1. Australia’s one of the leading vertically integrated wholesaler and retailer of flowers and potted
plants which owns a subsidiary company in China as well.
2. Its core business reliance is on supply chain of Floral and Potted products to supermarkets to
cater to public at large. In Aus., their share of people purchasing from these supermarkets is
19% which is increasing at a rapid rate, also LGL is further associated with famous major
supermarket chains such as Coles, Woolies and Aldi.
3. The company’s eco system revolves around many contributing factors to the vision of the
company but to name a few factors are: –
Best Quality assured at reasonable prices.
Constant involvement of supply and scale
Greater emphasis on Supply Chain as they import from China
4. Some of the risks associated in general with the company are as follows:
Customer Concentration Risk – A huge dependance on number of large customers in
Australia
Continuous changes to Australia’s quarantine and custom requirements
5. The company forecasts a tremendous growth as per the pattern drawn from UK Supermarkets
which assumes a growth range of 15% to 55 % in the last 15 years and is still growing at a
significant speed.
6. The main source of revenue stream of income is from Australian Markets as growth in China is
still fragmented and there is a potential of growth in future.
The Cost System
7. As mentioned above, Lynch Holdings draws major stream of Income from Australian Market as
they have comparatively bigger market than China and their reliable supply chains which
enhances the growth of the company in an effective manner.
8. However, there are cost variables which adds hinderance to their growth a) Global Supply chain
Impacts & b) Availability of Labor. Because of which company is facing a downside trend along
with Covid Pandemic and War issues.
The Financials
9. The Companies revenue generating capacity on an average is 5-7% from last 4 financial years.
For 2022, revenue increased by $66.3m (22.1%) it grows significantly from $300.2m in 2021 to
$366.5m in 2022.
10. Net Profit after Tax Adjusted for Amortisation is 24.7m.
Breakdown of the Company
11. The Company accounts for $388 million worth of assets which primarily holds for $200m
Goodwill. Net Assets [Assets – (Liabilities + Capital)] is $242m.
12. The Total share outstanding is 122,456,000 shares out of which it includes options outstanding
for 3,582,531 shares, the company’s per share value is estimates around $1.93.
13. Out of $1.93 per share, major holding of $1.60 is goodwill, and then we call Discounted cash
flow assuming a certain interest rate, it comes around $0.50.
14. $1.94 + $0.50 = $2.44 per share assuming company will not dilute more share and options
remain in check.