ASX:LAU
Lindsay Australia Ltd
Investment Summary
The fund managers believe that Lindsay Australia Ltd (LAU) offers a valuable investment opportunity characterized by strong earnings, potential growth, and a defensive profile. In their opinion, the stock 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 approximately 12x and peers at around 13.4x. They expect EBITDA growth of 15-20% in FY24 and more than 10% growth in FY25, supported by developments in the Australian logistics sector. The recent liquidation of Scott’s Refrigerated Logistics has presented an opportunity for Lindsay, which acquired $22.3m in assets, positioning the company to capture market share and enhance its pricing power. This strategic maneuver is particularly advantageous in a period of above target inflation.
Commentary From The Managers
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.
Please note: The completeness, accuracy or current status of the investments referenced are not guaranteed.