The name Lindsay has long been associated with transport and logistics in Australia. If you spend much time on country roads, you are probably familiar with the distinctive red and white trucks of Lindsay Australia (ASX:LAU). Not to be confused with the red and yellow trucks of Linfox founded by the other well known Lindsay of logistics, Lindsay Fox.
Brothers Tom and the late Peter Lindsay founded Lindsay Australia in 1953 when they bought three trucks and started transporting produce around the Coffs Harbour area. Michael Lindsay started with the firm in 1974 and in 1983 founded Lindsay Rural. Since 2002 he has been Managing Director and CEO. He retains a significant stake in the business, alongside Tom, as shown below in the Major Shareholders table available under the Accounts tab.
Investment firm Washington H Soul Pattison and Company own a 19% stake. When investing in small cap companies it is important to review the Major shareholders table to get an idea of how much of the stock is tied up with strategic holders and how much is available to be freely traded on the market (also known as the free float). It is also good to know the size of a founder’s holdings. A founder CEO with a substantial holding is likely to have well aligned incentives with other shareholders.
Consistent with their origins, Lindsay Australia is focused on the agriculture and rural sectors. They derived 72% of last year's revenue from transport and 22% from rural services. Rural services is a network of outlets that sell rural supplies with a particular focus on the horticultural industry. They also have an operation in the Brisbane markets providing fumigation, ripening, quarantine, and export and import services.
Their competitive advantages include their expertise in fresh food logistics, and their integrated road and rail services. They also provide a lot of refrigerated transport by both road and rail. The last year has seen considerable investment into their rail capabilities. They have added over 100 refrigerated rail containers recently and now have a fleet of over 400 rail containers, most of them refrigerated. The chart below shows how this investment has been driving revenue growth.
Source: LAU FY22 Results presentation, 17/8/2022
This combination of rail and road transport helped them to reduce the impact on the business from the flooding…
