LaserBond

LaserBond (ASX: LBL) is too small to be considered a small cap stock, instead it falls into the paperweight micro-cap sector, but it is a profitable micro-stock that is rapidly growing.

LBL offers a range of thermal spraying, laser cladding and welding technologies to an increasing range of industries. The application of LaserBond’s wear-resistant applications can extend machinery life by up to 4 to 5 times its original expected life-span and at a deep discount to the cost of purchasing new equipment.

LBL listed on the ASX in 2007 and is growing geographically and through expansion into new markets, with its key strategy to expand into the Western Australian market.

Since listing in 2007 its earnings per share (EPS) has grown at a compounded annual growth rate (CAGR) of 68%pa and EPS in the year to 30 June 2011 (FY11) increased by 154%. FY11’s net profit came in at $1.3 million with $2.1 million net profit expected in FY12 and $2.7 million in FY13.

This is strong growth, and continued growth is forecast and expected to be achieved through growth strategies in other markets and selective EPS accretive acquisitions.

Interestingly, LBL has most of its operations in either NSW or QLD with very little presence in other parts of Australia, while it operates predominantly in the Property and Mining sectors. Western Australia is a huge market for the company as it already operates in the mining sector, and if it can win customers in this market, this will help it execute its growth strategy.

The first half ending 31 December 2011 showed continued growth as profit more than doubled to $800,000 as revenue grew 28% to $7.6 million.     

On a price/earnings (PE Ratio) basis, LBL’s shares are trading at 9.1x FY12’s forecast EPS, while on a relative EV/EBIT valuation basis its shares are trading at 6x, well below the peer average of 9.5x.

HAPPY EASTER!

Status: GROWTH BUY

LBL’s shares today traded at 25.5c

For portfolio, sharemarket and fixed income enquires contact:
Dan Stratful at Investment Research Group (IRG)
Authorised Financial Adviser (AFA)
0800 437 8489, 09 304 0232, dan.stratful@irg.co.nz
**A disclosure statement is available, on request and free of charge.

Disclosure: LBL

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