Here are a few considerations I have for why Laserbond will be able to weather a storm eventuating from tariffs and a trade war.
Please add your thoughts and comments, looking for a healthy discussion.
While it is true that Laserbond has a degree of exposure to the resources industry - which would be affected by trade wars, tariffs, and slower economic growth - it is also true that in such instances, the resources industry would look for cheaper alternatives to reduce costs.
Laserbond could provide this by ensuring machinery could operate for longer, with lower downtime, through their higher quality products and services. Directly alleviating pain that their clients are feeling.
Additionally, when it may become more expensive for clients to import a whole machine or parts, Laserbond will be more competitive on an initial capital basis for the services it offers. Laserbond has also worked to diversify the client base and relative contribution to revenue (i.e. the two biggest customers have fallen from >50% revenue share, to around 40%). Now they have clients in agriculture, infrastructure etc.
Australia is also at low-risk of tariffs being imposed due to the fact that
"according to the US Census FT 900 report of November 2024, out of the US's 230 trading partners, Australia sits at number 230 in terms of the trade balance (i.e. the US's biggest trading surplus) running a deficit with the US of $US17.5 billion". That is, we buy more from the US than they buy from us.
With that in mind, Laserbonds steel rolls that they export to the US are unlikely to have tariffs placed on them, and these are already in high demand. If other steel supplying countries have tariffs imposed, ours will be cheaper in comparison.
Finally, Laserbond is looking to expand in to the US. This isn't a kneejerk reaction to current events, rather a long term goal that they have worked towards for years. This would put us in an advantageous position, nominally "within the relative calm of the eye of the storm", where the US dollar is of higher value against the AUD, and their products would be tariff free.
The ASX and market in general certainly may fall and be prone to volatility, impacting the LBL SP. But, Laserbond is a dividend paying stock with a DRP, and as long as revenue continues (it should) and growth prospects are there (they are), a lower shareprice is definitely a buying opportunity, not a cause for panic or a sign of a bad company.
(20min delay)