It's rare to get a business that fits a lot of negative bearish points but the below is my reasoning to watch FY results carefully to assess whether to hang around...
New investors may not be coming on board even at this low share price due to..
1. Earnings Decline and Margin Compression
In the first half of FY2025, LaserBond reported a decrease in earnings per share (EPS) to A$0.009, down from A$0.015 in the same period the previous year. This decline was accompanied by a reduction in profit margins from 11.1% to 6.8%, indicating challenges in maintaining profitability .
2. Delayed Revenue from Technology Division
The company's technology division, which is expected to be a significant growth driver, has faced delays in revenue generation. This has led to skepticism among investors regarding the company's ability to meet its ambitious revenue targets, including a previously stated goal of reaching A$60 million by FY2025 .
3. Post-Acquisition Uncertainty
LaserBond's acquisition of a 40% stake in the Gateway Group, a Perth-based equipment parts and servicing enterprise, was intended to expand its presence in Western Australia. However, the lack of detailed information about the acquisition and its integration has created uncertainty among investors .
4. Suspension of US Expansion Plans
The company announced a temporary halt to its planned expansion into the United States, citing market conditions. This decision has raised concerns about the company's growth strategy and its ability to penetrate new markets .
5. Valuation Concerns
Despite the share price decline, LaserBond's price-to-earnings (P/E) ratio remains around 17.2x, close to the Australian market median of 18x. This suggests that the stock may still be perceived as overvalued, especially given the recent earnings contraction .
6. Investor Sentiment and Market Reaction
The combination of declining earnings, strategic uncertainties, and valuation concerns has led to negative investor sentiment. While there was a short 20% rebound in the share price over the past month, it has not fully offset the losses experienced over the past year before ot retracted again.
That is a lot of uncertainty.
(20min delay)