In Brief: EOS, Austral Resources & GLP-1 Winners

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This story features AUSTRAL RESOURCES AUSTRALIA LIMITED, and other companies.
For more info SHARE ANALYSIS: AR1

This week's In Brief includes Electro Optic Systems under attack via short report, Austral Resources "amazing turnaround" with a copper growth story, plus winners and losers from GLP-1s growing popularity.

• Short report targets Electro Optic Systems, management and Canaccord Genuity repond 
• Glencore's strategic alignment with a small cap, burgeoning copper producer
• Winners & Losers from GLP-1s Down Under

By Danielle Ecuyer

This week’s quote comes from DBS Economics & Strategy:

“Investors remain wary that the Fed’s steady-for-longer stance would collide with US President Donald Trump’s desire for significantly lower interest rates, especially under the leadership of his Fed Chair nominee, Ken Warsh.

“Lingering doubts about the Fed’s independence are likely to cap the USD’s upside.

“At the same time, the Congressional Budget Office’s renewed warnings about the widening fiscal deficits and rising national debt added to de-dollarisation concerns, i.e., recent news of some countries reducing their exposure to US Treasuries.”

Shoring up contract details and resilience of balance sheet

Electro Optic Systems has issued an in-depth report to refute claims from a recent short report.

As highlighted by Canaccord Genuity, the rebuttal covers the key assertions, including the legitimacy of the counterparty to the South Korean 100kW HELW (High Energy Laser Weapon) conditional contract valued at US$80m.

Management confirmed ‘Goldrone’, a small but well-connected drone operator, as the counterparty that has the potential to raise enough capital for the initial $28m deposit by the Feb/March period.

This opportunity is not included in Electro Optics backlog or guidance until the contract becomes unconditional. It is conditional currently.

Secondly, the Marss acquisition for -$54m achieved total revenue of EUR243m from 2020-2025 with the shorter’s report leaving out the non-UK operations which generated a further EUR114m over the period. Management also confirmed the Marss potential pipeline is over EUR300m from existing and new customers, essentially from the Middle East and Europe.

Thirdly, the sale of non-core EM solutions for around $159m in cash in January 2025 improved the balance sheet post repayment of a -$61m debt facility. The company has cash of $107m or $53m post Marss and the broker expects earnings to move to positive EBITDA in FY26 with a gross profit margin of 45%.

Management also detailed, as noted by the broker, the validity of the $459m contract backlog, and net additions of $323m in 2025, with “potential for further contracts to be received in due course from the US Army”.

The counterparty to the 100kW HELW order in August last year was confirmed as the Ministry of Defence of the Netherlands and last week it successfully opened the 20k square foot HELW manufacturing plant in Singapore. At full utilisation, the analyst sees potential revenue of over $1bn assuming US$30m-US$50m/unit for larger orders.

Canaccord continues to retain a positive stance on Electro Optics with an unchanged Buy rating and $12 target, with the recent fall in the share price viewed as a buying opportunity.

FNArena’s universe of daily monitored brokers consists of two Buy ratings and an average target price between the two of $12.36, one Buy rating is ascribed as ‘Speculative’.

Burgeoning copper producer in the sweet spot with Glencore

MST Access detailed Austral Resources Australia ((AR1)) espousing the company is one of the “most remarkable corporate turnarounds” as the analyst initiated coverage.

Austral is a developing copper producer which has come out of a period of suspension as a multi-mine, multi-plant producer from a small-scale single asset.

In January, Austral acquired Lady Loretta from Glencore and the resources giant will in turn pay $57m to Austral with the mine adjacent to the Lady Annie mine which allows for mining at Lady Annie ore that needed a cutback, the analyst explains, onto the Lady Loretta lease to access.

The Mt Kelly Heap Leach facility has received a second production hub with the acquisition of Rocklands with a study in place for its restart in 2H2027.

Mt Kelly facility can process 25ktpa with Rocklands at 3mtpa while the latter asset has an estimated replacement value over $443m.

