MM thoughts on Lark Distilling (LRK)

Hi David,

This Tasmanian based Whiskey producer  is a new one for MM however it looks great from both a fundamental and technical perspective. As you say, it’s a tiddler with a market capitalisation of ~$160m however the trajectory of its sales / revenue is very strong. In 2020 they generated sales of ~$7m and that’s expected to grow to ~$15m in FY21, ~$27m in FY22 and ~$38m in FY23 (although obviously a lot can happen between now and then). 

The important thing to monitor here is that margins remain solid while this growth is achieved. If the expected growth comes through, then the operational leverage in the business really kicks in and profit increases materially. Clearly these guys have developed a great brand and I think they articulate their message very well – it’s worth a look here https://larkdistillery.com/brand/.

The only potential red flag here is the resignation this week of Non-Exec Director Laurent Ly, who also owned 4.7m shares which were sold yesterday in a block trade at $2.20 per share, an 8% discount to the market at the time. The buyers were Perennial Value, Greencape & Mirrabooka. Overall, this looks like a very interesting stock.

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Lark Distilling (LRK)

LAST UPDATED 23/04/2021 11:19

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Lark Distilling (LRK)

LAST UPDATED 23/04/2021 11:19