In Brief: GQG, Caravel Minerals & SkinKandy

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This week's In Brief looks at an equity fund manager's fall from grace and two recent IPOs which have analysts aflutter with enthusiasm.

• Poor performance remains a drain for GQG Partners' funds under management
• Caravel brings forth a global copper resource with a new production twist
• SkinKandy ticks all the growth boxes, banking on a growing 'jewellery' trend

By Danielle Ecuyer

This week’s quote comes from Louise Dudley, Portfolio Manager for Global Equities at Federated Hermes:

“Following a recent pause in the AI trade and a broader market breather, valuations appear more reasonable and provide a healthier backdrop for earnings season.

“Fundamentals remain strong, and the environment for US equities remains generally supportive. The broadening of market leadership continues to be an important source of returns, particularly within the AI ecosystem.”

Stock picking remains super challenging

One doesn’t need to scratch the surface of listed active equity portfolio managers to reveal just how challenging the task has been over the last few years.

Passive managers have continued to pick up mandates at the expense of traditional stock pickers.

In the case of GQG Partners ((GQG)), Goldman Sachs doesn’t mince its words, noting “persistent benchmark underperformance”.

The word ‘ouch’ springs to mind.

Since July 2025, the active manager has experienced net outflows, with around -10% of funds under management (FUM) walking out the door, or circa -US$15bn, in 1H2026.

Goldman Sachs attributes the loss of funds to the ongoing underperformance of the portfolios relative to their benchmarks.

The manager has continued to underweight the technology and consumer discretionary sectors, with overweight positions in consumer staples, energy and financials, with the caveat the funds are adjusted daily depending on “opportunities and risks”.

For the June quarter, net outflows were -US$6.5bn, including -US$3.2bn in the month of June.

Total funds under management or FUM totalled US$156bn against US$152bn at the end of the March quarter.

Goldman Sachs is not expecting any management fees for the 1H2026 results, due out on August 21. Equally, the broker is waiting for updates on the planned Abu Dhabi expansion and opportunities via Private Capital Solutions.

Revenue margins are expected to improve slightly in 1H2026 over 2H2025 due to the FUM mix, with more detail anticipated from management at the interim results, including an outlook statement.

Goldman Sachs downgrades the stock to Sell from Neutral with a new target price of $1.40 from $1.91. EPS forecasts are downgraded by -2.2% for 2026, -11.4% for 2027 and -19.0% for 2028.

The analyst emphasises a more “severe cycle” of outflows is expected relative to consensus forecasts. The valuation stands at around 7.7x one-year forward PER.

The Next Copper Giant 

Shaw and Partners initiated coverage of what the analyst describes as a Western Australian “copper giant taking shape”, Caravel Minerals ((CVV)).

Caravel owns 100% of the Caravel Copper Project in the Wheatbelt of Western Australia, some 150km north-east of Perth. It is considered one of the largest undeveloped copper resources globally.

A definitive feasibility study is expected in September and, strategically, management is aiming to develop an open-pit ‘big bulk’ mining method based on successful Canadian operations, including Highland Valley, Copper Mountain and Gibraltar.

The JORC mineral resource is 1.276bn tonnes at 0.24% Cu, and the aim is to use a ‘Mine of the Future’ framework. This incorporates autonomous haulage to minimise unit costs and create operating leverage through volumes and efficiency rather than ore grade alone.

With initial support from the European Export Credit Agencies for up to US$220m in senior debt, the analyst believes the project is de-risked and has scope to move towards construction financing.

The process plant design is around 90% complete and environmental studies are progressing towards resubmission. The final Environmental Review Document is expected in 2H2026.

The project also has sizeable precious metals and molybdenum by-product credits. On the broker’s current gold and silver price forecasts, the project has scope to earn 65c/t in by-product credits in the first full year of operation.

At this stage, Shaw sees the major risk relating to weakness in the copper price.

The stock is rated Buy (High Risk) with a $1.15 target price.

Offshore expansion could underwrite future earnings acceleration

Jarden almost waxes lyrical over SkinKandy ((SK1)), the recently listed piercing and fashion jewellery shop operator aiming to grow through new store openings.

The initiated coverage highlights management’s “cookie-cutter rollout”, complemented by an under-serviced market, a net cash position and a relatively short new-store payback period of around 14 months.

SkinKandy is forecast to open 16 stores annually, with potential for 161-202 stores across Australia and New Zealand by 2030 from 109 at the end of FY26, which is below management’s target of 180-210 stores.

Jarden expects 175 stores by FY33, which, at the current rollout rate of 15-20 new stores annually, equates to around four years of expansion across Australia and New Zealand.

Like-for-like sales growth of 2%-3% annually is forecast as new stores mature, with market growth expected to achieve the 5% forecast.

With needle-piercing prices some -13% to -36% below competitors, the analyst sees upside potential from price increases and believes the 2H26 like-for-like sales guidance of circa 6% is conservative.

EBIT margins are forecast to increase to 17% in FY30 from 15% in FY26 on improved cost management. The analyst also points to considerable scope to reduce the overhead ratio, currently at 26%, well above Australian and New Zealand peers at 20%-21%.

The 22% margin forecast for FY30 is viewed as conservative.

Expansion into South Africa and the US appears the most likely near-term opportunity, with South Africa viewed as the lower-risk option and one that could replicate the success of Lovisa Holdings ((LOV)).

Jarden believes expansion into the US, South Africa and the UK could generate FY31 EPS upside of 25%, 18% and 19%, respectively.

The Australia and New Zealand total addressable market is estimated at $154m, around -60% lower than the prospectus estimate. This implies SkinKandy’s piercing market share is already around 30%, suggesting the jewellery offering will need to generate the bulk of future earnings growth.

Shopper surveys indicate customers like the company’s offering.

The broker initiated with an Overweight rating and a $2.90 target price.

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