Lark Distilling Co Ltd (ASX: LRK) this morning announced the successful completion of its capital raise. This news has sent the Lark share price jumping 24.55% to $1.37, at the time of writing.
This compares to the All Ordinaries Index (ASX: XAO) which is up just 1.05% for the day so far to 6,076.30 points.
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What does Lark do?
Formerly known as Australian Whiskey Holdings Limited, Lark is involved in the Australian craft distilling industry. The company produces whiskey and liqueurs in Hobart, Tasmania.
Completion of capital raise
Lark updated the market today advising it had completed a capital raising of $8.85 million via an institutional placement. The offer was priced at $1.10 per share and the proceeds raised will be used to accelerate its growth strategy.
The company has been busy ticking off its strategic roadmap and will leverage its balance sheet to broaden consumer appeal.
The new shares will be allotted next week on 23 September.
Management commentary
Lark Managing Director, Geoff Bainbridge, was optimistic about Lark's future. He said:
The overwhelming support received for the Placement provides validation of the Lark growth strategy – brand and barrels – and will ensure that whisky under maturation will reach 1.5m Litres by the end of F22. The Placement is the next step into Lark's journey to becoming a globally consumed, recognized and loved Tasmanian brand icon.
Mr Bainbridge further added:
It is the final milestone in the restructure of 'Lark for growth' plan, and it is a real coup for the Company to welcome such proven and highly regarded institutions to the Lark register.
FY21 guidance
Lark is forecasting to double its net sales in FY21 to $12 million. The company's key drivers are expected to be from its e-commerce platform and direct mainland sales. In the first two months alone, e-commerce sales are more than all of FY20 e-commerce sales at a 6-fold increase. This has been underpinned by new, limited online releases selling out within hours/days.
Specialty products Symphony No1 and Nant sales performance are tracking ahead of FY21 plans. To meet the rising demand, Lark will continue to increase whisky under maturation.
In addition, the company will look to launch a portfolio strategy to address multiple occasions and price points. This will include the reboot of its Forty Spotted Gin product for Summer 2020.
About the Lark share price
The Lark share price has risen 63% since April this year and has slowly been trending upwards. At a market capitalisation of around $73 million, the Lark share price has an average volume of around 17,000 shares traded on any day. Today, that volume has increased to 301,000 shares being exchanged.
Should you invest?
I think that Lark has exciting growth prospects in the coming years. If the company is able to increase brand awareness and execute effective marketing strategies, sales should increase. This in-turn could drive the Lark share price up even further.
I would recommended prospective investors adding Lark to their watchlist to monitor its future developments.
