Author: Greg Peel

Re-Rating Ahead For Fineos Corp?

Small Caps | Oct 23 2025

Insurance software company Fineos Corp should become free cash flow positive this year – a milestone that typically triggers a multiple re-rating.

  • Fineos Corp a dominant SaaS player in the global insurance industry
  • Heavy investment in R&D has weighed on valuation to date
  • Extensive addressable market of insurers moving to the cloud
  • Free cash breakeven expected in 2025

By Greg Peel

Fineos Corp ((FCL)) is one of leading providers of insurance software to Life, Accident and Health (LA&H) insurers worldwide. Headquartered in Dublin, the company was listed on the ASX in 2019 at a price of $2.50 per share and closed last Monday at $3.06.

Fineos has established itself as a dominant SaaS player in the sector through extensive client relationships, with customers including seven of the ten largest employee benefits insurers in the US, the largest LA&H insurer in Canada, and 70% market share of employee benefits insurance in Australia.

The company is yet, however, to reach positive free cash flow.

Being Irish, the company reports in euro, and the EURUSD exchange rate has proven a headwind in recent months. But the real drag has been Fineos’ heavy investment in R&D towards its purpose-built, cloud-based platform.

This was the issue for Moelis back in August ahead of Fineos’ interim earnings result (December year-end). Moelis noted the company was maintaining its strategic trajectory, but longer-term growth was dependent on new client acquisition and deeper penetration of large accounts.

Caution led Moelis to downgrade Fineos to Hold from Buy, setting a target price of $3.27. (The 52-week high for the share price is $3.29, earlier this month.)

Fineos Corp services Canada's largest Accident and Health (LA&H) insurer

Fineos Corp services Canada's largest Accident and Health (LA&H) insurer

Seeking Guidance

Also reporting ahead of Fineos’ interim result was Macquarie, who in early September drew upon US-based rival Guidewire’s FY25 result to assess implications for Fineos.

In FY25, Guidewire's annual recurring revenue (ARR) grew 19%, revenue rose 23% and the cashflow margin was 25%, beating the top end of guidance. Initial FY26 guidance was for 22% ARR growth and a 52% rise in operating cash flow.

Macquarie suggested Guidewire's strong subscription-driven growth and profitability highlights the potential path for Fineos but also underscored the current gap. Fineos trades at a steep discount, justified by its slower growth and heavier R&D capitalisation, but offers optionality if execution on cloud transition accelerates, the broker believed.

Macquarie retained an Outperform rating on Fineos, lifting its target to $3.48 from $3.29.

Blood from a Stone

Whether it be a loss of interest, or the result of down-sized analyst teams being overstretched, neither Moelis nor Macquarie have updated on Fineos’ result, maintaining radio silence to date.

Cit has stepped up, but noted by way of apology its late September update was rather belated.

Fineos added EUR5m of ARR in the first half 2025, the strongest half of incremental ARR since 2023, with ARR growth benefiting from three new wins towards the end of the half (as well as lower churn).

With stronger-than-expected first half cash flow removing concerns of a potential equity raise, and strong ARR growth, Citi reiterated its Buy call, hiking its target up to $3.25 from $2.35 to reflect earnings upgrades due to lower opex and higher peer multiples, as well as applying a lower discount to peers to reflect reduced probability of an equity raise after the stronger than first half cash flow.

However, said Citi, there is still more work to be done for Fineos to hit mid-term Subscription revenue targets.

The broker’s forecasts assume Subscription revenue grows of 61% of group revenue (assuming Services is flat), which is below Fineos’ target of 65% of group revenue. While Fineos is seeing good momentum in Absence/Claims deals, Citi sees winning larger Policy & Billing contracts as key for acceleration of subscription revenue.


The full story is for FNArena subscribers only. To read the full story plus enjoy a free two-week trial to our service SIGN UP HERE

If you already had your free trial, why not join as a paying subscriber? CLICK HERE

MEMBER LOGIN

Australian investors stay informed with FNArena – your trusted source for Australian financial news. We deliver expert analysis, daily updates on the ASX and commodity markets, and deep insights into companies on the ASX200 and ASX300, and beyond. Whether you're seeking a reliable financial newsletter or comprehensive finance news and detailed insights, FNArena offers unmatched coverage of the stock market news that matters. As a leading financial online newspaper, we help you stay ahead in the fast-moving world of Australian finance news.

Another Step-Change In Growth For SRG Global

Infrastructure services company SRG Global has announced another step-change in growth with the acquisition of a marine infrastructure services business.

-SRG Global has acquired TAMS, a marine services company
-Acquisition supports FY26 EBITDA around $35m with upside from construction work

-Management and analysts laud attractive deal economics
-Step-jumps in valuation follow, with ongoing upside potential

By Greg Peel

SRG Global ((SRG)) provides comprehensive infrastructure services, encompassing Maintenance & Industrial Services and Engineering & Construction.

According to the company’s website, SRG “…engages early with clients, offering consulting and engineering expertise to ensure efficient and cost-effective solutions. Our diverse capabilities cover a wide range of industries and applications, supported by innovative technology and a highly skilled workforce”.

A year ago SRG acquired Diona. According, again, to the website, “Diona’s market-leading position in program and asset management services in water security and energy transition with utilities/government agencies under long-term collaborative program and asset management agreements, complements SRG Global’s current end-to-end full asset life cycle capability in water, defence, resources, transport and energy transition”.

Last week SRG announced the 100% acquisition of Total AMS Pty Ltd (TAMS). TAMS is an end-to-end diversified marine infrastructure services partner with a 25-plus year history and full self-perform capability (all trades in-house), with expertise in design, engineering, construction, maintenance and remediation services.

The company has a strategic geographic footprint with exposure to Resources, Energy, Transport, Water & Defence sectors.

TAMS has a workforce of 500-plus highly skilled technical specialists accompanied by a highly regarded management team, Moelis notes.

TAMS adds marine infrastructure services to SRG Global

TAMS adds marine infrastructure services to SRG Global

Attractive Price

SRG will fund the acquisition through $45m in debt, $28m in SRG shares (issued at $1.99 and subject to a two-year escrow), and $12m in cash. The earn-out structure provides for 100% of earnings (EBITDA) between $30-40m and 50% above $40m.

On a pro forma FY26 basis, TAMS is forecast to deliver $200m in revenue, $35m of EBITDA and $30m of EBIT, for an EBITDA margin of 17.5% and EBIT margin of 15.0%. Bell Potter previously had SRG Global on margins of 9.6% and 6.3% respectively.

On the investment case of TAMS delivering $35m of EBITA in FY26-27, Bell Potter calculates the deal is priced at 2.7x FY26 EBITDA and 3.2x EBIT.

Bell Potter previously had SRG on a valuation of 13.9x EBIT. Earnings per share accretion is expected to be 25%, with upside should TAMS outperform its investment case.

Shaw and Partners points out SRG now offers an FY26 EBITDA multiple broadly in line with peer Monadelphous ((MND)), though it has a market cap circa -$800m lower and trades at a circa -8-point FY26 PE discount.

The Opportunity

TAMS adds a highly complementary capability to SRG’s existing business, Shaw suggests, with a sole-source, end-to-end marine infrastructure service offering.

The acquisition is consistent with SRG’s strategy of driving step-change growth in recurring earnings underpinned by long-term collaborative maintenance and asset lifecycle agreements.

TAMS offers full lifecycle services across marine infrastructure, including design, engineering, construction and maintenance.

The acquisition adds scale, recurring revenue, and strategic exposure to markets with structural tailwinds, Ord Minnett notes, such as ageing port infrastructure and increased government investment in marine assets, including potential entry into the Defence sector.

Similar to SRG’s Diona acquisition, Shaw expects the combined group to be able to chase larger opportunities that may not have been available on a standalone basis. The maritime defence sector is one such sector.

The Australian Defence Force has allocated 38% of its $330bn Integrated Investment Program budget to maritime expenditure over the next decade.

The Australian Government defence budget also includes $435bn to cover areas such as maintenance, sustainment and operational funding. Shaw expects the combined group to target wins in these categories from the second half FY26.

The TAMS acquisition rationale is to combine two highly complementary businesses that provide cross-selling opportunities with existing and new clients.

TAMS has a long history with strategic geographical footprint (including Pilbara, Fremantle, Gladstone) and blue chip clients, Moelis points out, along with an attractive 80%-plus recurring/annuity style earnings profile, and will add $600m of work in hand and a $3bn-plus opportunity pipeline.

In the last 4-6 weeks, TAMS delivered a large construction project (Broome floating wharf) which took up the entirety of the company’s construction focus.

This means all the work at present is maintenance/annuity style work on term contracts. This underpins the $35m of EBITDA and $30m of EBIT.

However, management confirmed on the conference call TAMS had delivered up to $50m EBITDA and $45m EBIT previously, which reveals considerable upside when construction work resurfaces.

Additionally, management talked up the construction pipeline.

Valuation Step-Change

Suffice to say, brokers have materially upgraded their earnings forecasts for SRG Global. This has translated into sharp target price increases.

