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What's New
Smart Parking Ltd
Endeavor Asset Management
- Endeavor Asset Management identifies Smart Parking Systems as a top pick for the next three to six months.
- Analysts project a revenue growth of 25% and a shift to profitability by next June.
- Earnings before interest, taxes, depreciation, and amortisation margins are expected to expand from 10% to 15%.
- The stock trades at approximately eight times forward EV/EBITDA, significantly below its historical average of 12 times.
- The global smart-parking market is anticipated to reach $US10 billion by 2028, presenting growth opportunities.
- Smart Parking's expansion in the USA offers clear catalysts for future growth.
- Compared to peers trading at 14 times EV/EBITDA, there is notable re-rating potential with new contract announcements.
ASX:SPZ
$0.79
Clarity Pharmaceuticals Ltd
Frazis Capital Partners
- Frazis Capital Partners observes that Clarity Pharmaceuticals is affected by broader sell-offs in the biotech sector, particularly following negative results from Opthea.
- Liquidations by funds and retail investors have increased due to market momentum unwinding.
- Clarity has substantial growth potential with approximately $20 billion in diagnostics and even larger opportunities in therapeutics.
- The company's current market cap of $400 million significantly underplays its potential against the market opportunity.
- Short selling has created liquidity and potential for future funding, however, it poses risks for shortsellers as momentum can reverse.
- With $106 million in cash and an $11 million non-dilutive R&D grant, Clarity is well-positioned to extend its development timeline.
- Positive clinical updates include improved patient outcomes and ongoing trials that could validate Clarity's treatments.
- Noteworthy therapeutic data includes disease control rates of 78% in patients who had previously undergone multiple treatments.
- Clarity's diagnostic agent shows promise, having identified lesions better than standard diagnostics and may lead to significant treatment changes.
- Upcoming clinical trial readouts over the next year are expected to enhance clarity on Clarity's market position.
- Both diagnostics and therapeutics markets show potential—diagnostics forecasted at $3 billion and therapeutics exceeding $5 billion.
- Frazis Capital Partners recently reinstated a holding in Clarity, now constituting ~8% of their portfolio, indicating confidence in the company's future growth.
ASX:CU6
$2.08
Paladin Energy Ltd
Blackwattle Investment Partners
- Paladin Energy experienced a drop of 25.7% in March due to a significant flood event at its Langer Heinrich mine.
- The extent of damage from the flood has been clarified, with production impacted for a limited number of weeks.
- Delays in reaching nameplate capacity have pushed out timelines, which is viewed as a critical milestone.
- Continued softness in the spot price and market uncertainty have contributed to ongoing declines in Paladin's share price.
- Blackwattle Investment Partners has reduced the position size while awaiting further clarity from management on the ramp-up timeline.
- Investors can expect commentary on these issues during the March quarterly investor call later this month.
ASX:PDN
$5.11
Genesis Minerals Ltd
Blackwattle Investment Partners
- Genesis Minerals rose +16.7% in the month.
- Astute M&A in 2022-23 laid the foundations for impressive growth.
- Laverton mill restarted and ramped up to nameplate capacity.
- Production set to climb from 50koz today to 135koz by FY29.
- Genesis has a fully funded 10-year plan to produce 3 million ounces of gold.
- 91% of ounces already in reserve provides a high level of certainty.
- Assets like the Westralia pit not yet included in mine plan.
- A fantastic team demonstrates passion, focus, and owner mentality.
ASX:GMD
$3.71
James Hardie Industries plc
Ten Cap
- James Hardie Industries (JHX) was the portfolio’s most significant contributor during the period.
- Ten Cap had a short position in JHX, based on a cautious stance regarding US housing.
- This stance was informed by a combination of industry feedback and macroeconomic data indicating endmarket weakness.
- Concerns were heightened by JHX's announcement of its acquisition of AZEK, a US-based decking business.
- The size of the transaction was unanticipated by Ten Cap.
- Ten Cap's positioning was influenced by observable signals such as the suspension of the share buyback program.
- There was also a noted increase in M&A-related recruitment activity.
ASX:JHX
$38.48
Move Logistics Group Ltd
Naos Asset Management
- Naos Asset Management views MOV's recent results as exceeding expectations after a challenging period with leadership changes.
- Despite a ~5% year-on-year revenue decline, MOV saw a ~6% revenue increase from 2HFY24 driven by a revamped sales team.
- Gross margin improved significantly, rising by ~14% year-on-year and reaching ~5.2%, indicating better sales margins.
- The company reported a normalized EBT loss of ~$3.9 million, an improvement from previous losses.
- Strong business momentum continues, with the strongest quarterly performance in 18 months.
