Pinned straw:
Please! I sold LYL out of my largest portfolio in June (liquidated that entire portfolio) and I've been looking to buy back in - in a different portfolio - but they won't pull back!!
I can't hold them in my super because it's within an industry super fund and LYL aren't in the ASX300, so do not qualify for inclusion there, and the only place I currently hold them is here in my SM virtual portfolio (where they remain one of my largest exposures) and also in the one-stock-portfolio I "manage" for our two children. But I want exposure to them IRL again - and they're not giving me that chance at this point.
I can only imagine they'll just go higher in the lead-up to their next dividend - which will be another juicy one - but I'm going to hold off because they CAN bounce around on low liquidity every now and then, and I'd hate to pay top dollar now and then see them drop back a couple of dollars soon afterwards...
Patience is often rewarded, but it ain't easy!!
@Rick and @Bear77 - agree with you both. I'm in at $12. $LYL is a very well-run engineering company. Of course, as @Rick notes, if FY24 ends up being strong, it could step up out of reach. It can be argued to be not all that expensive today, even at $13.70.
But then again, its most closely related commodity has had a phenomenal 10-year run. And I can't take a further 5-10 year view on that, so I will be conservative even if that means I never get to own it.
While you've both put it on my radar screen through your posts here, it separately keeps popping up favourably on my sector comparisons of engineers. In particular, it seems to score well on retention and culture.
(It's on my "priority" shortlist - the list of 10-15, as opposed to the "long" shortlist of more than 30)
I don't understand why no analysts appear to be covering it - at a market cap of >$0.5bn its not exactly micro.
I hope you can get back in real life @Bear77. I think $12 wouldn’t be a bad price to get back in. What are your thoughts?
Lycopodium has grown to #6 in our real life portfolios and makes up about 5.8% by value. Unfortunately I didn’t add in Strawman. We’ve added shares a few times this year IRL after pull backs. I think LYL is approaching its valuation, but could still have some to go, depending on the FY24 result.
Back in February management confirmed FY24 guidance of $345 million in revenue, and NPAT between $46 million and $50 million compared to $46.8 million last year. Given 1H24 NPAT was $30 million compared to $20 million in 1H23, I think management, in their usual style, are being ultra conservative with their guidance. To reach the upper end of guidance 2H24 NPAT only needs to come in at $20 million. I think they’ll breeze that in.
Looking at the metrics I expect ROE will be close to 40%, similar to last year. I expect earnings to be between $1.26 to $1.50 per share based on NPAT between $50 million and $60 million, compared to $1.18 per share last year. That puts PE somewhere between 9 and 11 times FY24 earnings. Over the past 8 years the PE ratio has ranged between 7 and 15 with the median around 10. A simple PE valuation using 10x FY24 earnings puts the valuation somewhere between $13 and $15 per share.
If Lycopodium could maintain an ROE of 39%, you could expect a return of 15% per year going forward on the current share price of $13.70 (McNiven’s formula). About 10% of that would be in dividends (includes franking credits and assumes a payout ratio of 60%) and about 5% would be growth.
Good luck Bear!
Firstly, this: Lycopodium-2024-Full-Year-Results-Call-Details.PDF
Lycopodium Limited will report its full year results on Wednesday 21 August 2024.
A conference call will be hosted by Peter De Leo, Managing Director, Rod Leonard, Chairman, and Justine Campbell, Chief Financial Officer. The call will commence at 09:30am AWST.
To access the call, use the link below to register your details. Once registered, you will receive a confirmation email containing your passcode and PIN to join the call.
https://s1.c-conf.com/diamondpass/10039980-xq3cg5.html
I wasn't patient. I should have been. My reasoning was that they weren't expensive even at $14/share, so I ended up building a position that I was happy with at prices between $13.76 and $14.08, and as soon as I had what I wanted they dropped below $13, getting down to an intraday low of $12.485 on August 6th (last Tuesday - of last week) before finishing that day on their day-high of $13.28. Mind you, the amount of shares I wanted to buy would have moved the share price because they are quite illiquid with the majority of their shares held by insiders (founders, founders' families and management), so they do tend to trade small volumes. I accumulated 7,000 LYL shares in that real money portfolio - I can't add them to my SMSF as I have previously mentioned because they are not in the ASX300 index due to their reduced "free float" due to that very high insider ownership. To give you some idea of the liquidity issues - have a look at the bids and offers for LYL right now:
I can't save anything from MS Paint 3D right now, probably because my computer is too old and doesn't have enough memory to do the basics anymore since the latest Windows updates - I am in the process of "upgrading" to my son's "old" gaming PC, which is streets ahead of my office PC, but was too slow for him - so we upgraded his PC a few months back and now I have to move my stuff over to his old PC - probably on Saturday I'm thinking, but for now - that screenshot is the best I can do.
These are smallish bids and offers when you're trying to buy $100K worth - or 7,000 LYL shares, so I did it over a series of days at various prices. And I was tempted to buy more in the mid-$12s - like around $12.50 - and would definitely have added more at $12 or below, but they didn't get down to $12, and now they're back up to over $13.50. They were also down at around $12.50 for only a very brief period (on the 6th) and while I thought they might go lower, they didn't - they bounced back quite strongly, and quite quickly. No matter - I have my position, and at the current price, I'm only -2% down on my average buy price.
The reason for my post here today however is (1) to update that I'm back onboard with LYL, and (2) to mention that if history is any guide, they should have a reasonable run into their result in a week's time (next Wednesday, 21st August), and if they over-deliver on their already-very-positive guidance (which they usually do), then we may well see some further upside. So if anybody who wants exposure hasn't got any yet, I reckon the sooner the better, or else wait until after they go ex-div, but I personally want that div, so I'm in now.