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Laserbond (ASX:LBL) FY 2019 Full Year Results

2019-08-20T01:07:40+00:00

Laserbond (ASX:LBL) FY 2019: Triple Digit Profit Growth

Additive manufacturing company Laserbond Limited (ASX:LBL) released its full year results for 2019 earlier today. At the time of writing, its share price has gained 18% to 57 cents, up 137% from when we initiated coverage on it last year. Revenue rose 44.9% to $22.7 million, net profit after tax (NPAT) was up 190.3% to $2.8 million and earnings-per-share (EPS) grew 185.8% to 3.0 cents. The results are better than the most recent guidance issued by the company in May of revenue between $21.6 million and $22.2 million and profit before tax of between $3.2 million and $3.5 million ($3.8 million actual). The board declared a final dividend of 0.5 cents making total dividends 1 cent per share for the year, up 66% on last year.

Cash from operations was $4.1 million up from $0.4 million last year and $3.4 million was spent on plant and equipment to increase capacity and improve efficiency. A significant proportion of this investment relates to a new high powered laser system commissioned in the South Austraian facility during the year which should enable the company to both grow sales and enhance margins. Cash at 30 June was $2.2 million offset by $2.9 million of financial liabilities, slightly up on the net debt position a year ago of $0.5 million.

Underlying earnings before interest, tax, depreciation and amortisation margin (EBITDA%) improved from 16.0% to 21.6% demonstrating operating leverage as overheads rose by less than gross profit.Underlying gross margin (GM%) improved slightly to 47.4% from 46.3% last year. Underling figures exclude a $0.3 million inventory impairment in FY 2018.

All three divisions performed well with services revenue up 11.3% to $11.2 million, products revenue up 62.8% to $9.1 million and a technology sale for $2.4 million compared to none last year. The second half of the year was an improvement on the first half, but only because of the technology deal. Both services and product revenue were slightly down half-on-half. A noteworthy achievement was breaking into the US market with steel mill rolls. Management said, “The steel mill roll market in the United States alone is estimated to be well over fifteen times that of Australia, and Australia steel mills provided $285k revenue in 2019 (and growing)”

The technology sale during the year included $1.95 million of equipment and a further $0.4 million of consumables. The customer is under contract to continue buying these consumables from Laserbond and they could be worth $1 million per year albeit at relatively low margins. In addition, the customer will pay a utilisation based licence fee estimated in the hundreds of thousands of dollars per year falling straight to the bottom line. Another technology sale is planned in 2020 and two per year from 2021.

Based on these results Laserbond trades on a historical enterprise value to earnings multiple of under 20. The outlook remains positive for the company with double digit sales growth forecast for the Services and Products divisions at similar profit margins to FY 2019. Longer term the company is targeting $40 million of annualised revenue by 2022.. Today’s results have proved that operating leverage exists within the business and so an almost doubling of sales could translate into even higher profits. This is without the impact of technology license fees which will start to flow from next year. Whilst half on half revenue excluding technology was slightly lower and there is a decent chance that the coming year will be one of consolidation, I think Laserbond shares remain good value over the long term and I will be holding on to my shares.

Disclosure: Matt Brazier and Claude Walker both own shares in Laserbond at the time of publication, and will not sell for at least two days.

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This article does not take into account your individual circumstances and contains general investment advice only (under AFSL 501223). Authorised by Claude Walker.

Addendum from Claude

Matt has covered Laserbond very well for Ethical Equities, quite publicly.

But newsletter subscribers were quite clearly told we liked the stock back in October last year, when we sent them this:

So even if you're not ready to become a paid subscriber to Ethical Equities, I do believe there is a lot of value in the Free (albeit infrequent) Newsletter.

Laserbond: Impressions From A Site Visit

2019-05-22T07:02:22+00:00

Laserbond (ASX:LBL): Guidance, Thesis Update And Site Visit

This is the third time that we have covered Laserbond. We first introduced the company in October 2018 and also reviewed the HY 2019 results.

Introduction

Last week I visited Laserbond’s Smeaton Grange facility and met with CEO Wayne Hooper and Financial Controller Matthew Twist. Wayne and Matthew were open, friendly and generous with their time. I spent three and a half hours on site, spending time in the company boardroom and having a tour of the shop floor including the R&D laboratory. The factory is more like a workshop as much of the work done at Smeaton Grange is bespoke services such as reclamation. The 5,400 m2 premises contains 2 laser systems and a High Pressure High Velocity Oxy Fuel (HP HVOF) thermal spray setup, but the majority of the space is used for machining.

