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September 13, 2011 BUY Price at Sept 13, 2011 Price Target 52-Week Range $9.00 $10.50 $2.50 – $9.55 Lasco Manufacturing Limited Strong revenue growth, improved margins & tax break Mario Ahjahorie Financial Analyst mahjahorie@scotiadbg.com Company Overview Lasco Manufacturing (LASM) is a company which was formed over a year ago and is the product of two long standing subsidiaries Lasco Food Proccessor’s Limited and Lasco Food’s Limited which together produce Soy and Milk based products. The amalgamation of the entities was in anticipation of their initial public offering and their combined product lines include: 1. 2. 3. 4. 5. 6. Lasco Whole Milk Lasco Readi Milk Lasco Food Drink Lasco Lasoy Lactose Free Lasco Oats Porridge…show more content…
Economy weak, Lasco strong Producing for local consumption is challenging given the weak economic background. The economy eked out a growth rate of 1.5% for Q1 March 2011, after 3 years of contraction. It means consumers’ spending power is still lukewarm as the growth rate was not enough to make a meaningful dent on the unemployment rate. Fortunately for Lasco, their products are positioned at the lower end of the spectrum, which allowed them to benefit from a shift in consumer spending habits. On the flip side, a recovery in the economy could see consumers shifting away from Lasco products. To combat this, the company will have to ensure their products are not branded only as low cost alternatives but also as high quality products when consumers regain their Figure 4: GDP Economy vs GDP Distribution 1.0% 0.0% Mar-08 -1.0% -2.0% -3.0% -4.0% Sep-08 Mar-09 Sep-09 Mar-10 Sep-10 Mar-11 Distribution GDP lagging Overall GDP rebound GDP - Economy GDP - Distribution Figure 5: Inflation - Reducing 30.0% 25.0% 20.0% 15.0% 10.0% 5.0% 0.0% Apr-08 Oct-08 Apr-09 Oct-09 Apr-10 Oct-10 Inflation rate has abated and stabilized, allowing companies like Lasco to better control operating costs Figure 6: Exchange Rate - Stabilizing 100 95 90 85 80 75 70 65 01-Apr-08 01-Oct-08 01-Apr-09 01-Oct-09 01-Apr-10 01-Oct-10 Jamaican Dollar exhibiting stability since 2009. Lasco therefore benefits from

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