LaserBond makes WA market entry


Staff reporter

Long-term gains but some short-term pain for LaserBond shareholders, who heard this week the ASX-listed small-cap was buying 40% of Western Australia-based Gateway Group for circa-A$10.8 million to position itself to tap the state’s mining, metals, energy and construction industries.

LaserBond has reported FY24 first-half net profit of A$1.69 million and $4.2m EBITDA on $20.28 million revenue ($18.65m in H1 FY23). The company generated $38.6m revenue in FY23.

It said 14-year-old Gateway’s FY23 revenue was $32.6 million. LaserBond is paying 4.5-times EBITDA ($5.6 million last year) for its stake and has an option to move to 51% within three years. It said the deal was expected to be earnings per share accretive in its first year.

Laserbond’s share price dipped by nearly 14% Friday to 75c, capitalising the company at $83 million. The shares are down more than 16% for the week.

However, they have climbed nearly 83% in the past five years.

Sydney stockbroker Curran & Co put a $1.40 target price on LaserBond last September when it speculated about a “modest WA acquisition” and suggested the company’s $60 million annual revenue goal for FY25 was achievable.

“The provider of innovative laser cladding services and long-lasting surface engineered products … will experience strong operating leverage from achieving this target, resulting in an EBIT of $15.6 million in FY25,” the broker said.

“LaserBond’s early entry into laser cladding over 22 years ago has allowed the company to develop world class technology and establish itself as the leading provider of laser cladding services in Australia.

“The company’s refurbished parts last five-to-10-times longer than new original components which provides its diverse industrial customers a major reduction in replacement and downtime costs.”

Gateway, which had about 100 employees at the end of 2023, provides a range of services, including chrome plating of high-wear metal machine and equipment components to improve their operating life.

LaserBond CEO Wayne Hooper said the move into WA “substantially increases” the company’s domestic market opportunity.

“With the inclusion of Gateway Group’s revenue, LaserBond will achieve its FY25 $60 million revenue target,” he said.

“The strategic focus for the next period will be leveraging the strengths of Gateway, incorporating our surface engineering capabilities into Western Australia, and completing research into an acquisition for North America.

“The formulation of our next revenue target to FY28 we look forward to sharing with the market in due course.”

LaserBond chairman Phil Suriano said technological advancement through a targeted R&D roadmap was “the engine room of our business and the reason we can offer superior, proprietary technologies that do not exist anywhere else in Australia and potentially overseas”.

“With our expansion into WA, there is ample opportunity to fill a gap in the market for sophisticated and bespoke technology and service delivery for a range of large, heavy-industry customers,” he said.

“We are also advancing our progress into the lucrative North American surface engineering market with the appointment of a buy-side broker.”

 

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