In Brief: Amplitude, Bubs & Cash Converters

Weekly Reports | 10:00 AM

This week's In Brief highlights three good news stories from the week past.

• Prospects for Amplitude Energy look up with Juliet
• Full FDA approval gives Bubs the confidence to expand in the US
• Cash Converters delivering on new corporate strategy

By Danielle Ecuyer

This week’s quote comes from RBC Capital:

"The Australian Government has released details behind the proposed Domestic Gas Reservation Scheme.

"At first glance, this scheme will introduce lower gas volumes into the domestic gas market than what some may have feared, noting the 20% requirement is net of existing LNG export licence holders contractual sales/infrastructure limitations and existing gas reservation (e.g. the WA 15% gas reservation policy).

"We view this as a welcome relief to smaller cap Australian domestic gas focused stocks, such as Amplitude Energy ((AE)), Beach Energy ((BPT)), Comet Ridge ((COI)), Strike Energy ((STX)) and Tamboran Resources ((TBN))."

Turning the corner, potentially

Jarden suggests investors will draw a sigh of relief after a challenging start to the East Coast Supply Project (ECSP) exploration phase earlier in 2026, with gas intersected at the Juliet exploration well in the offshore Otway Basin.

Amplitude Energy ((AEL)) --market cap $540m-- has a 50% interest in Otway. Jarden highlights positive results from the Juliet-1 exploration well, which intersected 49m of net pay in the primary Waare C sandstone target, with reservoir quality and thickness in line with pre-drill expectations.

The gas-water contact was not encountered, providing potential upside to the pre-drill P50 gross volume estimate of 46.4Bcf, while drilling was completed ahead of schedule and under budget.

Moving forward, Amplitude will conduct wireline testing of the reservoir to generate pressure data, giving more definition to resource estimates and the decision to complete the well.

The broker indicates once the decision is made, the well can be cleaned up, and the process should offer information on the well being able to be delivered and gas composition within a two-week period.

CO2 content below 6% would be viewed as positive. While Juliet has produced encouraging geological results, the joint venture still needs to establish whether there is enough recoverable gas, at acceptable economic metrics, to go ahead with the development.

The broker believes if Juliet is considered commercial, that could support sanctioning both the broader ECSP development phase and the nearby Nestor exploration well.

Nestor has the potential to be significant and could be drilled almost immediately. Jarden explains the Transocean Equinox rig is moving on to drill the Annie-2 development well. After that, there is an available drilling slot for Nestor, meaning the JV could drill it without having to wait for another rig campaign.

In terms of valuation, Juliet has moved from being ascribed essentially no value in the broker’s valuation assessment to around 18c per share, which boosts the target price to $2.03 from $1.85, while a successful Nestor could eventually unlock some or all of another 24c per share of unrisked value.

The stock retains an Overweight rating, assuming lower than forecast gas plant performance at Orbost and Athena, lower than forecast spot gas prices and a failure in the ECGS projects.

FDA approval a confidence booster

Bubs Australia ((BUB)) --market cap circa $116m-- had brokers like Shaw and Partners bubbling with enthusiasm post receiving permanent FDA approval for its three infant formula products, which has removed key regulatory uncertainty that has been in place since the company entered the FDA’s temporary enforcement discretion program in 2022.

As noted by the analyst, the US is one of the world’s largest infant formula markets, estimated at around $7.3bn.

With FDA approval, Bubs management and distributors are now afforded greater confidence to invest and plan for growth. Notably, distribution has grown to over 10,000 stores across 50 US states under the temporary FDA authorisation.

There is now scope to accelerate the expansion with a higher degree of confidence that the products will remain in the US market.

Shaw sees management as considering the optimal way forward to service the market given products are shipped and transported (flown) from Victoria.

Bubs now has some optionality to manufacture some products in the US, which would shrink the supply chain and lower transport costs, with air freight at -$3m in FY26, and lower US tariffs, -$1m in FY26.

EBITDA forecasts are raised by 2.7% for FY27 and 13.5% for FY28. Target price is raised to 15c from 20c and a Buy, High Risk rating ascribed to the stock.

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