I see the declining share price as an opportunity @Mujo, and have been accumulating IRL under 83cps. The share price has been almost flat for over 3 years, and earnings have grown at 17.8% over the last 5 years. One analyst on Simply Wall Street is forecasting earnings to grow at over 20% for the next 3 years. This aligns with management expectations, who are also confident in strong earnings growth going forward.

Assuming FY24 earnings come in at $6.1 million (5.6cps), and working on a PE multiple of 19x, I am valuing the business at $1.06 per share. I think by FY26 earnings could be c. $63 million (c. 6.9cps) which puts Laserbond on a forward PE of less than 12x. At a PE of 19x, Laserbond could be worth approx $1.30 in 3 years time. That’s a 60% upside from the current share price of 82cps.

I expect ROE to lift back up to 20% in FY24, making a PE of 19x sound very reasonable. I like that there is a good runway for growth in the US making it possible for a significant proportion of earnings to be reinvested at a high ROE. During FY23 Laserbond reinvested 63% of its earnings into growth. The dividend yield should come in at c. 2% fully franked.

The business is debt free and holds $31 million in cash. It is founder led with the CEO, Wayne Hooper, owning 19.2% of the business. The Hooper family combined hold nearly 40% of the shares.

The margins are good, the FY23 gross profit margin was 51.6%, and net profit margin was 12.3%. Margins could improve further as management rolls out their patented technology through franchises in the US.

With the ASX index at an all time high it’s getting harder to find high quality businesses at a reasonable price. I think Laserbond fits this category, and for me it’s a ‘no brainer’ at the current price.

Held IRL (1%)