Shaw has lifted to $2.75 from $2.00, Moelis to $2.81 from $2.00, Bell Potter to $3.00 from $1.95 and Ord Minnett to $3.15 from $2.00. All four retain Buy ratings.

Morgans has lifted its target to $3.00 from $2.10, but downgraded to Accumulate from Buy. This broker does not qualify its move, but there is likely a clue in the 20% upside share price response to SRG’s acquisition announcement.

Find out why FNArena subscribers like the service so much: "Your Feedback (Thank You)" - Warning this story contains unashamedly positive feedback on the service provided.

FNArena is proud about its track record and past achievements: Ten Years On

Australian investors stay informed with FNArena – your trusted source for Australian financial news. We deliver expert analysis, daily updates on the ASX and commodity markets, and deep insights into companies on the ASX200 and ASX300, and beyond. Whether you're seeking a reliable financial newsletter or comprehensive finance news and detailed insights, FNArena offers unmatched coverage of the stock market news that matters. As a leading financial online newspaper, we help you stay ahead in the fast-moving world of Australian finance news.

Acquisition Loads Up Catapult

In its latest acquisition, Catapult Sports has added the missing element to make it a globally competitive sports software company.

-Catapult acquires soccer scouting and recruiting software firm Impect
-Impect product can be expanded to other sports
-Preliminary interim result reflects strong momentum
-Post strong rally, investors expected to scrutinise November market update

By Greg Peel

Originally formed from a partnership between the Australian Institute of Sport and the Cooperative Research Centres to maximise the performance of Australian athletes ahead of the Athens Olympics, Catapult Sports ((CAT)) was officially founded in Melbourne in 2006, and listed on the ASX in 2014.

Initially, Catapult focused on wearables to track an athlete's performance but has since grown to include technology for sports recruiting and scouting, and video analysis. The company now has over 4600 elite teams as clients globally across more than 128 countries, representing sports including soccer, rugby, cricket, basketball, baseball, American football and ice hockey –- more than 40 sports in total.

In June, Catapult announced the -US$18m acquisition of Perch, a Boston-based sports technology company which offers off-field, AI-integrated athlete monitoring solutions, developed originally at MIT, combining a 3D camera with proprietary AI that tracks athletes in the weight room to offer insights for personalised training programs.

Last week, Catapult announced the -US$91m acquisition of Impect, founded in Germany in 2014 to support player scouting and tactical analysis for soccer teams. The SaaS provider collects and owns the data that is then presented through proprietary “packing” metrics to provide unique match and player insights.

The purchase price has a bit to unpack, UBS notes, including -US$46m upfront, -US$32m in Catapult shares that vest over four years and -US$12m in earn-out equity to be issued again over four years.

UBS views this as a pretty reasonable up-front price as well as providing founder lock-in and incentive over a number of years. The acquisition will be funded by an A$130m (US$84m) equity raising and A$20m (US$13m) share purchase plan (SPP) at $6.68 per share.

On Friday, the shares were trading at $6.78.

sports equipment

sports equipment

Filling the Void

It had been well flagged by Catapult and well understood by the market that a scouting platform was the key missing module to the company’s overall video software platform, UBS notes. Catapult has now inorganically filled that void.

Clearly, the opportunity exists, UBS suggests, to drive revenue synergies in soccer and other flow sports through leveraging Catapult’s at-scale global sales force and large customer base compared to Impect’s 150 teams.

The key questions will be how Catapult can integrate this with its existing video suite, but more importantly how Impect Scouting could enable Catapult to better compete with current video incumbent and clear market leader, US-based Hudl and its Wyscout platform, which collects data and video from more than 600 competitions worldwide.

Impect, while small, is fast growing, Morgan Stanley notes. Annual contract value (ACV) has grown at a two-year compound annual growth rate of 68% from US$2.8m in July 2023 to US$8.1m in July 2025.

Morgan Stanley sees a strong strategic fit and expects Impect to be integrated seamlessly, augmenting Catapult's offering with scouting and tactical insights, including its unique and proprietary “Packing” metrics.

Morgan Stanley believes Impect can accelerate both the velocity and value of cross-sell opportunities, particularly across Catapult’s existing base of around 1,500 soccer teams. Over time, there is potential to scale the technology across additional sports verticals.

Trading Update

Along with the acquisition announcement, Catapult provided preliminary first half FY26 (year-end March) results, featuring annual contract value (ACV) of US$115.3-115.6m, slightly above consensus.

Revenue came in at US$67.2-67.5m, management earnings US$9.0-9.5m and free cash flow US$3.7-4.0m. Bell Potter notes the free cash flow figure did not include -US$3m in transaction costs associated with the Perch acquisition. Without this the result would have been US$7.2-7.5m.

This is clearly a solid result and reflects ongoing strong top line momentum, UBS commented. Importantly, this represents another period of strong operating leverage with incremental margins of 52% being the fourth consecutive period in excess of 50%.

FY26 guidance was reaffirmed for ACV growth to remain strong (consensus 19%-plus), continued improvement in cost margins, and higher free cash flow.

The Risk

Financial disclosure with regard the Impect acquisition is limited, Morgan Stanley notes, other than ACV and the earnings margin of the target. Based on available information, the broker estimates the transaction will be dilutive to both earnings per share and free cash flow in the near term.

Catapult shares have materially outperformed the market over the last twelve months, up 204% to the ASX300’s 7.75%, predominantly driven by surpassing the critical inflection point of positive earnings and free cash flow. Morgan Stanley warns any deviation from this ---if margins and/or free cash flow generation contract--- could see the multiple de-rate from current levels.

Morgan Stanley expects elevated scrutiny around these metrics and ACV growth at the November results. For now, the broker retains its Overweight rating and has lifted its price target to $7.90 from $6.00, noting Catapult has globally scalable software and is serving a growing total addressable market.

It is clear to UBS we are now in the midst of a wave of consolidation within the global sports tech marketplace. Within the last twelve months alone, we have seen major players undertake multiple transactions, including Hudl, Sony, Teamworks, and Catapult.

The significant growth in the money within sports is creating a transformational period of sports tech product adoption by pro-teams, UBS notes. Nonetheless, the challenge remains for these start-ups to go from initial adoption to profitable scale-up. This is where Catapult has a unique position to come out as a major player through this consolidation given its significant pro-teams penetration and scaled sales force footprint.

UBS retains Buy, despite an unchanged target of $7.00. Note that the share price shot up almost 8% on the announcement to $7.70 before settling back.

Bell Potter has rolled forward its enterprise value to revenue valuation on Catapult for a year given we are now in the second half of FY26 and to better capture the full year impact of both Perch and Impect.

This broker has increased the multiple it applies to 9.0x from 7.75x given the strategic value of Impect and the opportunity to both cross-sell and expand the products into other sports.

The net result is a target price increase to $7.50 from $6.00 which, as a modest premium to the share price, prompts an unchanged Hold rating.

Find out why FNArena subscribers like the service so much: "Your Feedback (Thank You)" - Warning this story contains unashamedly positive feedback on the service provided.

FNArena is proud about its track record and past achievements: Ten Years On

Australian investors stay informed with FNArena – your trusted source for Australian financial news. We deliver expert analysis, daily updates on the ASX and commodity markets, and deep insights into companies on the ASX200 and ASX300, and beyond. Whether you're seeking a reliable financial newsletter or comprehensive finance news and detailed insights, FNArena offers unmatched coverage of the stock market news that matters. As a leading financial online newspaper, we help you stay ahead in the fast-moving world of Australian finance news.

Paladin Energy Powering On

Record quarterly production, a promising new project, and surging global demand for nuclear energy is injecting renewed excitement for the prospects of Paladin Energy.

-Paladin Energy posts record September quarter production
-Grades at Langer Heinrich set to step up
-World class asset in Patterson Lake South
-Green energy transition and AI growth driving nuclear demand

By Greg Peel

Uranium is making a come-back as a 'green' power source

Uranium is making a come-back as a 'green' power source

The price of uranium has endured a rollercoaster ride in the twenty-first century. From the depths of the post-Chernobyl era, the uranium price surged to over US$130/lb in 2007 as the world began to wake up to climate change and nuclear energy was seen as a great saviour.

It was a 'bubble' fit to burst, and a year later the price was back around US$30/lb. Another attempt to rally was then thwarted by the Fukushima disaster, which sent the price back down below US$20/lb, when nuclear was once again a dirty word.

Thereafter, another rally, led by financial entities stockpiling physical uranium, another bubble, and another burst. But, yet again, the uranium price has been on the rise in 2025, currently around US$82/lb.

The share price of Australian-listed uranium miner Paladin Energy ((PDN)) has tracked a similar path over the period. Historically, Paladin shares peaked at $10 back in 2007, but corrected for a 1-for-10 consolidation in 2024 historical charts now put that peak at the equivalent of $100.

The share price post consolidation is back near $10 today, but that is, effectively, still -90% down from the prior peak.

What is driving the uranium price and the share prices of uranium miners now?

