Why you should buy shares in JLG
Johns Lyng Group is an incredible Australian company that specialises in the restoration of buildings, construction projects, and managing insurance claims.
Founded by Gary and Scott Johns, along with Leigh Lyng back in 1953, this company has grown to become a true industry leader.
What sets Johns Lyng Group apart is its strong presence in the insurance sector.
They work closely with insurance companies and policyholders to handle property damage caused by a range of events such as fires, storms, floods, and other natural disasters. They offer a wide range of services including building restoration, construction, and repair, ensuring that properties are brought back to their former glory.
Operating throughout Australia and now in the US, Johns Lyng Group has strategically positioned branches and offices, allowing them to swiftly respond to emergencies and provide timely assistance to their clients. Their solid relationships with insurance companies streamline the claims process, resulting in efficient and effective property restoration.
The company has a team of skilled professionals, including builders, project managers, estimators, and tradespeople who are well-versed in managing insurance claims and handling restoration projects. Their expertise covers everything from assessing and estimating repair costs to project management, construction, and restoration work.
But that's not all. Johns Lyng Group has expanded its offerings to include additional services that complement their core business. They now have divisions specialising in flooring solutions, plumbing, electrical services, and security systems, further enhancing their ability to deliver top-notch property restoration and construction solutions.
Why you should consider JGL
Investors looking for a unique and resilient investment opportunity should consider JLG for several compelling reasons.
Firstly, it has a strong business franchise - JLG has built strategic long-term relationships with its customers (these are some of the largest insurers in the world) with its diversified service offerings and integrated approach.
Its longevity and high-quality services have meant it continues to gain share domestically and now internationally. In a fragmented market, I see substantial market share gain in coming years through both organic opportunities and acquisitions.
Secondly, the defensive nature of JLG's earnings growth, driven by recurring revenue models and exposure to resilient markets, offers stability during economic uncertainties.
Particularly as we head into an economic slowdown here in Australia and globally. Organically, increasing demand for insurance-related restoration services, market share gain and expansion of the company's services offering have seen strong growth irrespective of economic conditions year in and year out. In addition, one of the most interesting components of this business (which some discount) is how it is a beneficiary of natural disasters.
When natural disaster or catastrophes take place, JLG often is the first call for government and insurers as it is seen as the most trusted operator for disaster recovery and rebuilding.
These contracts are generally large in nature and take years to complete which means JLG has incredible visibility to a big part of its earnings, on top of the defensive growth from other parts of the business (BAU - business as usual).
Sometimes I like to refer to this company as a beneficiary of climate change because we have seen increasing catastrophic events take place in the past decade and this part of the business is absolutely booming.
Lastly, JLG's strong track record, demonstrated by its ability to consistently meet or exceed guidance expectations, instills confidence in investors. The company's management team has a proven ability to deliver on promises and create long-term value for stakeholders.
In the past five years, this company's share price has increased five-fold and is expected to grow its earnings by over 40% for the 2023 financial year and another 15% for 2024, this is before multiple upgrades which are generally announced throughout every financial year.
In conclusion, Johns Lyng Group is a unique and high-growth investment opportunity with reasonable earnings multiple of 23x compared to its other high-growth peers at over 30x.
With its defensive earnings growth, high earnings visibility, and strategic acquisition opportunities, JLG stands out as investors seeking stability and growth. By capitalising on its exceptional market position and solid financial performance, investors can participate in the success story of this exceptional company.
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