Category: Blogs – Company

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.

Recently , I read a report by PwC, in relation to India’s growth and the desired leap it needs to take in order to grow economy to 10 Trillion Rupees in 2034. The report highlighted various facts and expectations which are need to be sustainably managed and addressed in order to gain that share.

The report highlighted firstly and fore mostly manufacturing contribution to GDP increasing to around 24-25% , which will be tremendous for a country like India , which has abundance man power and capability to replace China to an extent of producing and incorporating great value added machines.

Value added Machines , which are made by true Entrepreneurs , latest know how ( R&D ) , and a eco system which has been designed to prosper the nation and its people.

With our Mindset of saving a major chunk of our Income , we are greatly placed to use to certain extent our own savings to facilitate these giant and enormous infrastructure project which will help future entrepreneurs to thrive and create something extra ordinary out in the future.Country still is an excellent place for investors , as still there are a lot of mis pricing which can be found in the market.

The other major improvement will be in Logistics sector, which will hopefully decrease the travel time and will increase efficiency in the sector.

With certain improvements like these, the Country is well placed to be a great nation once again.

ts been quite a long time , since I last wrote about a company . Today I am here to write about what I learnt from Howard Marks Memo and its book .

The reading was very enriching and informative as there was times , where I could not believe and accept if you see in a long run ( bird eye view ) it all makes sense.

I thought maybe I can share it here.

Firstly, the whole world’s primary output is GDP which they produce in a certain year through use of various fixed and working capital. The greater the output greater the prosperity and thus greater the reward. On an Average with favourable conditions ( working age population , fairer eco system and comprehensive long term approach ) a nation can build and transform its resources to most productive uses.

The Output which is total produced within a certain time frame is directly linked to credit cycle , the amount of credit available to the nation really provides finance to carry on different productive endeavours , why I am referring to this cycle now is as it sets the base of every productive nations, economies and also companies.

The credit cycle is something which is kind of an leading indicator where the economy is heading, imagine this if we think we are prone to develop and dedicate huge proportion of our cost in R&D , it shows that we have enough liquidity and money to survive everyday operations and cost , whereas a company which reduces their exposure to R&D ought to use those limited funds for everyday necessary operations.

The same is the concept for a nation, when Lenders are confident in an economy , they thrive and capital base increases. Because bad news is scarce , the risks entailed in lending and investing seem to have shrunk. Dodgy financial institutions move suddenly lot of capital is their in the market, with less or no financial standard and thus capital destruction phase starts.

The bottom line is that a country , economy or a company can grow through its effective and properly planned capital allocation startegy , the way capital is bought into the market and also the way it is been used speaks volume about a certain company or economy in general.

If we are printing money and credit is booming , what’s happening is we are boosting our consumption now and productivity ( actually to work for it ) to future. It is very important in the short run basically to be mindful about the consequences.

I am a very firm believer of understanding and measuring investments through eyes of a person who can only invests where the odds are highly highly skewed against his/her favour.

In the meltdown of 2007/08 crises I went back and found there where marketable securities which where giving the holder a chance of getting them at 10cents to a Dollar. I have always understood that we can sit out in the markets for years and years but once we get the position its final , And as Warren Buffett once said , ” In the long run time is your friend and in short your foe “

Sarvashay always try to do that, Keeping away from losers and as result winner will take care of themselves , we never try to out smart the sharpest , loudest or biggest mind on the table. We only understand solid identifiable value at a bargain price and we tend to just stay there. There is and will never be a rocket science to what we do and achieve , we just try tone at the right place at the right price.

Always a defensive approach with few attacks , that’s what is the key .

We are supposed to take risks when we make investments. We are supposed to feel unsure of future events which can potentially differentiate our expected returns from actual returns, but that’s the quality of a superior investor to understand the payoff RISK REWARD PAYOFF to use it for his own benefit. 

We are very much aligned to understand and exploit that. We understand that in a rational world every riskier investment should provide greater returns for the investor so they can justify extra risk taken by the same works on the other side too. 

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