Lindsay Australia (LAU) is involved in the transportation of refrigerated and general freight, logistic services associated with importing and exporting of horticultural goods and merchandising rural supplies. Lindsay delivered FY23 profit at the top-end of company guidance and ahead of expectations. FY23 EPS rose by 91% capping off a bumper year for the company, with a positive earnings outlook into the current financial year. The company has absorbed a sizable piece of the c$500m revenue market share previously held by Scott’s Refrigerated Logistics and further expanded its market position by investing in fleet size and national capabilities. FY24 will see a full 12-month earnings contribution of the large road and rail fleet, with what we believe to be longer contract duration and better terms.
Return on equity expansion to above 30% is testament to this improving position. The rural business capped off a soft second-half but has now cycled through excess inventories and has a level of insulation from climatic conditions given that it specialises in irrigated cropping areas. The WB Hunter acquisition has settled a month earlier than forecast, diversifying revenues into new horticultural regions. Following the result, we lifted our price target from $1.51 to $1.55 while retaining a Buy recommendation.