- Guidance for profitability in FY26 was reaffirmed, necessitating run-rate profitability by May/June.
- Expected factors for profitability include:
- Further gross margin improvements from utilization benefits and price increases.
- Reduction in underutilized leased property in warehousing.
- Increased benefits from the 'Accelerate Program' in 2HFY25.
- Aiming for an additional $4 million annualized fixed cost reduction.
- Improvement in retail sector volumes expected to enhance MOV's profitability.
- MOV is demonstrating characteristics seen in previous high-performing investments, such as:
- Customer-first approach with high service levels.
- Value-based pricing strategy.
- Building an experienced and aligned team.
- Clear market offering that resonates with customers.
- Cost-efficient operations with minimal waste.
- With a NZD $300 million revenue base, even modest margin improvements can significantly benefit shareholders.
- Current market capitalization of $25 million NZD suggests minimal margin expectations, presenting potential for growth.
ASX:MOV
Unknown
Hancock & Gore Ltd
Naos Asset Management
- Naos Asset Management notes that HNG has put forward an all-scrip acquisition proposal for H&G High Conviction Limited (ASX: HCF).
- HNG is related to HCF as its manager and substantial shareholder.
- The acquisition is expected to complete during Q4 FY25.
- Acquiring HCF provides funding for Remaining Deferred Consideration related to the Schoolblazer Ltd. acquisition.
- The HCF assets, being liquid, add optionality to HNG's balance sheet for settling deferred considerations.
- Simplification of HNG's business is necessary for shareholders to realize full value; acquiring HCF is a step towards this.
- This move may pave the way for Global Uniforms Solutions to potentially operate as a standalone entity.
- HNG aims for a larger & more liquid listed entity by acquiring HCF, enhancing market capitalization and trading activity.
- Many top holders of HNG are directors, aligning their interests but potentially reducing share trading activity.
ASX:HNG
$0.27
Solvar Ltd
Endeavor Asset Management
- Endeavor Asset Management notes that shares in car financier Solvar (SVR) have remained stable despite market softness.
- The company has continued its on-market buyback program, which has positively impacted the share price.
- Solvar is currently trading at just 8x FY26e earnings.
- The stock offers a fully franked yield of 9.2%, indicating attractive pricing.
- Recent strength in the stock led Endeavor Asset Management to trim their position.
ASX:SVR
$1.44
James Hardie Industries plc
Bennelong Long Short Equity Fund
- James Hardie announced the acquisition of Azek, a synthetic/composite decking supplier in the US known as TimberTech.
- Bennelong Long Short Equity Fund notes that James Hardie achieves excellent returns and growth from its legacy fibre cement business, dominating the fibre cement segment with a 90% market share.
- High returns, along with high organic growth and dominant market share, are rare attributes for businesses.
- Despite Azek's rapid growth, it operates in a more competitive segment, with lower returns than James Hardie.
- The fund believes that JHX's agreement to pay a high price for Azek dilutes the quality of their core business.
- This dilution creates a poor risk/reward trade-off for JHX shareholders.
- The market has reacted negatively to this acquisition, punishing JHX's stock for the perceived risks involved.
ASX:JHX
$38.48
Motio Ltd
Mereweather Capital
- Mereweather Capital has initiated a position in Motio (MXO) due to short-term market volatility presenting unique opportunities.
- MXO operates as a digital place-based media business with over 1600 digital screens across various sectors such as medical centres and sports venues.
- The majority of MXO's screen network was established through four acquisitions since 2019, totaling approximately $6m.
- Post-acquisition, efforts were needed to refresh assets and engage customers, with a focus on enhancing advertisement utilisation.
- Management indicated that the bulk of foundational work is complete, shifting focus to monetising their network in FY25.
- MXO has consistently upgraded its FY25 financial guidance, from $7.7m revenue and $800k cash EBITDA to $8.6m revenue and $1.2m cash EBITDA.
- Management improved the balance sheet through divesting a non-core software asset, generating $1.35m cash and $1.4m free cashflow.
- Mereweather Capital views MXO’s cash generation as substantially stronger than reported profits, due to non-cash expenses affecting financial statements.
- MXO currently has an $8m market capitalisation and approximately $1.5m in net cash.
- Despite potential 2H uncertainty due to the Federal election, the seasonality trend suggests stronger performance in 2H for MXO.
- This investment aligns with Mereweather Capital’s strategy of targeting neglected micro and nano cap stocks.
- MXO management is experienced, with CEO Adam Cadwallader having nearly 25 years in the industry and ownership aligning with minority shareholders.
- The business model is capital light and generates high cash flow, operating in areas of structural growth despite traditional media weaknesses.
ASX:MXO
$0.03
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