Business Segments

Laserbond has three divisions which are Services, Products and Technology.

Services is where customers send their existing parts to Laserbond to be repaired or improved. The company has been offering services since it was founded in 1992 and it remains the largest segment by revenue. Services do not always involve extending life or using Laserbond’s proprietary technology and around 60% of group revenue is derived from laser cladding.

There is little in the way of competition for the Services business . Being close to the customer is critical as lead times dictate cost. There are a few small companies around the world that specialise in laser cladding, but they typically do not have a presence in Australia. The advantage of location is one reason why Laserbond is looking to expand geographically, but more on that later.

The Products division is the fastest growth area and manufactures parts which undergo laser cladding to extend useful life. Customers are mostly OEMs and Laserbond relies on two such customers for 46% of its total revenue. Laserbond provides OEMs with differentiation for their own products, which mitigates customer concentration risk.

Own brand products are yet to take off. There was a false start with the DTH Hammer released in 2015. The product has struggled to gain traction because it is only superior to cheaper Chinese alternatives in the harshest environments. Also, the DTH Hammer is designed for the Drill and Blast industry which is fragmented and so hard to sell into.

A more recent product, Composite Carbide Steel Mill Rolls, looks more promising. It lasts three times as long as competing parts, but is more than three times as expensive. Despite this, it saves customers money through reduced downtime. The product is currently used in Australian steel mills and is undergoing testing at five sites with a major US customer. The US steel industry is 15 times larger than Australia and so these steel mill rolls have the potential to become a significant contributor to revenue.

Correction thanks to Gregory Hooper, CTO and founder:

"Our Composite Carbide Steel Mill Rolls are lasting more than 5 times longer than competing parts and are less than double the price. This development would be regarded as step-change within the steel industry and addresses a costly wear issue that has been a problem for many decades. The manufacturing of our Composite Carbide Steel Mill Rolls utilises our Patent Pending Laser deposition method."

The current strategy for the Products division is to develop products where laser cladding provides an obvious advantage over existing alternatives. This could mean that the product range becomes thinly spread across a range of geographies and sectors instead of addressing a specific industry. In turn this may improve revenue diversification, but could also mean that fewer economies of scale are attainable. For example, the company would constantly need to break into new industries and its sales and marketing teams may remain unspecialised.

The Products division is perhaps more likely to encounter competition than Services as manufactured parts can be more easily distributed internationally. For example, Caterpillar carries out laser cladding internally on some of its products. Laserbond generated just $2.6 million in export sales last year and so the division is still too small (and will remain so for some time) to attract the attention of such competitors.

The company also licenses its laser cladding technology overseas, involving a large upfront fee for equipment and ongoing license fees of around $200 thousand per year for training and support. I had wondered if this could hurt Laserbond’s competitive position in the long-run, but learned that the company does not give away all of its knowhow when it sells a technology package. It is constantly innovating in any case and so the technology it sells becomes outdated over time.

The first technology deal was with a Chinese company and involved Laserbond receiving an ongoing percentage of the customer’s sales, but this has translated into little revenue to date. Management has learned from this and the latest sale, which was to a UK multinational, is based on hours of usage which can be monitored by Laserbond remotely.

Economic Moat

I believe Laserbond has a sustainable competitive advantage because of its R&D capability. It was the first to introduce HVOF to Australia in the early 1990s and created its first laser cladding system in 2001. Laserbond has improved that early laser setup significantly, both in terms of efficiency and quality, and still manufactures its own systems today. The reason it originally decided to manufacture its own equipment was because it was too expensive to buy it ready made. New entrants would have the same problem today. They would either have to go through years of learning to develop a similar solution in-house, or pay the likes of Laserbond to provide them with one at much greater cost and which would need upgrading over time.

The three colours in the pictures above represent different elements. The improvement from the left panel to the right panel typically represents a doubling of useful life for a product. The breakthrough was developed by Laserbond in 2014 and patents are still pending. The company believes its laser cladding technology is the best in the world.

The other element of Laserbond’s moat is its expertise of knowing which solution to apply in each application. For example, spray surfaces are a good solution for corrosion, but do not stand up so well to wear as there is no metallurgical bond. Alternatively, some materials cannot be welded as heat from the process breaks down their qualities.