A recent $40m equity placement, as well as debt-for-equity swaps and the $57m from Glencore, means Austral is now well funded.

For context, Glencore has a strategic relationship with the burgeoning producer and has secured the supply of Austral’s copper units to its marketing division and Mt Isa smelter as well as rights to Rocklands capacity, Canaccord explains.

Management is targeting production of 50ktpa copper over a decade-plus timeframe and MST sees substantial valuation upside based on a net present value of the western and eastern hub operations.

The broker has a 38c valuation. Austral has a circa $178m market capitalisation.

The sole daily monitored broker in FNArena’s universe that covers this company, Shaw and Partners has a Buy rating with a 20c target price.

The shares finished yesterday’s session at 10.5c.

What do US GLP-1s trends signal for Australia?

Usage of GLP-1s is continuing to grow rapidly in Australia. The latest data show 48% of users in FY25 accessed the drug privately and the market value exceeded $2.3bn at the end of 2025 with over 500,000 Australians using GLP-1s at the end of last year.

Jarden estimates usage has continued to grow and currently represents 3.6% of the Australian adult population, up from 2.3% in June 2025 and 1.5% in June 2024.

By comparison, 12% of US adults are using GLP-1s with US penetration growing from around 6% in 2024; around 18% of the population has tried GLP-1s at least once.

Jarden estimates the Australian GLP-1 market can grow to $5.6bn by 2030, applying the same take up rate as the US market as a base case. This assumes 50% penetration among Pharmaceutical Benefits Scheme (PBS) qualified users and 6% penetration across the rest of the adult population.

Looking at the behavioural changes of users, the analyst points to primary effects which occur within a year. Some 22% of users are diagnosed with nutrient deficiencies and 46% take daily supplements. Jarden estimates over a $1.6bn rise in annual supplement consumption.

Grocery spend declines by around -4% in the first six months. Users are noted for lowering their calorific intake by -16-39% and spending on food declines by some -5%. Reportedly, 63% desire more vegetables and 55% more fruit when on the medication with a move away from salty and sweet snacking.

Nestle and UK grocers have started supplying GLP-1 meals.

Turning to secondary effects over a year-plus timeframe, there is a shift in cloths shopping habits for 64% of users with demand for smaller sizes rising.

More exercise is also required with 15-40% of weight lost by users being lean mass, hence exercise is needed to build muscle and maintain bone health.

Turning to beneficiaries, Jarden envisages Sigma Healthcare ((SIG)) as the major winner in Australia, followed by Ebos Group ((EBO)), Wesfarmers ((WES)) and –indirectly– Super Retail Group ((SUL)).

If GLP-1 penetration reaches 5.5% by FY28, the analyst estimates a further circa 2% CAGR to Chemist Warehouse Group’s network sales assuming circa 1% prescriptions and 1% supplements.

For Sigma (Chemist Warehouse) Jarden estimates an incremental 3% growth to like-for-like sales if GLP-1 penetration reaches over 6.3% and weighted average spend per person is over $2,771 including vitamins and supplements.

Regarding Wesfarmers, there is potential for around 4% network sales growth.

Companies at risk of negative impacts are QSR operators, Domino’s Pizza Enterprises ((DMP)), Collins Foods ((CKF)) and Guzman y Gomez ((GYG)), albeit the latter less so.

Structural impacts are expected on alcohol-related companies, Endeavour Group ((EDV)) and Treasury Wine Estates ((TWE)).

For Supermarkets, the impact is expected to be net neutral as lower food sales are offset by higher supplement sales.

Jarden has an Overweight (Buy-equivalent) rating on Sigma with a $3.60 target price. FNArena’s daily monitored brokers consensus target is $3.213 with four Buy-equivalent ratings, and three Hold.

For Wesfarmers, Jarden is Underweight rated (Sell-equivalent) with a $70.50 target price compared to FNArena’s consensus target of $87.467 with one Buy rating, four Hold ratings and one Sell-equivalent rating.

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