I'm not a holder of LGD though I have had my eye on them for sometime. I like the fact the Thorney is involved.
As for where the SP is going, interesting!
Back in December there was a Becoming A Substantial holder announcement. This is a US fund, Positive
They then announced a buy back. Positive
I believe LGD is well run and the CEO/MD has huge skin in the game +28% of the shares outstanding. Positive
On the negative side, they are heavily impacted by the falling dollar and have been slow to get price increases into the market. Also I do not believe they would get all increases to stick. On top of that the dollar has fallen further so some challenge if needing to go back with further price increases to maintain margin. Potential loss of revenue/market share due to price increases.
The balance sheet had some debt and was to increase with the latest acquisition, add to that the buy back and I believe the balance sheet will be restricted into the future for any major opportunities. Note I said restricted not at risk.
I personally believe that the reason for the buyback was purely because the SP is attractive and the board didn't want to see the SP soften resulting in loss of interest from investors. I believe the short term outlook is soft due mainly to high Debt +$22m, margins softness/currency exposure and its impact of trading results. Remembering the acquisition has a full six months +EBIT impact yet the guidance has EBIT lower than last year.
LGD Price at posting:
22.0¢ Sentiment: Buy Disclosure: Not Held