Laserbond has demonstrated and refined its expertise over many years developing strong relationships with customers in the process. Some of these customers are now willing to buy products from Laserbond because of this shared history. These relationships are critical as Laserbond’s products are usually more expensive than alternatives and so customers would probably not buy them unless they were convinced of their superiority.

As laser cladding is not necessary or even desirable in many cases, it may not make sense for a large equipment manufacturer to simply copy Laserbond’s technology and apply it to all their products. This could benefit Laserbond as it may leave exploitable gaps in the market which are too small to interest larger competitors. In this way, Laserbond could become a niche parts supplier to various industries over time. Added to this, selling spare parts is an intrinsic part of the business model of some manufacturers. It is not in their interest to significantly extend the life of such parts.

Historical Performance

Laserbond has achieved remarkably consistent sales growth over the years despite generating most of its revenue from the mining sector. This is for two reasons. It is growing relative to the broader industry and it is exposed to mine maintenance and not mine construction. Indeed, customers are perhaps more likely to look at extending the life of equipment during tough times rather than replacing it.

You can see below how revenue (the blue) has grown steadily over time, while profit before tax has swung around a bit.

Between 2013 to 2016 the mining industry contracted sharply coinciding with Laserbond’s expansion into South Australia and with it moving into a much larger facility in NSW. Consequently, operating costs increased substantially at a time when revenues plateaued impacting profitability.

Such volatility is also caused by a low base effect and so as Laserbond grows profitability should become more stable across the cycle. However, Laserbond is and will remain a business with high fixed costs, which must invest in advance of expected growth and so profitability will remain bumpy.

Various exceptional items relating to the upgrade of the Cavan laser rig and the recent UK technology sale are included in working capital at 30 June 2018 and 31 December 2018. Excluding these, in the first half of 2019 the average working capital to annualised sales ratio was 26.5%, its lowest level since the first half of 2015, as can be seen below.

26.5% is still high and it is clear from breaking working capital down into its constituent parts that receivables is the main contributor. As can be seen below, receivables days have averaged around 3 months over recent years. This is a long time to wait to get paid and may say something about the balance of power in Laserbond’s relationship with its large OEM customers.

Outlook

Over the past couple of years, revenue growth has been strong and this looks set to continue. Currently, the company is experiencing a shortage of machining staff and has had to turn away some business for which it could not guarantee sufficient turnaround times. A lack of skills locally has led the company to source employees from overseas. It has experienced significant delays in doing so due to the recent government transition from the 457 to the Skilled Migrant visa program. Hopefully, this is a one time only event and such delays are not repeated in the future.

The above chart is taken from the latest investor presentation and includes forecasts from FY 2019 onwards. Horizontal lines mark $5 million increments and so the FY 2022 forecast is $40 million. In the context of the above figures, it is worth considering that Laserbond’s revenue visibility is limited as its sales cycle is only a few weeks long and the company has a missed forecasts in the past.

The following chart was taken from the 2015 Annual Report and includes forecasts at the time.

As you can see below, these targets haven’t yet quite been reached, and it has taken a couple of years longer than anticipated. The main reason for the lag is that the DTH Hammer product did not take-off as hoped.

From July 2016 the Products division includes OEM products (previously in Services). Jan-Jun 19 figures are based on the mid-point of FY 2019 company guidance.

Aside from missing revenue targets, there is also a risk that focus on growth comes at the expense of returns. The company has publicly stated that it is looking to expand geographically, either through an acquisition or a greenfield site. Strong sales growth means funding is tight and so such a move would likely be accompanied by a capital raising, as was the case when Laserbond expanded into Queensland and South Australia. However, if geographical expansion happens, it would probably only require a small raising.

The company has expanded into Queensland and South Australia previously. The Queensland expansion was via the ill-fated acquisition of Peachey’s Engineering in 2008 and later disposed of in 2013. A number of unfortunate events unfolded following the acquisition of Peachey’s. A family tragedy impacted the long-standing manager of the business, it was dependent on work from Rio Tinto which scaled back operations in the area and the LNG boom caused high wage and rental inflation.

The South Australia expansion has been much smoother. Laserbond opened a greenfield site in Cavan in 2013, towards the end of the mining boom. Although this meant that growth was slow in the first couple of years, it gave the company the opportunity to develop valuable R&D significantly improving the performance of its laser cladding technology (as per the coloured images from earlier in this article).