Demand for uranium is likely to double over the next decade, Shaw and Partners points out. Nuclear reactors are being restarted, AI/data centre demand for energy is surging, governments around the world (with one notable exception) have realised nuclear is a vital part of decarbonising power grids, insatiable Chinese energy consumption is driving the fastest nuclear rollout in history, and the US has hit the nuclear accelerator to power its AI arms race with China.

On the supply-side, the world’s two largest uranium miners –-Canada’s Cameco and Kazakhstan’s Kazatomprom-– have recently lowered production guidance. At the same time, ramp-ups from mining juniors have simply not progressed as expected.

Amidst this demand/supply imbalance, and having to shutter its two producing mines post-Fukushima (ultimately selling one and selling a stake in the other), Paladin has re-emerged as a globally significant uranium producer.

Record Quarter

Paladin saw a solid operational September quarter result from its flagship Langer Heinrich mine in Namibia, achieving record U3O8 production of 1.07mlb, consistent with management guidance and consensus. Unit costs of US$41.6/lb were impressive, Ord Minnett suggests, though below consensus, as mining volumes increased 63% quarter on quarter to 5.3mt.

Sales volumes were the only blemish at 533klb, a big miss to consensus of 908klb, however, uranium sales are typically lumpy, Shaw notes, and a shipment delayed in the September quarter has been pushed into the December quarter. Paladin has also received a US$30m pre-payment for a shipment scheduled this quarter.

Paladin is beginning to demonstrate steady, reliable production at Langer Heinrich, Bell Potter suggests, which bodes well for building confidence in management’s forward guidance. Repeating the performance of the June quarter FY25 into the first half of FY26 creates a platform for the miner to hit the upper end of its 4.0-4.4mlbs production guidance, with increased mining rates expected over the second half.

The plant is continuing to be predominantly fed by the previously stockpiled ore with feed grade in the quarter of 477ppm, in line with the June quarter. Once the plant is fed with fresh ore in 2026, Shaw expects production to step up. Paladin is not disclosing the grade of the material it will be initially mining, but it should be higher than the current stockpiles, Shaw believes.

The Langer Heinrich plant recovery is continuing to run in the high 80%s (86% in the September quarter). The plant never ran this well historically, Shaw notes, with recoveries down in the 60s/70s. The better performance is due to the plant enhancements that were made as part of the post-Fukushima restart; particularly adding surge capacity between the front end and the leach circuit.

With the balance sheet bolstered in the wake of a September equity raise, the focus for UBS remains the ramp-up of Langer Heinrich to nameplate in FY27 as well as advancing Paladin’s Patterson Lake South (PLS) project through to FID (final investment decision) against an improved commodity backdrop.

The PLS project is a world class asset, which adds an additional 11mlb U3O8 on Ord Minnett’s numbers by FY33. But it does face risks (eg lengthy approvals and high capex).

Pricing

In Macquarie’s view, the marginal greenfield projects in the current market are the lower grade pre-FID Namibian projects Tumas and Etango.

Macquarie believes these projects may require US$85/lb floor pricing in market-related contracts, which was the broker’s prior long-term price assumption, still needing to lift beyond the current US$70-75/lb level indicated by industry.

Macquarie has raised its long-term uranium price forecast to US$95/lb, a level that allows for an adequate rate of return for investors in these marginal projects when all costs are considered.

Nuclear's expanding role in global energy and the AI race will require significant investment in new uranium mines, Macquarie notes. With a largely exhausted restart queue and production challenges at major producers, contract floors should lift to incentive levels for the two new Namibian projects.

It would be remiss to ignore the increased focus placed on western critical minerals availability (such as rare earths), UBS suggests, and ask whether uranium should be included in this basket of commodities,  acknowledging the supply concentration into less accessible jurisdictions uranium exhibits, as well as (Western) conversion/enrichment bottlenecks.

While there is perhaps more work as it relates to this particular thematic, UBS is still incrementally positive on the commodity outlook from a traditional demand-supply perspective, with increased US/Western policy support for nuclear combining with continued supply disappointments.

One Bad Apple

Of the seven brokers monitored daily by FNArena covering Paladin Energy, all bar one have a Buy or equivalent rating on the stock, chorusing a preferred sector exposure.

Ord Minnett retains a view that Paladin is perhaps the highest-quality ASX-listed uranium stock for long-term capital growth linked to future nuclear energy demand. But despite the stock’s more than 100% rally in the past six months, spot uranium prices have only risen from US$67/lb to US$82/lb (22%).

Term prices have lifted even less so, by 4% to US$83/lb. Ord Minnett estimates the movement in the spot price may only translate to an 8% gain on Langer Heinrich’s average realised price (from US$65/lb to US$70/lb). In the broker’s view, this does not warrant a doubling of the share price.

Ord Minnett considers Paladin’s recent $300m capital raise to accelerate the development of PLS may have excited investors given some of its common features with NexGen Energy’s ((NXG)) Rook I project. Hence, the higher multiple.

Ord Minnett considers investors must be prepared to take a much longer than twelve-month investment horizon to capture the value of this project, and invest at these higher prices, and has cut its target price to $7.50 from $7.60, downgrading to Sell from Hold.

The next lowest target among the six brokers rating Buy is $9.00 (Citi and UBS). The highest is Bell Potter’s $11.35, up from $$10.30 prior to the quarterly report.

The consensus target price among the seven brokers is $9.71. Ex-Ord Minnett, that rises to $10.08.

Outside of the seven, Canaccord Genuity has a Buy rating and $12.50 target.

Find out why FNArena subscribers like the service so much: "Your Feedback (Thank You)" - Warning this story contains unashamedly positive feedback on the service provided.

FNArena is proud about its track record and past achievements: Ten Years On

Australian investors stay informed with FNArena – your trusted source for Australian financial news. We deliver expert analysis, daily updates on the ASX and commodity markets, and deep insights into companies on the ASX200 and ASX300, and beyond. Whether you're seeking a reliable financial newsletter or comprehensive finance news and detailed insights, FNArena offers unmatched coverage of the stock market news that matters. As a leading financial online newspaper, we help you stay ahead in the fast-moving world of Australian finance news.

Unique, Predictable And Stable Dalrymple Bay

Investors are being drawn to Dalrymple Bay Infrastructure’s predictability and stability in an uncertain world, offering dividend growth ahead.

  • Dalrymple Bay Infrastructure operates the world’s largest met coal port
  • Ongoing investment in port efficiency drives earnings upside
  • Revenue upside implies dividend growth
  • Private equity divestment now complete

By Greg Peel

Cargo-Ship-Loading-In-Coal

Cargo-Ship-Loading-In-Coal

Dalrymple Bay is a multi-user export terminal located within the Port of Hay Point, approximately 38km south of Mackay, capable of handling up to 84.2Mtpa of coal, mined in the vast Bowen Basin and transported via the Goonyella rail system.

Originally constructed by the Queensland government in 1983, the Dalrymple Bay Terminal has been expanded over seven different phases in the meantime to become the world’s largest met coal export terminal. 80% of coal passing through the terminal is metallurgical coal used in steelmaking.

The terminal’s user portfolio includes a diversified list of some of the world’s leading global mining companies and coal producers.

The Queensland government still owns Dalrymple Bay, but has leased the terminal for 50 years to listed entity Dalrymple Bay Infrastructure ((DBI)), previously Babcock & Brown Infrastructure.

Dalrymple Bay does not have a monopoly on Bowen Basin coal. The North Queensland Export Terminal (NQXT) lies 25km north of the town of Bowen, south of Townsville, and has a 50Mtpa capacity.

Since 2009, Dalrymple Bay Infrastructure, which for sake of simplicity we’ll refer to as DBI, has been implementing a non-expansion capital works program (NECAP) at the terminal, comprising projects which ensure the terminal remains in a safe and efficient operating condition, but which do not increase terminal capacity.

Most NECAP projects are related to safety and environmental improvements or compliance with various regulations and standards. Major NECAP projects are also undertaken from time to time.  

Positive Interim Surprise

In August, DBI reported first half 2025 earnings in line with consensus, but Citi noted a positive surprise to medium term revenue guidance, which the broker was “not used to” from the company.

Citi highlighted -$406m in capital works underway at the time, and -$511m total (from -$471m previously). The $40m increase represents NECAP 8X (eighth phase), which should raise the DBI‘s terminal infrastructure charge (TIC) uplift to 0.63c/t from $0.62c/t previously.

Additionally, Citi noted a non-TIC revenue increase through optimisation/capacity pooling. This increases other revenue to $4m-plus annualised, which is relatively material, Citi suggested, as there are no costs and/or capital attached.

Along with non-TIC revenue, which should flow into free cash flow, Citi highlighted an announced capital allocation review. The estimated combination from both should lead to higher near-term distributions and drive value in a market that is pricing in lower cash rates.

Citi retained a Buy rating.

Sell-Down

DBI’s IPO foundation shareholder was private equity firm Brookfield, which sold down -23% in June for $3.72ps and the final -26% last month for $4.05. The significant sell-down unsurprisingly weighed on DBI’s share price.

In response, Morgans last month upgraded DBI to Accumulate from Hold given share price weakness, noting Brookfield’s exit implied no fundamental change to the business. On September 22, DBI was added to the ASX200.

