I've been following this company for a while and actively doing my own research for the past month, since seeing it mentioned on
Au.s-B.iz's The C.all a couple of times in November. I started to write a long post about the unfortunate and unnecessary messages on the other thread from the founder (Greg is almost having a debate with himself at this point) but think I'll stay well out of it. Let's just say tomorrow will be an interesting time at the Hooper family gathering for Christmas Day.
I am very impressed with what I have seen so far. I've read a lot of posts recently on this forum, read the company presentations going back a couple of years, watched an interview with Wayne and Owen Rask on YouTube. I've looked through the financial numbers on
Commsec and ownership structure and dividend history on
Marke.t Index. I've looked at some broker reports posted on the forums and the company website. It looks like a well-managed company with a great product and conservative board -- which is correctly taking the US expansion approach very cautiously. The US has been a graveyard for many successful Australian companies. I also read positive reports on the
Under.TheRadar small cap stocks site.
An office in WA to service the mining sector feels easier and more intuitively prudent than US expansion. I'm almost shocked there is no WA presence. I like how small acquisitions have been made and the workforce kept on. I like the idea of licensing the technology to entities abroad for high returns on capital.
The technology, and the orders of magnitude of longevity LaserBond can expand the life of mechanical parts sounds almost unbelievable / fraudulent!. I didn't think it was technically possible to make moving parts last 10-15x longer. If it isn't the de-facto industry standard (eg. Audinate) it certainly should be. I also can't believe any company would consider
not using LaserBond. I can imagine (tongue in cheek) the home Victa lawnmower blades, and drill bits of veteran factory floor engineers. Twenty years on, and they have never been sharpened
Low debt. Good margins.
If revenue increases to $60 million in 2025, I am confident a decent percentage of that extra revenue would translate to actual profit. As a potential new shareholder, some of this optimism seems already built in to the current share price. If the company achieves this goal, 89 cents looks cheap. The P/E ratio is a little high, but as mentioned, the market looks to be assuming that $60m target will be reached, and if I were a betting man I'd say it's more likely than not. My feeling is that as a prospective shareholder I am paying for this optimism.
It might not be strictly a founder-lead business in 2023, but it's certainly a family-lead/owned business. Good people, who know what they are doing from what I've seen so far. Dividends & yield is on the low side (although increasing); but you can't expect the company to be paying 5-6% dividend AND expanding into other states and countries with cap raises. You'd rather it be put back into the business -- especially when the financial management is on-point.
I have a couple of questions which I hope
@3500 and others can help with:
1. What type of moat surrounds the technology used? That is, how easy would it be for other companies to catch-up and produce a better product or replicate LBL's success? Does innovation in this space move slowly, or could something new suddenly appear on the horizon? I am thinking of how the Chinese have suddenly worked out how to turn nickel pig iron into battery nickel in Indonesia, or the GLP1 weight loss drugs which have appeared out of nowhere and smashed the ResMed and CSL share prices. Also, I am assuming patents extensively cover the LaserBond process.
2. Has the LaserBond process / technology evolved much since 1992 (like a ResMed machine has)? LBL is spending about $500,000 a year on R&D. I am wondering whether this focuses on: improving the current process, finding new uses for the current process, or developing entirely new processes? I am not very literate when it comes to engineering or trades matters!
Enormous credit to Greg for his vision, dedication to his craft, and for identifying the early opportunities against great odds in the 1990s. He sounds like a Steve Jobs-type of guy. A huge compliment; but not someone I'd personally like to work with! I am trying to work out if improvements are incremental in this industry, or come out of the blue and disrupt the status-quo. Wayne and Owen Rask discussed this briefly in their excellent video interview. I was fascinated to read Greg's posts about the current R&D personnel which apparently include Wayne's daughter.
3. What use (if any) does LaserBond have for extending the lifecycle of parts used in on-shore and off-shore wind turbines for the renewable energy industry? Is there an opportunity in the future in this regard?
I am thinking very seriously about buying an initial, small parcel in the next few days. LBL looks like a wonderful company with excellent growth prospects for the next decade or so; although I am still a little sceptical about the valuation.
(20min delay)
