I invested in May 2024 with the basic thesis that Laserbond offered a solid and reliable industrial business as a base line investment but via its Tech division it offered a leveraged growth upside surprise opportunity. The base business was a small growth opportunity limited by the need for capital and capacity scale up that would staircase profit growth in a slow but methodical way. Not at all attractive by itself, other than on a potential valuation basis at the right price.

The core of the thesis and my interest was the ability for the business to scale with low capital input and without the operational limitation constrains (aka skilled workers) and into bigger markets (aka US/ROW). The Gateway purchase was a partial proof of concept, but the current Komatsu deal is what I have really been looking for in term of business growth models that offer rapid scaling.

As usual I was too early (by almost 2 years) and probably should have not assumed much dynamism from the previous management. I have been questioning my position over the last 6 months but I think the new management and what looks like solid progress to revenue in the Tech division tells me my original thesis remains intact.

On a valuation basis the current price looks modest assuming it achieves my estimated $5.5-6.5m NPAT in FY26  the PE would be between 11 and 13. With 10% topline growth and 5% opex growth I get a DCF valuation over $1.00 which assumes good but not heroic growth given FY26 is tracking towards 12-17% sales growth (assuming H2 sales dominance persists).

The new management seem to be better placed and motivated to grow the company but are yet to prove themselves fully. Also, we know little about the Komatsu deal, so the economics of the scaling opportunity remain a black box, but it should allow for high margin royalty/licencing revenue on top of any capital, parts or servicing sales which would be more normal margins.

So, I am going to sit and watch with my half weight position, not enthusiastic enough to increase it to a full weight position, but not selling which was on the cards prior to the half year result.

Disc: I own RL