Lynch Group : ASX

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


 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.

Leave a Reply

Your email address will not be published. Required fields are marked *