Morgans’ base case is for DBI to grow earnings at an 8% compound annual growth rate over FY25-28, with a step-change from major project commissioning in mid FY27.  Dividend growth is assumed to remain within guidance of 3-7%pa, with stronger growth in the early years. Morgans’ forecasts do not include the 8X expansion, M&A, or changes arising from the capital allocation option review.

An outcome of that review is expected to be published with DBI’s full-year 2025 result next February. Keeping the status quo would see DBI continue to part-fund its capex with operating cashflows, Morgans notes, leaving it with strong credit metrics and debt capacity within its target credit rating.

The alternative would be to entirely debt fund capex, allowing a greater amount of cashflow to be paid out to investors. The downside of this option would be relatively weaker credit metrics compared to the status quo, albeit still within the constraints of the target credit rating.

Predictable and Stable

Last week Macquarie initiated coverage of DBI with an Outperform rating, describing the company as a unique infrastructure business, with a predictable base income growing with inflation.

Replacement/NECAP investment of some -$0.7bn becomes the near-term growth driver in the next five years, Macquarie suggests, adding around 27% to earnings, which “comfortably” translates to 5%pa sustainable dividend growth.

Re-contracting with miners in 2031 could see DBI move from the current light-handed regime to an unregulated regime, Macquarie notes, in which it can price relative to alternative ports like NQXT.

This could bring material upside ($1.00ps on the broker’s estimate). Even if the current regime continues, there is scope to reprice access to reflect higher bond rates compared to 2022, and recovery for future remediation costs.

8X is a $0.5-1.5bn NECAP opportunity that could add $0.16-0.48ps to DBI’s valuation, Macquarie calculates. Timing of the investment decision is 2026 or 2027, with clarity around NQXT, Goonyella to Abbot Point rail expansion (GAPE) demand and miner Anglo America's unused capacity contracts potentially deferring the decision.

Medium term, NECAP will grow as further major reinvestment is required.

M&A Risk

When Citi retained its Buy rating on DBI post the interim result in August, it came with the caveat “we are cautious about potential M&A discussions”, with regard to the announced capital allocation review.

In September, Morgans suggested DBI may appeal to investors seeking dependable and growing yield and defensive elements for their portfolio. However, said Morgans, a key risk is a value-dilutive capital raising and/or M&A.

Last week, Macquarie noted acquisition risk is emerging as DBI seeks to move from being a single asset, noting green steel is the substitute for metallurgical coal and port demand. The government's Net Zero by 2050 policy aids this.

However, in Macquarie’s view the quantum of sunk capital in blast furnaces, Goonyella's lower cost and better-quality coal position means the 20-year outlook remains robust.

Unique Investment

Macquarie believes DBI is a unique investment with dividend growth of 5% and an enterprise value to earnings multiple of 13x, which is below comparable port multiples.

The main upside event for Macquarie is the 8X development, and medium-term repricing to capture more of the difference between NQXT and Dalrymple Bay.

Citi noted in August that as we move past peak ESG, management is seeing borrowing markets open up. With $474m in undrawn debt facilities, headroom to investment grade credit ratings and minimal risk to revenue/cashflow, DBI is flagging the potential to fund more NECAP with debt.

This is not insignificant to potential distributions in FY25/26. Following a review to capital allocation, Citi estimated there is potential upside to near term returns.

(“Peak ESG” implies the strong focus on ESG factors impacting listed companies which Citi suggests is not now as stringent as it was. Clearly, in Trump’s America ESG no longer exists.)

Citi has set a price target of $5.20 for DBI, up from $4.20 prior to the interim result. Last month, Morgans retained its $4.73 target.

Macquarie has initiated with a target of $4.91.

The consensus forecast dividend yield is 5.6% in 2025 and 5.7% in 2026.

Find out why FNArena subscribers like the service so much: "Your Feedback (Thank You)" - Warning this story contains unashamedly positive feedback on the service provided.

FNArena is proud about its track record and past achievements: Ten Years On

Australian investors stay informed with FNArena – your trusted source for Australian financial news. We deliver expert analysis, daily updates on the ASX and commodity markets, and deep insights into companies on the ASX200 and ASX300, and beyond. Whether you're seeking a reliable financial newsletter or comprehensive finance news and detailed insights, FNArena offers unmatched coverage of the stock market news that matters. As a leading financial online newspaper, we help you stay ahead in the fast-moving world of Australian finance news.

Elders To Fly With Delta

Australia | Oct 13 2025

After missing on third quarter earnings, Elders' fourth quarter looks much brighter plus approval of the Delta acquisition will drive significant synergies and new earnings capacity.

-Adverse weather leads Elders to miss on updated FY25 guidance
-FY26 should see improved conditions
-Approval of Delta acquisition brings boost from synergies and earnings
-Buy ratings all round

By Greg Peel

Elders ((ELD)) is the go-to business for everything agricultural in Australia and New Zealand. Morgans calls Elders “the Bunnings of the Bush” in term of agri-products.

The business extends into real estate, insurance, financing and other services.

As an agricultural company, Elders' fortunes are very much beholden to the weather. Based on earlier BOM forecasts, the big dry being suffered in the south, particularly South Australia and western Victoria, did not ease as expected in the third quarter, but the fourth quarter is looking more promising.

Elders accounts on a September year end, hence its third quarter ended in June.

Due to the persistent dry, Elders’ recent trading update provided FY25 earnings guidance -9% below consensus expectation.

Tractor-Fertilize-Field

Tractor-Fertilize-Field

Approval Finally Received

Overshadowing the weak update was the announcement the ACCC has finally approved Elders’ takeover of (unlisted) Delta Agribusiness after an extended delay.

Delta Agribusiness is a leading independent rural inputs and advisory service in regional Australia, with a strategic footprint across NSW, Queensland, Victoria, Western Australia and South Australia.

The similarities are eerie, which is likely why the ACCC agonised over its decision. Ultimately, the regulator demanded only the divestment of six Delta outlets in Western Australia, which analysts note earned less than a combined $0.3m in FY25 (June year-end) -- immaterial given the synergies on offer.

Delta will expand Elders’ network by a net 62 locations post divestments and 40 wholesale customers and, importantly, Morgans suggests, fills key gaps in NSW, Victoria, South and Western Australia. Additionally, it will enhance Elders’ technical expertise and offering in ag-tech and precision agriculture.

Delta is a strong brand, Morgans notes, and is well managed. Elders’ expectations of synergies of $12m over three years should prove to be conservative given they are solely around backward integration benefits.

Morgans also expects there are benefits from increased buying power as a larger group. Over time, there is an opportunity to expand Delta’s network, product and services offering. In addition, there will be benefits from placing Delta on Elders’ new IT systems.

Given the delay in receiving ACCC approval, Morgans thinks Elders will now fast track this timeline.

While Canaccord Genuity held the view that ACCC approval was likely, the drawn-out process and residual uncertainty was weighing on the share price.

The acquisition rationale is compelling, in Canaccord’s view, led by the complementary nature of Delta’s strengths in Retail Products in NSW with Elders’ strengths elsewhere on the east coast, as well as margin expansion synergies via backward integration.

The -$475m acquisition will be funded by last year’s $246m non-renounceable entitlement offer; a new $110m debt facility; and $190m of scrip issued to Delta shareholders at $8.52, who will own 10.45% of Elders.

Delta is owned and managed by the people that work within the business.

Things Can Only Get Better

Delta's FY25 performance was equally negatively impacted by dry conditions in Southern Australia, Macquarie notes. Margins were also impacted by heightened competitive pricing from a later season and crop protection traders seeking to avoid carry-over inventory.  Macquarie highlights minimal lift in agchem prices over the last six months.

Yet, the outlook for Delta remains in line with the acquisition case from back in December last year.

Conditions in South Australia and western Victoria improved from June, resulting in increased crop protection demand in the September quarter, Macquarie notes, however this has not completely offset June quarter weakness.

The Agency business should benefit from a lift in livestock pricing which is being driven by a supportive backdrop for protein, particularly from the US where Australian beef is seeing strong demand as the US herd plumbs 70-year lows and prohibitive tariff rates (50%) have been applied to Brazilian imports.

Volumes will likely be lower, given restocking activity across northern states on optimal seasonal conditions offsetting some of benefit from higher pricing.

Elders’ softer guidance reflects a materially softer outcome in crop protection margins in the second half, which has more than mitigated the stronger trends visible in Agency. While disappointing, Bell Potter notes most forward indicators of activity are starting FY26 with double digit year-on-year gains in areas such as livestock, wool, fertiliser and crop protection pricing.

Given the inherent risk around unpredictable weather patterns, Citi thinks it is prudent to err on the side of caution when it comes to a progressive recovery pertaining to crop protection in FY26. Citi is factoring in partial recovery in FY26 versus FY25 but acknowledges the risk is likely to the upside.

The key question for Elders are its earnings for a “normal” year. While momentum in the September quarter is encouraging, first half and June quarter drags are stark reminders of inherent volatility across the industry, Citi warns.

