Fresh listee Lynch Group shares rise after upgrading its guidance for FY21
The first major test for a newly listed ASX stocks is if it can meet or exceed its prospectus forecasts, and Lynch Group (ASX:LGL) passed that test today.
The company expected a pro forma net profit after tax of $28.7 million but now it expects this figure to come in between $31 and $32 million.
The key catalyst for the florist and potted plants wholesaler a has been stronger than expected pricing in China, allowing it to increase production to meet demand.
Business has also been positive in Australia, where it supplies nearly 30 per cent of florists and over 2000 supermarkets. This was particularly the case on Mother’s Day which Lynch Group said was the largest floral event of the year.
Another trend the company said it was benefiting from was “improving consumer perceptions of supermarket floral quality”.
Lynch Group raised capital at $3.60 per share although for much of its first few weeks it traded below that price. Today, shares rose above the threshold – by as much as 8 per cent.
Lynch Group would be far from the only ASX stock in recent times to initially drop on debut and then recover off the back of earnings.
Last week pathology network Australian Clinical Labs (ASX:ACL) lifted its guidance by over 10 per cent and has been slowly rising to its IPO price ever since its initial fall.
And on the flip side, data forensics company Nuix (ASX:NXL) initially more than doubled but is now little over half of its IPO price after two financial downgrades among other controversies.