Laserbond recently replaced the laser at its South Australia operation. The new unit cost around $0.5 million and its installation has led to a reduction of around $100 thousand per year in energy costs. In addition, production output has doubled. Further improvements will come from the installation of a second laser in the next couple of months. The two lasers will be controlled by a new robot system, allowing one person to operate both lasers whilst reducing downtime. Similar opportunities exist to upgrade the two lasers in NSW, where there is also the opportunity to add a third. Such investments promise excellent returns on investment.

Clearly, there exists spare capacity within existing facilities. Smeaton Grange currently operates on two shifts rather than three and as stated above could take another laser. A second laser is about to be installed in Cavan. The fact that the company is looking to add another site despite an apparent surplus of spare capacity may say something about the wealth of sales opportunities that lie ahead. It may also be related to a buoyant share price.

Valuation

Laserbond’s share price has roughly doubled since listing in 2007 at 20 cents. Grossed up dividends represent a further 6 cents to give a total return of 130% in just over 11 years, or 7.6% compounded per year. This is a decent performance, but I own Laserbond shares because I am expecting better returns in the future.

If management’s FY 2022 forecast is achieved then today’s share price of 40 cents, representing a market capitalisation of around $40 million, will appear cheap. Assuming 12% net profit margins, the stock would be trading on a FY 2022 price-to-earnings (PE) multiple of 8 assuming minimal dilution between now and then.

UK listed Bodycote is the global market leader in heat treatment, dwarfing its nearest competitor. Like Laserbond it offers surface engineering technologies such as HVOF, but crucially does not currently offer laser cladding. Neither does it have operations in Australia.

Bodycote generates strong returns on capital, also experiences stable revenue combined with lumpy profit and trades on a mid-teens forward PE multiple. Laserbond trades on a similar multiple and is growing much faster than Bodycote so is arguably relatively undervalued.

Conclusion

I remain a supporter of Laserbond as it has many features that I look for in an investment. Management are entrepreneurial, long-standing and their interests are well aligned with shareholders. Laserbond’s R&D capability provides it with an economic moat and it has few competitors. Although the business is exposed to the mining cycle and dependent on some large OEM customers, it is becoming more diversified. The company is undergoing rapid sales growth and management has an abundance of excellent capital allocation opportunities.

There is a risk that the mining sector turns down in the near term and takes Laserbond’s profits (and share price) with it, as happened in 2012. But it is also possible that the company achieves its sales targets over the next few years and richly rewards investors in the process. In the first scenario I will probably sell my shares and look for an opportunity to re-enter when conditions improve. Otherwise, I intend to keep hold of my shares as long as the company continues to improve and the share price remains sensible.

Disclosure: Matt Brazier and Claude Walker both own shares in Laserbond and will not trade for at least two full trading days following publication. This article contains general investment advice only (under AFSL 501223). Authorised by Claude Walker.

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Laserbond Limited (ASX:LBL) HY 2019 Half Year Results: Planning Pays Off

2019-02-24T01:11:09+00:00

Laserbond Limited (ASX:LBL) HY 2019 Results: Planning Pays Off

Surface engineering company Laserbond reported great results on Friday. Revenue was up 45% to $10.5 million as guided in January, but EBITDA exceeded guidance of $1.8 million coming in at $2.1 million and up 293% from last year. NPAT was up 635% to $1.2 million, operating cash flow jumped from $0.2 million to $1.8 million and free cash flow improved from $0.3 million to $1.8 million. Unusually for a manufacturer, investing cash flows were positive, although at least $0.5 million of expenditure is planned for the second half.

Turning to the balance sheet, cash of $2.8 million exceeds $2.5 million of financial liabilities. This was an improvement from a net debt position of around $0.5 million at the end of June 2018. Such cash generation is impressive in light of the strong growth the company is experiencing and enabled a substantial increase in the interim dividend from 0.2 cents to 0.5 cents.

The products division was the key driver of growth in the half with revenue up 103% to $4.8 million and also saw an improvement in gross margin from 42.5% to 49.6% due to efficiencies of scale. Growth is expected to continue with the company recently winning its first orders from a US steel manufacturer at the end of last year for its Composite Carbide Steel Mill Rolls.

Meanwhile, the services division recorded revenue growth of 17% to $5.7 million and is also expected to continue growing. Furthermore, gross margins are expected to return to historical levels of around 50% in the next 12 months, up from 45% for the first half.

