Q: You seem somewhat concerned by the low level of cash for Luimine in the recent report and how under capitalized the business is. This along with the high EV/EBITA ratio. So we be concerned?
Thx
Thx
5i Research Answer:
In the recent LMN report, we mentioned “LMN only has a net cash of around $7.2M; this is a very low leverage level for a business that is expected to generate more than $300M in EBITDA”. We meant LMN has a very solid financial position and could be able to carry more debt if management wants to. However, the Forward EV/EBITDA is around 28x, and we think this is a premium valuation (relative to CSU at 24x), and this valuation could be justified if LMN continues to execute to grow strongly over the next few years. We remain bullish on LMN’s prospects.