On that basis, Citi thinks a “normal” year should factor in potential perseverance of challenging conditions in some regions. The broker estimates earnings headwinds from a dry South Australia and western Victoria in FY25 to be around -$24m. Instead of simply adding the full $24m back to FY26 earnings, Citi thinks it is prudent to assume partial recovery in FY26 for now and err on the side of caution.

The closing of the Delta transaction is clearly a positive development, Bell Potter suggests, given the elongated acquisition timeline and in isolation is expected to be some 10% earnings per share accretive.

In addition, Bell Potter sees encouraging indicators heading into FY26, with crop input prices (fertiliser and glyphosate tech), livestock prices (cattle, lamb and mutton) and wool prices all demonstrating double digit year-on-year gains.

A more normal selling pattern in FY26, delivery on systems modification and backward integration initiatives, sector activity tailwinds and consolidation of Delta are expected to drive high double-digit earnings growth in FY26-27.

This view does not look reflected in the current share price, Bell Potter believes, with Elders trading at around an 11x PE on its forward projections. (for FNArena's consensus forecasts and PE multiple, see Stock Analysis).

While it is disappointing that FY25 guidance materially missed expectations, Morgans notes the seasonal break came late in Elders’ financial year. Importantly, FY26 should be a big year for the company and Elders has many growth projects in place to deliver strong earnings growth over coming years.

The ACCC approval now provides certainty and Elders can get on with merging the businesses and delivering the targeted synergy benefits. Elders is one of Australia’s leading agribusinesses, Morgans notes. It has an iconic brand and is diversified by product, service, market segment and geography.

The stock’s trading multiples are seen as undemanding and it also offers an attractive dividend yield.


The full story is for FNArena subscribers only. To read the full story plus enjoy a free two-week trial to our service SIGN UP HERE

If you already had your free trial, why not join as a paying subscriber? CLICK HERE

MEMBER LOGIN

Australian investors stay informed with FNArena – your trusted source for Australian financial news. We deliver expert analysis, daily updates on the ASX and commodity markets, and deep insights into companies on the ASX200 and ASX300, and beyond. Whether you're seeking a reliable financial newsletter or comprehensive finance news and detailed insights, FNArena offers unmatched coverage of the stock market news that matters. As a leading financial online newspaper, we help you stay ahead in the fast-moving world of Australian finance news.

ESG Focus: The Little Big Things – 09-10-2025

FNArena's dedicated ESG Focus news section zooms in on matters Environmental, Social & Governance (ESG) that are increasingly guiding investors preferences and decisions globally. For more news updates, past and future: 
https://www.fnarena.com/index.php/financial-news/daily-financial-news/category/esg-focus/

Little Big Things focuses on some of today’s biggest ESG issues, including the new government reduction target, transition action plans, corporate safety records and more.

-Progressing to new emission reduction target
-Utilities’ energy transition plans
-Corporate ESG updates
-Corporate safety records
-EU’s carbon tariff
-Bio-stimulants

By Greg Peel

Assessment and Target

Following Australia’s first National Climate Risk Assessment and the government’s subsequent 2035 emissions reduction target of -62-70% below 2005, Westpac reports plans are taking shape for a nationwide scheme to recycle and reuse solar panels, new thinking on generating financial and environmental returns in the construction industry, plus a grant to promote consistency across the agricultural sector, and more.

Solar: Commonwealth, state and territory governments have come together to progress the first national solar panel reuse and recycling scheme. The scheme aims to direct solar panel waste from landfill towards re-manufacture or recycling.

NSW, which is currently developing a mandated stewardship program for batteries, will work with other jurisdictions to create a Regulatory Impact Statement, while the Commonwealth will work with states to test and validate a national product stewardship scheme. All parties have agreed to report back on progress in early 2026.

The Pilbara: Could a global hub for mineral and energy resources be transformed into a renewable energy powerhouse? A new report commissioned by the Clean Energy Finance Corp shows a shared transmission model for the Pilbara region has potential to significantly cut emissions while also driving economic and environmental benefits.

The report explores the benefits of a Common User Transmission Infrastructure (CUTI) system, which would enable multiple users and generators to connect to a single, shared grid. The CUTI system would replace the traditional model, where each miner builds and operates its own infrastructure, and would be a key facilitator of the renewable electricity transition.

Agriculture: Consistency of farm-level greenhouse gas emissions calculators looks set for improvement with Agricultural Innovation Australia receiving a $6.4m federal government grant to help farmers and agricultural businesses estimate emissions from on-farm activities, such as those from livestock, manure management and nitrogen fertiliser.

Construction: A German technology company is taking an innovative approach to circularity in the construction industry. BetaPort Systems is pioneering a building model in which modular timber components are used to generate financial returns for investors. 

Under the company’s Beta Finance model, building components such as facades, beams and staircases are designed to last for more than 80 years, and this longevity positions them as assets of financial value. Every element is digitised and assigned a material passport, so its history can be traced from production to reuse.

Returns for investors come in the form of income generated during use, reuse across multiple projects and residual value at the end of the component’s lifecycle.

Climate Transition Action Plans (CTAP)

Morgan Stanley believes AGL Energy’s ((AGL)) decarbonisation task is the largest among Australia’s utilities and its emissions reduction and clean energy investment targets are the most ambitious, both in absolute terms and relative to company size.

Origin Energy’s ((ORG)) reduction targets exclude the impact of new gas fields, should Origin reach final investment decision (FID) on new projects. AGL's generation intensity targets have not been met to date. The company plans to develop new gas-fired generation which would then require additional renewables investment to lower generation intensity.

APA Group ((APA)) has similarly backslid on its generation intensity targets.

Scope 3 (end-user) reduction targets for energy suppliers remain difficult to specify, in Morgan Stanley’s view, as they are akin to revenue reduction targets. AGL's proposed FY36 Scope 3 target relies on coal closure and grid intensity reductions which lack additionality, but to be fair, says Morgan Stanley, AGL also targets abatement from electrification.

Origin's clean energy investment target of 4-5GW of renewables and storage by FY30 includes a starting position of 1.8GW as of FY24, so equates to 2.7GW incremental investment, versus AGL's 4.8GW incremental investment over the same period.

When considering energy security, Morgan Stanley estimates AGL’s and Origin's closure versus investment plans leave the National Electricity Market short, but to be fair, policy auctions are incentivising supply, and Origin also makes a material contribution to East Coast domestic gas markets.

AGL’s largest shareholder (10%-plus), Mike Canon-Brookers’ Grok Ventures, refused to endorse the company’s updated CTAP at last week’s AGM, labelling it as inadequate, the SMH reported. Grok said AGL’s commitments were “largely unchanged” from two years ago and fall short of the Paris Agreement target.

Grok’s votes accounted for the majority of proxy votes that opposed the CTAP, while 70% of votes supported it.

Origin’s second CTAP sets out a comprehensive framework for decarbonising its operations, Jarden reports, reaffirming the company’s ambition to achieve net zero Scope 1, 2 and 3 emissions by 2050. The 2025 plan builds on Origin’s 2022 strategy and reflects both progress and challenges of Australia’s energy transition and will be subject to an advisory shareholder vote at the company's upcoming AGM.

Origin's CTAP maintains the medium- and long-term climate targets first set in 2022: a -40% reduction in equity emissions intensity and a -20Mt absolute reduction by 2030 (from an FY19 baseline), and net zero emissions by 2050.

While the plan outlines areas of progress, delivery remains highly dependent on several factors, Jarden notes, including Eraring power station's closure, the speed of renewables and transmission build-out, and customer and partner progress on Scope 3 emissions.

ESG Updates

BHP Group ((BHP)) has held an ESG roundtable and South32 ((S32)) a CTAP briefing, while Fortescue ((FMG)) has released its CTAP.

BHP is seeing solid progress on Scope 2, Macquarie reports, however, diesel displacement remains a challenge, with battery electrification the preferred option.

South32’s operational decarbonisation is focused on aluminium (over 90% of operational emissions). Fortesuce’s CTAP includes a slight change in the time frame on real zero target to 2030-31 from 2029-30, more focus on cable electric solutions, and reduced mentions of green hydrogen.

There has been some momentum on sustainable aviation fuel (SAF), through the Western Australian government’s $1.1bn investment. The International Air Transport Association expects SAF to represent 0.7% of jet fuel in 2025. Qantas Airways ((QAN)) has a target for 10% SAF in its fuel mix by 2030, increasing to 60% by 2050, however, Macquarie suggests Australian SAF mandates likely need to see significant uptake.

Moving to the ‘S’ in ESG, the Federal Court has found Coles Group ((COL)) and Woolworths Group ((WOW)) underpaid around 30,000 salaried managers over several years.

Woolworths estimates additional remediation costs could reach -$530m (-$331m previously paid), while Coles estimates remediation at -$150-250m (-$31m previously paid). A further hearing is scheduled for October 25 to determine compensation for affected employees.

And to the ‘G’, the UN's first AI Governance meeting was held at the recent General Assembly with all 193 UN Member States to consider effective global AI governance given no global frameworks.

Two new bodies were introduced, Global Dialogue on AI Governance and Independent International Scientific Panel on AI.

