In Brief: LGI, Bravura & Dexus Industria REIT

This story features LGI LIMITED, and other companies.
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In Brief offers a melange of stock snack ideas, including a renewable energy winner, a once tech favourite in a bind, and an appealing REIT transition.

-LGI powers ahead with ACCU growth, higher LGC prices, and a bold battery move
-Bravura hits a speed bump as FY26 guidance includes customer exits
-Dexus Industria sheds offices, bets on industrial strength

By Danielle Ecuyer

This week’s quote comes from Michael Howell, CrossBorder Capital,

“Have we reached the second degree, when it is not the change in interest rates that matters, but the change in the change in rates? In which case, a bond market that is doing nothing may be good!

Consider how, despite widespread predictions of upcoming bond market distress and persistent dollar stress, US Treasuries have lately been a haven of calm, while alongside the US currency has rebounded across the exchanges.

“Pundits wrong again, or perhaps policy makers have a new target? Let’s call this ‘volatility suppression’…”

Growing clean energy generation boosts earnings

LGI Ltd ((LGI)) is an energy generator not often mentioned, but the company caught our eye this week.

LGI is a vertically integrated provider of clean energy and carbon abatement solutions, primarily leveraging biogas from landfills across Australia. Established in 2009 and based in Eagle Farm, Queensland, the company operates across three main segments, renewable energy producing and selling large-scale generation certificates (LGCs); carbon abatement through the creation and sale of Australian carbon credit units (ACCUs); and biogas extraction infrastructure including wells, flares, power stations and control systems to landfill owners.

Canaccord Genuity pointed to in-line FY25 results and strong guidance for FY26. FY25 earnings (EBITDA) of $17.4m came in mid-guidance, but positively the 2H25 earnings were $10.1m, supporting management’s FY26 growth guidance.

Revenue didn’t surprise either way for FY25, but the mix moved towards ACCUs in FY25 at 42.5% of total revenue, up from 39.5% in FY24.

Electricity generation advanced by 12% to 109GWh, with the bulk coming from Mugga Lane, circa 5,000 incremental MWh, and Eastern Creek at 2,667MWh.

Growth in LGCs reached 12% on the prior year, with a substantial uplift in price which boosted revenue growth to 39% on FY24.

Carbon abatement biogas flow grew 8.8%, which underpinned 14% growth annually on ACCUs with higher pricing of 3.6%. Accordingly, ACCU revenue lifted 18%.

LGI announced it had reached agreement with Waste Assets Management Corp to investigate the development of a 12MW/24MWh standalone grid-scale battery storage system (BESS) at the closed Belrose landfill.

While the site no longer has power generation, the infrastructure remains, which facilitates grid connection at some point.

The project would raise LGI’s power generation plans to 56MW from 47MW, having finished FY25 at 21MW, with Mugga Lane and Eastern Creek commissioning 2MW and 4MW, respectively, over the fiscal year.

FY26 guidance is for earnings (EBITDA) growth of 25%–30% to a range of $21.8m–$22.6m, which seems achievable, Canaccord believes, post the 2H25 result of $10.1m.

Target price raised to $4.30 from $3.50 with an unchanged Buy rating. Market cap stands at around $321.5m.

Bravura in the tempest of leadership transition and a stalling client base

It’s August reporting season again, and why that comes to consternation and sometimes hand-wringing or joyful yelps of delight depends on how your investments stack up on earnings reports.

Even in-line results can see stocks having their share prices shellacked, as was the case for CommBank ((CBA)), when a new allt-time record cash profit is not good enough for an outsized valuation.

Better-than-expected reports can equally disappoint if guidance fails to excite, and quality of the earnings is equally thrown into the reporting mix of in-line, ‘miss’, or ‘beat’.

Bravura Solutions ((BVS)) is one of the many companies whose share price hit the proverbial speed hump, falling -16% on the day of the release of FY25 results.

Investors at first glance may have been convinced all was well with an FY25 earnings report largely in line with consensus and Wilsons’ estimates on a constant currency basis.

Revenue rose 3% on the year, with pre-forex revenue recurring at $154m, or 60% of the total revenue. EMEA saw 4% growth and APAC at 3%, with steady corporate costs of $44m.

Underlying earnings (EBITDA) almost doubled to $50.5m due to a rise in APC of $14m. So far so good.

Adjusted net profit after tax rose to $24.4m from $8.8m a year earlier, underpinned by robust earnings (EBITDA), but unfortunately this metric missed Wilsons’ forecast of $27.9m by -12%.

Bravura served up an unpalatable guidance for FY26. Revenue guidance was in line with FY25 and cash earnings (EBITDA) of over $50m, which infers 15% growth on FY25 and around 5% growth when annualising 2H25.

Overhanging the guidance was an unfilled CEO role, which was expected to have been addressed at last year’s October AGM, while the Chairman announced he is stepping down at the upcoming FY25 AGM.

Looking under the revenue guidance hood, FY26 includes both customer churn (exits) and expected customer wins. All told, Wilsons views the outlook as lacking “tangible, material catalysts” as well as visibility on the leadership changes.

The stock has been downgraded to Market Weight from Overweight. Target price $2.10.

More upside in the industrial sector than the office space

Moelis Australia has a penchant for real estate analysis and this week Dexus Industria REIT ((DXI)) was in the line of sight.

The REIT reported in-line FY25 funds from operations of 81.2c and a dividend of 16.4c, which also met upgraded guidance. Rent revenues rose 3.5% across the board against 4.9% in FY23 and 4.4% in FY24.

Moelis explains Dexus Industria is transitioning to a pure industrial REIT, including a land bank for development which equates to 5% of asset value.

The REIT has confirmed the divestment of its last office assets via two transactions for $155.5m at a discount to the prior book value of -4%, with settlement flagged in 1H26 and both purchasers needing to raise capital for completion.

Moelis expects the sale to be around -5% to -6% dilutive to funds from operations due to the high yield. The capital intensity of leasing the asset means the sale is not expected to be notably impactful or dilutive to cash income.

The ongoing transition includes the development of Western Sydney vacant industrial buildings in Glendenning to a multi-tenancy logistics facility over FY26, with an expected yield of 5.5%. Leasing is anticipated in FY27, and the acquisition will be dilutive while unproductive.

Over 99% of the industrial portfolio is leased, and like-for-like rents grew 3%, with like-for-like income growth of 4.6%. The portfolio has circa 1% of area expiring in FY26 and around 6% in FY27.

Net tangible asset was unchanged at 27.3% but will decline by around -5ppts post transactions. Moelis does not expect gearing to exceed 28%, which leaves scope for the REIT to make accretive acquisitions.

Buy rating maintained with a new target of $3.38 from $3.41. Earnings are expected to grow at over 4% p.a., and a FY26 yield of 5.9% is on offer, with the stock trading at a discount of -15% to NTA.

Dexus Industria is viewed as offering “compelling value”.

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