The technology division registered no sales in the half but the company incurred some costs related to a $1.8 million order with a UK multinational that will flow through as revenue in the second half. Management are confident of securing further deals in future.

In light of all the above, my 2019 forecasts (included in the charts on the original writeup) look achievable. $22 million of revenue implies a repeat of H1 plus the UK technology sale. EBITDA of $4.3 million is just over double the first half result.

At Thursday’s closing share price of 38.5 cents, Laserbond is trading on an EV/NPAT in the mid teens using my EBITDA forecast for 2019 and adjusting for interest, depreciation and tax. History shows that Laserbond’s profitability can be volatile and so you could argue the company is fully valued at this multiple. However, I would point to the long-term revenue growth trajectory, the talented Hooper brothers who founded and still run the company, and the minimal share dilution that has occurred over the years.

Profit is unlikely to keep growing in a straight line from here and consequently there will probably be better opportunities to pick up some shares. But there may not, and if you believe in the long-term future of Laserbond then the shares are not particularly expensive at these prices.

I hold Laserbond shares and intend to continue holding while the growth story remains in tact. Assuming it does, I will be looking for an opportunity to add some more shares on any significant price weakness.

For those interested, this piece I wrote last year provides further detail on what the company does and its history. However, since writing that article, Laserbond’s share price has risen almost 100%.

Please feel free to sign up to the forums and let us know what you think!

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Note from Claude: Regrettably I did trim my position in Laserbond prior to these results, after the strong share price appreciation. That seems to be a mistake I make pretty often, and I'll put it down to the fact that I haven't followed the company very long, and I was trying to be too cute on valuation.

These results came in above my expectations. This is a very promising start to our coverage of Laserbond (all Matt). I will keep an eye on the share price and should there be a sell-off as a result of wider market malaise, then I would consider Laserbond a prime candidate for accumulation. So far I've been really impressed with what I've seen and if, as we increasingly believe, this is a good quality business run by honest and competent management, then they could achieve a lot in the long term.

Disclosure: Matt Brazier and Claude Walker both own shares in Laserbond at the time of publication, and will not buy or sell for at least two days after publication of this article. This article contains general investment advice only (under AFSL 501223). Authorised by Claude Walker.

LaserBond Limited (ASX:LBL): Scratching Beneath The Surface

2018-10-25T21:50:17+00:00

LaserBond Limited (ASX:LBL): Scratching Beneath The Surface

LaserBond Limited (ASX:LBL) was founded in 1992 by engineer Gregory Hooper along with other members of his family. Brother Wayne Hooper, also an engineer, joined the company in 1994 and the two still run it today. Gregory is responsible for much of the technology the company has developed over the years and Wayne is focused on business strategy and operations.

Edit (30/10/2018): The Hooper family collectively owns around 47% of the company.

Essentially, Laserbond uses various techniques to strengthen the surface of heavy duty equipment such as mining drill bits and steel mill rolls. Initially the company was focused on, and developed, its own techniques for thermal spraying. That is where semi-molten droplets of a coating material are sprayed at high velocity onto a substrate material. Since 2001, Laserbond has become a world leader in laser cladding technology which involves bonding a surface material to a substrate using a high power laser. This produces a metallurgical bond and unlike welding is done at low heat minimising damage to the materials. The company also does heat treating, machining and welding.

Laserbond has three operating divisions: services, products and technology. The services business is reclamation work where customers wish to extend the life of equipment. In many cases, Laserbond treated equipment can last more than twice as long. The products division makes new equipment for either OEMs or under Laserbond’s own brand name. These products are designed to last much longer than competing products that have not undergone a similar surface engineering process. Finally, Laserbond manufactures laser cladding rigs which it sells overseas to customers in non-competing industries along with ongoing training and maintenance.

In all cases, Laserbond saves its customers money by extending equipment life at a fraction of the cost of replacement. Although its products are a little more expensive, their lifespan is often multiples of alternatives. The techniques are also environmentally friendly because they use a tiny amount of energy compared with manufacturing new products.

Considering 75% of Laserbond’s revenue is sourced from the mining sector, the business has been surprisingly resilient since listing in 2007. On an organic basis revenue has grown steadily, from $2.6 million in 2003, to around $20 million this year. Even during the mining downturn between 2013 and 2015, revenue was flat whilst most mining services companies suffered steep declines. This suggests customers aren’t willing to cut their expenditures lightly.