Notably, points out Macquarie, the US delegation pushed back on the idea of centralised AI governance.

Safety

Over the FY25 period to date, 16 fatalities have been reported across ASX200 industrials, retail, mining and oil & gas companies, down from 19 in FY24, with the majority occurring in the mining and industrials sectors.

While the FY25 dataset is not yet complete, early trends suggest some improvement, Jarden notes, with leading safety indicators generally moving in the right direction among companies that report them.

At the same time, recordable injury outcomes have shown positive progress, with the Jarden-calculated Total Recordable Injury Frequency Rate (TRIFR) average easing from 6.5 in FY24 to 5.2 in FY25.

Despite these gains, many TRIFRs remain elevated, with 17 companies above seven in FY25. These include Qantas (21.3), JB Hi-Fi’s ((JBH)) The Good Guys (20.0), Coles (14.7), Metcash ((MTS)) (13.8), JB Hi-Fi brand (13.0), Woolworths (12.9), Boss Energy ((BOE)) (12.7), Sigma Healthcare ((SIG)) (12.7), Super Retail ((SUL)) (12.1), Ramelius Resources ((RMS)) (11.1), Endeavour Mining (10.2), IGO Ltd ((IGO)) (10.2), and Wesfarmers ((WES)) (9.5).

Jarden notes while high on an absolute basis, some are below industry averages, eg the air transportation industry was 30 in the FY24 period.

The largest increases in TRIFR were noted at Boss Energy, JB Hi-Fi (group), Auckland International Airport ((AIA)), Worley ((WOR)), Mineral Resources ((MIN)), Ramelius, Coles, and Aurizon Holdings ((AZJ)).

Europe

With the 1 January start date for the EU’s Carbon Border Adjustment Mechanism (CBAM) approaching, investor interest in the outlook for CBAM has intensified, particularly regarding the potential for delays.

Morgan Stanley provides an overview of changes to CBAM so far and a perspective on what lays ahead.

The CBAM is the EU's tool to put a fair price on carbon emitted during the production of carbon-intensive goods that are entering the EU, and to encourage cleaner industrial production in non-EU countries. It is effectively a carbon tariff.

The CBAM will have implications for in-scope sectors (cement, iron & steel, fertiliser, aluminium, hydrogen and electricity) and EU carbon prices, Morgan Stanley notes. There will be a review of CBAM before it is scheduled to start on 1 January.

Morgan Stanley sees export rebates and anti-circumvention measures as likely to be announced given the Commission has said it intends to address both concerns.

In the analysts’ view, gradual adjustments to CBAM only increase the likelihood of its timely implementation. Morgan Stanley’s base-case forecasts assume a timely start, but the analysts see three potential reasons CBAM could be delayed: lack of industry readiness (most likely), trade tensions, and economic concerns.

Any delay to CBAM must be matched by a delay to the phase-out of free Emissions Trading Scheme (ETS) allowances. Failing to align these timelines would disadvantage EU producers, Morgan Stanley notes.

Bio-Stimulants

Morgan Stanley has hosted Axioma Biologicals, a French biotech firm that designs and manufactures plant-based bio-stimulant solutions for improving agriculture yields under increasing climate stress.

There is a growing opportunity for bio-stimulants (promote plant resilience) over bio-controls (pest protection) due to varying regional restrictions for chemical fertilisers. Plant-based bio-stimulants can be tailor made for specific crop type, region and type of climate peril, though developing the right solution can take 2-5 years.

Morgan Stanley notes these solutions can enhance yield by 5-10% under climate stress. Other benefits include improved chlorophyll activity, shelf life and nutrient uptake.

Premium pricing is balanced by yield productivity gains and resilience. While R&D and distribution raise costs, scalability can drive them down over time.

Near-term growth markets include Australia and South America due to favorable regulation, large farm sizes, and limited agricultural subsidy protection.

FNArena's dedicated ESG Focus news section zooms in on matters Environmental, Social & Governance (ESG) that are increasingly guiding investors preferences and decisions globally. For more news updates, past and future: 
https://www.fnarena.com/index.php/financial-news/daily-financial-news/category/esg-focus/

Find out why FNArena subscribers like the service so much: "Your Feedback (Thank You)" - Warning this story contains unashamedly positive feedback on the service provided.

FNArena is proud about its track record and past achievements: Ten Years On

Australian investors stay informed with FNArena – your trusted source for Australian financial news. We deliver expert analysis, daily updates on the ASX and commodity markets, and deep insights into companies on the ASX200 and ASX300, and beyond. Whether you're seeking a reliable financial newsletter or comprehensive finance news and detailed insights, FNArena offers unmatched coverage of the stock market news that matters. As a leading financial online newspaper, we help you stay ahead in the fast-moving world of Australian finance news.

Compelling Story Drives Pantoro Gold Rally

Junior miner Pantoro Gold has repaired its balance sheet, swung to positive cash flow and offers compelling reserve and grade upside at its Norseman project. But is it too late to invest?

-Pantoro Gold swings to cash flow positive in FY25
-Balance sheet fixed and capital structure simplified
-Norseman offers above-guidance upside in reserves and grade
-Gold mining stocks have run hard in recent months

By Greg Peel

Pantoro Gold ((PNR)) operates its 100%-owned, high-grade Norseman Gold Project, located 180km south of Kalgoorlie in Australia’s premier mining jurisdiction.

A proven gold province with 5.5Moz of historical production since 1935, Norseman currently hosts multiple open-pit and underground operations, alongside numerous high-grade lodes yet to be mined at depth and along strike.

Pantoro reported an FY25 financial result last month that delivered substantial year on year growth across all key financial metrics, including a $112m turnaround from a -$46m loss in FY24 to $66m profit in FY25. Compared with Bell Potter’s forecasts, revenue was slightly lower on the treatment of gold call option deliveries; in-line for earnings, and lower for profit on the broker’s under-estimation of D&A and corporate costs.

Pantoro finished FY25 with $176m in cash and bullion, no debt and minimal hedging in place (6% of forecast FY26 production). FY26 guidance is unchanged 100-110koz at cost of $1,950-2,250/oz, which implies higher production and lower costs compared with FY25 (84.6koz at $2,261/oz).

Based on the USD gold price and AUDUSD exchange rate at the time of writing, the AUD gold price was $5882.90.

The highlight of the result, in Bell Potter’s view, was Pantoro’s improved financial performance, strengthening of its balance sheet and simplification of its capital structure. This included the closure of its US$12.5m convertible debt facility and a 1:17 share consolidation.

Pantoro delivered substantial earnings margin expansion, lifting from 11% in FY24 to 55% in FY25. Bell Potter forecasts this to increase to 65% in FY26.

Free cash flow turned from a -$12m outflow in FY24 to $78m cash generation in FY25. Pantoro continues to guide to a medium-term aspirational production target of 200kozpa-plus, predicated on filling the mill to 1.4Mtpa with high grade ore of 4.5g/t Au.

Gold-Mine-Operation

Reserves

Last month Pantoro released its annual Mineral Resources & Ore Reserves (MROR) estimates.

Group inventory has remained broadly unchanged year on year, Moelis notes, once adjusted for the miner’s divestment of its Halls Creek asset. The uplift in gold price assumptions (A$1,400/oz above last year) has served to partially offset depletion.

While the net outcome from the release is effectively neutral, Moelis notes Pantoro hasn't really had the opportunity (yet) to significantly drill across the portfolio with the specific intention of resource conversion.

Moelis sees material opportunity to progressively convert the company’s sizeable underground resource base into reserves, but this will require both time and capital, with the prospect of a meaningful lift in reserve grades (and ultimately feed grades) further down the track.

Moelis would hope to see a step change in the MROR update in 12 months' time following a material uplift in exploration spend/activity. 

Compelling

Morgans has calculated a base case net asset value for Pantoro of $1,638m based on assumed production growth delivered via an uplift in head grade. The broker expects Pantoro may beat its FY26 production forecasts as mining rates and grade increase.

Norseman has the ingredients for a lucrative future, Morgans suggests, being infrastructure rich and cashflow positive. This broker models average annual earnings of $267m and an earnings margin in excess of 50% over the next eight years.

Following a ramp-up of operations, Pantoro is beginning to hit its straps operationally, Morgans believes. Given the historical production head grade, high grade resource inventory and encouraging drilling, this broker’s base case assumes an ongoing lift in head grade to 3.5g/t Au by FY29 -- growing production to more than 150kozpa.

The company’s debt has been extinguished, ownership consolidated, and cash reserves are building, which Morgans thinks materially de-risks a balance sheet that historically has been a challenge for the business.

Shut the Gate?

By end-September, the USD gold price had risen 11% for the month and 47% in 2025 to date. Investors are typically slow to get onto a commodity price-based rally, but have recently rushed into gold mining stocks as the gold price has continued to soar. The issue is as to whether valuations have now overshot.

Moelis recently downgraded its investment view on Pantoro to a Hold rating from Buy on valuation grounds following the stock’s 73% rally in just three months. While the business is in solid shape, a rating upgrade would require either greater conviction in the peak production profile or a sustained further leg-up in gold prices, Moelis suggests.

