Ann: FY2023 Results Presentation, page-6

Some observations and ponderings from the annual results announcements:

1. The ability to access $8.1m of franking credits through the WB Hunter acquisition is an added bonus for LAU shareholders through be able to fully frank the FY23 final dividend. LAU itself not yet tax paying but expects to be so in FY24, with plenty of franking credits arising as the deferred tax liability arising from the accelerated write off of new assets acquired in FY22 and FY23 unwinding meaning that future dividends should be also able to be fully franked.
2. FY23 finished strongly with the tail winds of the Scott equipment purchases. FY24 will have the full year benefit of this increased capacity so this bodes well for a strong 1H24 relative to 1H23. Presentation notes that strong FY23 momentum had continued into FY24.
3. The WB Hunter acquisition was stated to be high single digit EPS accretive pre synergies adding further upside.
4. The FY23 financial ratios compare favourably with other industry players - PE of 10.5 and a franked dividend yield (looking forward assuming full franking) of 5.8%.
5. Listening to the presentation, I was impressed with the understanding that new CEO Clayton McDonald had only 6 weeks into the role. He presented very well and it was great to have a more detailed analysis and opportunity for Q&A that we had previously. CFO Justin Green also came across well.
6. There’s been a lot of stock liquidated by the two largest shareholders over the last few months, which has been mopped up without any substantial holder disclosures having been filed. Assuming the sellers won’t be around with these volumes forever, maybe there is a reasonable entry point available at the moment, especially cum dividend until 20 September.
7. Theres plenty of talk of smaller operators closing up. I wonder what scope there is for strong regional operators to come together, create a national footprint and provide upside through improved service offering against the large national players and access synergies.