply chain impacts affecting performance.
- The first half results were hindered, contradicting management's prior assurances of improvement.
- Despite these challenges, Mereweather Capital maintains its faith in LaserBond Ltd due to its historical effective management.
- Market reactions led to a sharp sell-off, though Mereweather Capital believes this is an overreaction.
- Recent discussions with management indicate that the issues are primarily short-term, with resolutions already underway.
- LaserBond Ltd is currently trading at 18x earnings, with potential for growth as revenue continues to expand.
- Mereweather Capital expects margins to return to previous levels with its experienced management team at the helm.
Please note: The completeness, accuracy or current status of the investments referenced are not guaranteed.