On the broker’s numbers, spot pricing implies a valuation of $5.80/share, suggesting the stock is fully valued at current levels, while under the same scenario (spot) peers retain upside.

Bell Potter last month upgraded its rating on Pantoro to Hold from Sell and raised its price target to $5.35 from $4.40, but qualified that while operational delivery is improving and the pathway to this objective is becoming clearer, there is a risk the market is pricing some of this growth in ahead of time.

In initiating coverage of Pantoro Gold, Morgans has set a Hold rating with a discounted cash flow-based price target of $5.33. With the Norseman gold project wholly consolidated, and with no hedging or debt, Morgans thinks Pantoro is positioned to realise solid free cash flow while establishing access to high grade mining areas.

 Pantoro appears to have turned a corner operationally and Morgans sees upside to FY26 guidance given recent performance. However, in Morgans’ view, the recent stock price rally has somewhat diminished short-term upside.

Find out why FNArena subscribers like the service so much: "Your Feedback (Thank You)" - Warning this story contains unashamedly positive feedback on the service provided.

FNArena is proud about its track record and past achievements: Ten Years On

Australian investors stay informed with FNArena – your trusted source for Australian financial news. We deliver expert analysis, daily updates on the ASX and commodity markets, and deep insights into companies on the ASX200 and ASX300, and beyond. Whether you're seeking a reliable financial newsletter or comprehensive finance news and detailed insights, FNArena offers unmatched coverage of the stock market news that matters. As a leading financial online newspaper, we help you stay ahead in the fast-moving world of Australian finance news.

September In Review: Winning Streak Broken

After five months of consecutive gains, the ASX200 went backwards in September despite a courageous effort from gold miners.

-ASX200 loses -0.8% (total return) in September
-Materials the only winning sector
-Gold the substantial driver of materials
-Weak month for some favoured heavyweights

By Greg Peel

September is, historically, the worst month of the year for the stock market. However, that trend has become diluted over recent years.

The trend more specifically pertains to Wall Street, to which the ASX200 has historically been anchored, but that correlation has also become diluted in recent years on a divergence of market-driving sectors.

Yet, September this year was indeed a weak month for the Australian stock market, breaking a five-month winning streak for the ASX200. The index closed down -1.4% for the month, for a total return of -0.8% (including dividends).

By contrast, the S&P500 rose 3.5%, underscoring diminishing correlation. The clue here is in the Nasdaq, which shares the Magnificent Seven with the wider index and rose 5.6% on the ever-inflating AI theme.

For Australia, index performance would have been substantially worse if not for the contribution of the materials sector, completely dominated in the month by the ongoing surge in the gold price.

Excluding dividends, the ASX200 materials sector rose 4.6% in September, to be the only sector with a positive performance for the month. All other sectors saw losses, led by energy (-10.6%), consumer staples (-5.6%) and healthcare (-4.9%) in terms of percentage moves, and financials (-1.5%) in terms of market cap impact.

Glittering

Within materials, the gold miner sub-index rose 24.4%. History shows gains in gold mining stocks typically lag gains in the gold price. This has again been the case in 2025. It takes a while for investors to cotton on.

While the energy sector is beholden to oil prices, September’s withdrawal of Abu Dhabi National Oil Co’s (consortium) takeover bid for Australia’s second largest oil & gas producer Santos ((STO)) dragged down all energy peers. It is questionable whether the bid would have ever made it past the FIRB.

In staples, woes continued for Woolworths Group ((WOW)) post a shock FY25 result and guidance in August. In healthcare, sector behemoth CSL’s ((CSL)) share price was trashed in August on the withdrawal of margin recovery guidance and restructure plans, and the mood did not improve in September following Trump’s social media announcement of 100% tariffs on imported pharmaceuticals (CSL has since played down the impact).

Within financials, falls in financial services and insurance companies drove weakness more so than banks, albeit some of the gloss came off Commonwealth Bank ((CBA)) in the month. The RBA’s on-hold September rate decision was also a drag.

Returning to gold, outperformance was not constrained to ASX200-listed miners. Morgan Stanley points out while there were 30 gold miners in the Small Ordinaries index in 2012 and only 18 now, gold’s weighting within the sector has reached 14% of all small caps.

Within large caps, the addition of Genisis Minerals ((GMD)) and Ramelius Resources ((RMS)) into the ASX100 has taken gold stocks to 3.6% of all large caps, eclipsing 2012 levels and matching the covid peak.

Individuals

Morgan Stanley notes the most value for the ASX200 was added in September by gold miners Northern Star Resources ((NST)) (up 27.0 basis points) and Evolution Mining ((EVN)) (17.2). While the winners on pure percentage were gold miner Regis Resources ((RRL)) (33.7%) and, bucking the trend, Droneshield ((DRO)) (44.7%). Thank you Ukraine.

The most index value was lost by heavyweights Woodside Energy ((WDS)) (-24.0 basis points) and CSL (-22.0), while the worst performers were intellectual property services company IPH Ltd ((IPH)) (-21.9%) and still struggling autoparts distributor Bapcor ((BAP)) (-19.1%).

Morgan Stanley cites likely switching amongst the banks, with CBA down -21.2 basis points while National Bank ((NAB)) outperformed.

Macquarie Group ((MQG)) also had a weak month as did another index heavyweight, data centre star Goodman Group ((GMG)).

Commodities

A down-month for the ASX200 for September belies the performance of commodity prices for the month –- typically an index driver.

I might have mentioned gold – that was up (USD terms) 11.0% in the month to be up 47.0% in 2025, but outshone by little brother silver (19.9% and 55.7%).

Copper starred among the base metals (8.0%; 19.8%), aided by a temporary shutdown of a major mine in Peru. There were contrasts among the others, with zinc up 5.6% for the month, but down -1.1% for the year to date, and nickel up a mere 0.3% and down -4.3% for the year. Aluminium put together a double; up 2.7% and 6.3%.

Uranium went nuclear in September with a 10.3% monthly gain within a 14.9% gain year to date, while iron ore has been largely static of late, up 3.6% for the month but only 1.5% for the year.

Fears of global slowing brought about by you know who have seen West Texas crude down -9.1% for the year and -1.7% in September, with Brent down -8.0% and -1.4%.

ASX100 Best and Worst Performers of the month (in %)

Company Change Company Change
GMD - GENESIS MINERALS LIMITED 30.60 PNI - PINNACLE INVESTMENT MANAGEMENT GROUP LIMITED -16.39
PRU - PERSEUS MINING LIMITED 29.63 STO - SANTOS LIMITED -16.08
NST - NORTHERN STAR RESOURCES LIMITED 25.62 NWL - NETWEALTH GROUP LIMITED -14.74
EVN - EVOLUTION MINING LIMITED 25.06 WDS - WOODSIDE ENERGY GROUP LIMITED -12.80
RMS - RAMELIUS RESOURCES LIMITED 22.40 SOL - WASHINGTON H. SOUL PATTINSON AND COMPANY LIMITED -12.04

ASX200 Best and Worst Performers of the month (in %)

Company Change Company Change
DRO - DRONESHIELD LIMITED 41.21 NEC - NINE ENTERTAINMENT CO. HOLDINGS LIMITED -27.54
GGP - GREATLAND RESOURCES LIMITED 34.96 IPH - IPH LIMITED -21.88
BGL - BELLEVUE GOLD LIMITED 33.14 BAP - BAPCOR LIMITED -20.35
EMR - EMERALD RESOURCES NL 32.80 HMC - HMC CAPITAL LIMITED -17.40
RRL - REGIS RESOURCES LIMITED 32.38 PNI - PINNACLE INVESTMENT MANAGEMENT GROUP LIMITED -16.39

ASX300 Best and Worst Performers of the month (in %)

Company Change Company Change
EOS - ELECTRO OPTIC SYSTEMS HOLDINGS LIMITED 76.21 MYR - MYER HOLDINGS LIMITED -28.36
RSG - RESOLUTE MINING LIMITED 58.46 NEC - NINE ENTERTAINMENT CO. HOLDINGS LIMITED -27.54
SLX - SILEX SYSTEMS LIMITED 58.31 REG - REGIS HEALTHCARE LIMITED -23.31
BC8 - BLACK CAT SYNDICATE LIMITED 56.11 IPH - IPH LIMITED -21.88
VUL - VULCAN ENERGY RESOURCES LIMITED 44.93 BAP - BAPCOR LIMITED -20.35

ALL-TECH Best and Worst Performers of the month (in %)

Company Change Company Change
4DX - 4DMEDICAL LIMITED 247.37 NVX - NOVONIX LIMITED -20.18
DUG - DUG TECHNOLOGY LIMITED 68.52 EIQ - ECHOIQ LIMITED -19.05
EOL - ENERGY ONE LIMITED 24.54 EML - EML PAYMENTS LIMITED -11.95
RUL - RPMGLOBAL HOLDINGS LIMITED 22.55 WTC - WISETECH GLOBAL LIMITED -11.34
360 - LIFE360 INC 14.45 FND - FINDI LIMITED -10.16

All index data are ex dividends. Commodities are in USD.

