Fund Manager Summary
The fund managers believe that Lindsay Australia Ltd presents a compelling opportunity for investors, given its strong earnings and potential growth despite a relatively defensive profile. In their opinion, the company is currently trading at a significant discount to its fair value, with a forward earnings multiple of less than 8x, compared to its historical average of ~12x and peers at ~13.4x. The forecasted EBITDA growth of 15-20% in FY24 and over 10% in FY25 is underpinned by strategic acquisitions, including $22.3m in assets from Scott’s Refrigerated Logistics. This positions Lindsay to capitalize on market share opportunities and enhance its pricing power amid inflationary pressures.
Source: Trading View
Commentary From The Managers
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Centennial Asset Management
29 Jan 2025
$0.88
Summary
- Centennial Asset Management believes Zip has the potential to rally in the short term.
- Zip is well positioned to deliver further strong growth in revenues and profitability.
- The US buy now, pay later market remains relatively immature, allowing Zip’s US footprint to grow rapidly.
- New product launches are expected to contribute to the company’s transaction volumes and earnings growth in the coming year.
- Zip’s balance sheet strength and ongoing buyback are expected to support share price performance.
- Zip has surprised the market with better-than-expected earnings over the past year.
- The company has upgraded expectations post the most recent quarter, indicating potential for additional upside earnings risk.
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Please note: The completeness, accuracy or current status of the investments referenced are not guaranteed.
Commentary From The Managers
Centennial Asset Management
29 Jan 2025
$0.88
- Centennial Asset Management believes Zip has the potential to rally in the short term.
- Zip is well positioned to deliver further strong growth in revenues and profitability.
- The US buy now, pay later market remains relatively immature, allowing Zip’s US footprint to grow rapidly.
- New product launches are expected to contribute to the company’s transaction volumes and earnings growth in the coming year.
- Zip’s balance sheet strength and ongoing buyback are expected to support share price performance.
- Zip has surprised the market with better-than-expected earnings over the past year.
- The company has upgraded expectations post the most recent quarter, indicating potential for additional upside earnings risk.
Summary
Contract Asset Management
31 May 2024
$0.91
- Contract Asset Management highlights a new position in Lindsay Australia Limited (LAU), currently trading below $0.90 after previously exceeding $1.40 this financial year.
- The firm has a long-standing relationship with this family-led business, included in the BKI Investment Company portfolio.
- Lindsay Brothers Transport, established in 1953, is recognized as one of Australia’s leading integrated transport, logistics, and rural supply companies.
- LAU operates from 16 terminals with over 1000 vehicles, serving Australian farmers across the supply chain.
- In early May, LAU management slightly revised its EBITDA guidance downwards due to weather disruptions, viewed as a short-term challenge.
- Contract Asset Management believes that the seasonal volatility is adequately reflected in the current share price.
- Forecasts indicate LAU is trading on a P/E of 7x and offers a grossed-up dividend yield of over 7%.
- The company’s Balance Sheet is robust, and its competitive position has strengthened in recent years.
- Contract Asset Management remains optimistic about the future prospects of both the business and the stock.
Summary
Cerutty Macro Fund
31 Oct 2023
$0.97
- Cerutty Macro Fund has recently added Lindsay Australia Ltd (LAU) to its portfolio.
- The investment was initiated due to LAU trading at a significant discount to fair value.
- Lindsay's conservative valuation reflects a market assignment of less than an 8x forward earnings multiple.
- This valuation is notably below its historical average of approximately 12x and the peer group average of around 13.4x.
- Management guidance indicates EBITDA growth between 15-20% for FY24, supported by asset integration.
- Expected EBITDA growth over FY25 is projected to exceed 10%.
- Recent developments in the Australian logistics market have positioned LAU favorably.
- The liquidation of Scott’s Refrigerated Logistics has opened opportunities for LAU.
- Cerutty believes LAU is well-placed to absorb the market share now available, enhancing its position in refrigerated goods transport.
- This increases Lindsay’s pricing power during a time of elevated inflation.
Summary
Please note: The completeness, accuracy or current status of the investments referenced are not guaranteed.
ANALYST INSIGHT
Equity Research Analyst
"While not your typical growth darling, Lindsay Australia Ltd appears poised for a rebound, trading at a steep discount with solid earnings potential. With strategic acquisitions and a strong market position, it might just surprise skeptics in the coming quarters."
Last Updated: 29 Jan 2025
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Frequently Asked Questions
Who is investing in Lindsay Australia Ltd (ASX:LAU)?
Fund managers including Cerutty Macro Fund, Centennial Asset Management and Contract Asset Management have invested in Lindsay Australia Ltd (ASX:LAU).
Why do fund managers invest in Lindsay Australia Ltd?
Fund managers are investing in Lindsay Australia Ltd (LAU) due to its strong earnings potential, defensive profile, and significant undervaluation compared to peers. Currently trading at an 8x forward earnings multiple, LAU is poised for EBITDA growth of 15-20% in FY24, bolstered by strategic asset acquisitions following market disruptions. This positions the company to capture market share and enhance pricing power in the logistics sector.
What happened to Lindsay Australia Ltd (ASX:LAU)?
There have been no recent updates from fund managers regarding Lindsay Australia Ltd although fund managers including Cerutty Macro Fund, Centennial Asset Management and Contract Asset Management have previously commented.