Organic profit before tax, excluding non-cash write-downs, has been less consistent, although the company has been profitable every year other than 2016, when it made a small loss. Between 2013 and 2016 Laserbond moved to a new larger manufacturing facility in New South Wales, established a greenfield operation in Adelaide, and invested heavily in staff and capital equipment, ahead of expected growth. All this affected profitability.

Many small and growing businesses experience such profit volatility until they reach a scale where incremental investments become insignificant relative to profits. You can see how this has played out with Laserbond in the image below:

The 2019 figures in the charts above are my estimates and all data excludes contribution from an ill fated acquisition of Peachey’s Engineering made in 2008, and disposed of in 2013. The idea behind buying Peachey’s was to provide a beachhead in Queensland where Laserbond could roll-out its laser cladding and thermal spraying services. The services business is dependent on proximity since the equipment is expensive to transport (products only require a one-way trip).

Laserbond paid $3 million upfront for a business that was expected to deliver $1.4 million in earnings before tax. The trouble was that it was heavily dependent on Rio Tinto’s Alcan aluminium refinery in Gladstone. Shortly after Laserbond acquired Peachey’s, Rio scaled back its aluminium business impacting revenue. At the same time, the Gladstone LNG plant was under construction putting upward pressure on wages for skilled tradesmen and Peachey lost some of its best employees.

When I spoke with Wayne Hooper, I asked why the company was still considering acquisitions following this experience, and given that the greenfield expansion into South Australia had gone so well. He said that lessons had been learned and the next time they will make sure everything is right. We will see, but in any case, it is an acceptable risk since acquisitions are not the core strategy of the company.

Wayne made a comment during our conversation that I thought underscored the innovative nature of Laserbond. When I asked about the risk of selling technology packages overseas and, how to ensure customers continue to pay licenses, he said that customers will need years of support to properly learn the techniques. On top of that, Laserbond manufactures the cladding systems themselves out of necessity, because when Wayne and his brother first started getting interested in laser cladding, they couldn’t find a company to supply them with the setup they wanted.

Clearly, there is significant key man risk in the business but this is something that management is aware of. This is part of the reason for the ongoing staff recruitment. They have hired an R&D manager with a PhD from Germany and continue to broaden the management team.

I think that Laserbond may be at an inflection point. Historically it has been a niche services business focused on reclamation with obvious limits to scalability. But in the last couple of years it has established the products division which has the potential to grow significantly and yield economies of scale over time.

It hasn’t been entirely smooth progress so far. The company’s down-the-hole hammer products have yet to take off and Wayne said this is because Laserbond doesn’t currently offer the same range as competitors. This is being addressed through a collaboration with Boart Longyear and the University of South Australia which should yield a variety of products that Boart may potentially distribute in the future.

The addressable market for Laserbond’s surface engineering techniques is vast since they can be applied to virtually any piece of heavy equipment. The large manufacturers currently don’t really use the techniques and so Laserbond’s competitors are mainly small innovative services operations like itself. Even after a recent run-up in share price, Laserbond is capitalised at just over $20m with minimal net debt. This compares to recent guidance of at least $1.8 million earnings before interest, tax, depreciation and amortisation (EBITDA) for the first half of 2019. The future looks bright, although there may be a few more bumps in the road along the way.

Note From Claude:

I greatly appreciate Matt contributing this research into Laserbond, in which we both own shares. In some ways, it reminds me of Kip McGrath Education Centres (ASX:KME), because it is a tiny, family run company that seems to be heading in the right direction. In my experience these kind of companies often fall off the radar of most investors, completely, so the observant and patient investor has the chance to buy shares at attractive prices.

If Laserbond is actually a good quality business, then there will probably be plenty of upside over the long term at current price of 23 cents per share, with a (growing) dividend yield of 2.6%, fully franked. However, I would consider a yield of 3% - 4% to be my target price to buy shares.

But the real value is in following along with the story, because a company this size will almost certainly be forgotten, at times. At those times that I will be looking to buy in my target price range, with a patiently set limit order. The other time I like to buy tiny companies like Laserbond is if there is some sort of good news but the market is slow to react. Both scenarios are worth watching for, in my view.

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Disclosure: Matt Brazier and Claude Walker both own shares in Laserbond at the time of publication, and will not sell for at least two days. This article contains general investment advice only (under AFSL 501223). Authorised by Claude Walker.