Australia & NZ

Index 30 Sep 2025 Month Of Sep Quarter To Date (Jul-Sep) Year To Date (2025)
NZ50 13292.360 2.80% 5.47% 1.39%
All Ordinaries 9135.90 -1.16% 4.14% 8.50%
S&P ASX 200 8848.80 -1.39% 3.59% 8.45%
S&P ASX 300 8802.20 -1.25% 3.87% 8.68%
Communication Services 1861.40 -3.17% 0.45% 14.38%
Consumer Discretionary 4518.40 -1.65% 9.06% 15.52%
Consumer Staples 11743.80 -5.60% -3.09% -0.22%
Energy 8332.70 -10.55% -3.95% -3.36%
Financials 9574.20 -1.48% 0.47% 11.14%
Health Care 37417.20 -4.93% -10.06% -16.64%
Industrials 8470.60 -2.76% 1.82% 10.78%
Info Technology 2927.50 -2.20% 0.92% 6.81%
Materials 18815.70 4.62% 18.65% 16.69%
Real Estate 4055.20 -3.08% 4.02% 7.81%
Utilities 10010.00 -0.67% 9.50% 10.82%
A-REITs 1863.20 -3.20% 4.04% 8.43%
All Technology Index 4226.60 -1.78% 4.52% 11.07%
Banks 4112.40 -0.27% 2.23% 14.03%
Gold Index 16080.60 24.40% 39.14% 90.90%
Metals & Mining 6453.80 6.17% 23.62% 22.80%

The World

Index 30 Sep 2025 Month Of Sep Quarter To Date (Jul-Sep) Year To Date (2025)
FTSE100 9350.43 1.78% 6.73% 14.41%
DAX30 23880.72 -0.09% -0.12% 19.95%
Hang Seng 26855.56 7.09% 11.56% 33.88%
Nikkei 225 44932.63 5.18% 10.98% 12.63%
DJIA 46397.89 1.87% 5.22% 9.06%
S&P500 6688.46 3.53% 7.79% 13.72%
Nasdaq Comp 22660.01 5.61% 11.24% 17.34%

Metals & Minerals

Index 30 Sep 2025 Month Of Sep Quarter To Date (Jul-Sep) Year To Date (2025)
Gold (oz) 3861.02 11.04% 16.92% 46.99%
Silver (oz) 47.05 19.91% 29.97% 55.69%
Copper (lb) 4.9060 7.98% -3.72% 19.76%
Aluminium (lb) 1.2156 2.67% 3.09% 6.34%
Nickel (lb) 6.8353 0.33% 0.23% -4.33%
Zinc (lb) 1.3362 5.55% 5.84% -1.12%
Uranium (lb) weekly 82.75 10.33% 5.21% 14.93%
Iron Ore (t) 105.35 3.58% 11.49% 1.45%

Energy

Index 30 Sep 2025 Month Of Sep Quarter To Date (Jul-Sep) Year To Date (2025)
West Texas Crude 63.14 -1.74% -3.63% -9.12%
Brent Crude 66.74 -1.37% -0.09% -8.02%

Editor’s Note when viewing the graphics below: all updates include early trading sessions in September.

market price bar market price bar market price bar

Technical limitations

If you are reading this story through a third party distribution channel and you cannot see charts included, we apologise, but technical limitations are to blame.

Find out why FNArena subscribers like the service so much: "Your Feedback (Thank You)" - Warning this story contains unashamedly positive feedback on the service provided.

FNArena is proud about its track record and past achievements: Ten Years On

Australian investors stay informed with FNArena – your trusted source for Australian financial news. We deliver expert analysis, daily updates on the ASX and commodity markets, and deep insights into companies on the ASX200 and ASX300, and beyond. Whether you're seeking a reliable financial newsletter or comprehensive finance news and detailed insights, FNArena offers unmatched coverage of the stock market news that matters. As a leading financial online newspaper, we help you stay ahead in the fast-moving world of Australian finance news.

Premier Investments’ FY26 Turnaround Potential

Small Caps | Oct 01 2025

Premier Investments’ Peter Alexander Brand is firing domestically and is just getting going in the UK. Smiggle has struggled, but analysts see a turnaround ahead.

-Premier Investments’ FY25 sees Peter Alexander outperform and Smiggle underperform
-Margins reduced due to expansion and start-up costs
-Consumer environment improving for Smiggle
-FY26 turnaround thesis suggests shares are cheaply priced

By Greg Peel

Premier Investments ((PMV)) wholly owns sleepwear retailer Peter Alexander and kids’ school supplies retailer Smiggle, has a 25% stake in home appliances manufacturer Breville Group ((BRG)) and strategic property investments.

The company reported largely in-line FY25 results (July year-end), which showed ongoing strong momentum in Peter Alexander with sales up 7.7%, partially offset by a -10.7% decline in Smiggle sales driven by a high single-digit sales decline and second half store network rationalisation.

Retail earnings were down -18% to $195m, reflecting gross profit margin declines from a tougher consumer trading environment (notably in the second half) and opex deleverage.

PMV Peter Alexander

Peter Alexander

Peter Alexander Australia & New Zealand was the jewel in the crown in FY25. Sales rose 9% and have risen another 9.2% year to date in FY26, driven, Morgan Stanley notes, by store footprint growth, range expansion and an improving consumer, showing the enduring brand strength in A&NZ.

Six new stores were added in the period while nine others were relocated or expanded. Expansion of the average store size from smaller (100-150sqm) to larger (200sqm-plus) stores is a multi-year growth driver, UBS suggests, supported by focused execution.

Management confirmed at least seven new or upsized stores for the first half FY26, with further opportunity for 15-plus locations.

Peter Alexander UK remains in its early stages, having commenced only ten months ago, showing second half earnings losses of -$5m and annualised sales per store of $1.6m versus $4m in A&NZ. While early metrics are weak, the UK remains a longer-term option, UBS believes, potentially contributing $29–77m in earnings by FY30, assuming successful execution.

Thus far, UK expansion looks to be on track, with no change to medium-term store network growth potential.

Peter Alexander in general appears well poised for the gift-giving season. Citi expects the store rollout in FY26 to be similar to prior years.

This broker is attracted to the upside potential of the UK market, but agrees with management’s prudent approach to first prove the concept works.

Smiggle

Smiggle’s second half sales were down -4.7%, but this was a better-than-expected result considering first half sales were down -14.5%, although H2 was measured against easier comparables.

The trading update was disappointing, with sales down -4% in FY26 to date. Momentum was impacted by a shipping delay, with product since arriving.

Brokers agree Smiggle’s core customers, being young families, have been among the most impacted by cost-of-living pressures.

However, Citi’s recent grocery & liquor survey as well as other indicators (eg consumer sentiment) suggest conditions are improving. Still, Citi thinks the appointment of a new leader of the business is critical to get the most out of the brand.

Investor sentiment is increasingly shifting toward structural concerns, although management maintains the issues are execution-related – understandable, says Ord Minnett, given the brand has lacked a CEO for some 15 months.

Notably, Smiggle’s A&NZ sales grew 2% in FY25, with offshore markets (-19%) driving the weakness.

Analysts agree Smiggle will continue to struggle in FY26 but less so than in FY25. Momentum is considered to be to the upside, but it will be a slow-moving turnaround story.

Macquarie suggests a strong Christmas period trading update will be a key catalyst watchpoint for a return to growth in Smiggle.

Margins

Premier Investments’ gross margins at 65.6% were down -154bps in FY25 (down -250bps in the second half) due to clearance given weaker sales (Smiggle) and mix to lower margin PA UK (45.7%), UBS notes.

Cost of doing business to sales rose due to rising rent (larger PA stores, new leases) and employee expenses (one-off in the first half, minimum wage increase), start-up PA UK losses (-$10.9m FY25) and soft sales in Smiggle.

UBS forecasts earnings margin expansion as the Smiggle product and external environment improve which support sales growth, Peter Alexander UK losses reduce and Peter Alexander sales growth generally continues.

Citi believes gross margins should improve in FY26 considering a better consumer environment lessens the chance of inventory markdowns as occurred in the second half FY25.

Moreover, the strengthening currency is favourable and there is upside from renegotiation of supplier terms given reduced demand from the US in light of tariffs.

On costs, the exit of unprofitable Smiggle stores should be favourable. However, with costs largely fixed in this brand, Citi needs to see positive sales to offset underlying wage inflation.


The full story is for FNArena subscribers only. To read the full story plus enjoy a free two-week trial to our service SIGN UP HERE

If you already had your free trial, why not join as a paying subscriber? CLICK HERE

MEMBER LOGIN

Australian investors stay informed with FNArena – your trusted source for Australian financial news. We deliver expert analysis, daily updates on the ASX and commodity markets, and deep insights into companies on the ASX200 and ASX300, and beyond. Whether you're seeking a reliable financial newsletter or comprehensive finance news and detailed insights, FNArena offers unmatched coverage of the stock market news that matters. As a leading financial online newspaper, we help you stay ahead in the fast-moving world of Australian finance news.