In Brief: Harmoney, Car Dealers, Pro Medicus & BHP

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This story features HARMONEY CORP LIMITED, and other companies.
For more info SHARE ANALYSIS: HMY

This week brokers assess opportunities across online lending, car dealer groups, software and the Big Australian.

• Online lender Harmoney’s technology and scale advantage
• Boost for car dealer groups from trade deal and tax change
• Pro Medicus growth story intact despite macro noise
• BHP’s Chilean copper project progressing toward key milestones

By Mark Woodruff

Given this article’s typical focus on small-cap opportunities, today’s quote comes from legendary American academic and hedge fund manager Joel Greenblatt, renowned for demonstrating how market inefficiencies can reward disciplined investors:

“The less a market is followed, the greater the opportunity.”

Online lender Harmoney’s technology and scale advantage

Moelis forecasts strong earnings expansion and returns on equity (ROI) approaching 30% for Australia and New Zealand’s largest 100% consumer-direct online lender Harmoney ((HMY)); market cap circa $96m.

A strong growth outlook is highlighted underpinned by technology, funding advantages and operating leverage, with a fast credit assessment engine and speed of cash delivery remaining key competitive advantages.

The direct-to-consumer (D2C) online model is another differentiator, according to the broker, enabling fast pricing decisions and flexibility in responding to funding cost changes.

Harmoney benefits from a diversified funding mix, including warehouse facilities and asset-backed securities, with most funding hedged.

Moelis explains loan durations of two to three years help manage margins across interest rate cycles, while stable credit quality has seen cash losses remain consistent at around -3.6% in recent years.

Commentary suggests one key growth driver is accelerating loan origination, supported by the rollout of the Stellare 2.0 platform. This system has improved customer acquisition and lending efficiency, contributing to a 40% increase in new customer lending in Australia in FY25.

The platform launched in New Zealand in the fourth quarter of FY25 and is expected to provide a full-year contribution in FY26.

Future growth for Harmoney will be supported by entry into new verticals, particularly secured auto finance in the used vehicle segment.

Management is targeting a loan book exceeding $900m by FY26, a rise of 8% year-on-year.

Operational efficiency is also considered a key strength.

Harmoney has significantly reduced its cost-to-income ratio to 18.9% in FY25 from 31.9% in FY22, with further improvements expected as scale increases.

The platform-driven model enables repeat lending at minimal acquisition cost, supporting strong cash profit growth, with FY26 guidance recently upgraded to $13m.

Moelis highlights management incentives are closely aligned with shareholder returns with long-term incentive structures tied to ambitious EPS growth and total shareholder return (TSR) targets.

The broker begins its research coverage this week with a Buy rating and $1.28 target price, implying around 73% upside to the 74-cent share price at the time of writing.

Boost for car dealer groups from trade deal and tax change

Jarden assesses an incremental positive for auto dealers with high exposure to European vehicle sales from recent announcements by the Australian government.

A trade deal with Europe includes removal of the 5% import tariff along with an increase in the Luxury Car Tax (LCT) threshold for electric vehicles (EVs) to $120,000 from $91,000.

Noting some degree of prior speculation around these changes, the broker sees benefits for Autosports Group ((ASG)) and, to a lesser extent, Peter Warren Automotive ((PWR)).

The expected outcome are lower vehicle prices. However, it remains unclear how OEMs will approach price pass-through, whether applied broadly or varied by model and price point.

Lower prices could encourage consumers to trade up into European brands or higher-spec models, potentially driving incremental gross profit for dealers.

For Autosports Group, more than 80% of revenue is derived from European OEMs, before accounting for manufacturing origin.

Peter Warren does not disclose OEM mix, and the recent Wakeling acquisition is likely to dilute European exposure, explain the analysts, who estimate exposure below 20%.

Eagers Automotive ((APE)) also does not provide a detailed OEM breakdown, and its exposure is seen as lower again.

While the increase in the LCT EV threshold has the greatest relative impact at the higher end of the market, Jarden suggests it is unlikely to provide a material near-term tailwind for dealer groups, given rising competition from lower-priced EV entrants below the threshold.

Pro Medicus growth story intact despite macro noise

Moelis reckons near-term consensus estimates for Pro Medicus ((PME)) might be overly aggressive, especially given currency swings and contract timing quirks.

Still, the long-term story hasn’t missed a beat, with strong growth expected to roll on for years.

Since the interim results release in February, the share price decline of around -6% looks macro-driven rather than fundamental, in the analysts’ view.

Certainly, it’s felt market concerns around artificial intelligence and noise surrounding the Iran conflict are unlikely to derail operations anytime soon.

Expensive? Yes, at around 50x FY28 earnings, but Moelis argues the valuation is supported by around 30% medium-term growth per annum.

Commentary notes two recent contracts were renewed at higher fees per transaction.

Given average contract sizes stepped up materially in 2020-21, the broker anticipates renewals incorporating additional products will increase in value over time.

The broker’s 12-month price target of $145 remains intact. The stock is upgraded to Buy from Hold, while noting macro risks will likely continue to be an overhang in the near term.

BHP’s Chilean copper project progressing toward key milestones

Barrenjoey analysts recently visited the Vicuna copper project on the Chile–Argentina border, a 50:50 joint venture between BHP Group ((BHP)) and Canada-based Lundin Mining.

Around 20km away in Northern Chile, the Caserones copper mine was also toured, offering useful context on regional operating conditions and development challenges.

Caserones is relevant mainly because it is a producing, high-altitude Chilean copper-molybdenum mine that underpins Lundin’s current cash flow. 

While Caserones is not part of the Vicuna joint venture, Lundin ownership creates scope for synergies via shared logistics, power, water, infrastructure and export routes through Chilean ports for concentrate produced in the Vicuna district.

Vicuna, comprising the Josemaria and Filo del Sol deposits, remains at a relatively early stage but is advancing steadily, report the analysts. Key milestones include RIGI approval expected in March 2026, a final investment decision (FID) targeted for Q4 2026, and first production anticipated around 2030.

RIGI is an Argentinian government incentive framework designed to attract large-scale investment.

Despite its high-altitude location in the Andes at 4,000-5,400 metres, the Argentine side of the project offers surprisingly favourable topography for construction, commentary explains.

Compared with the more constrained terrain at Caserones, Vicuna benefits from broader valleys that can accommodate tailings storage facilities, processing plants and supporting infrastructure.

While challenges such as strong winds and reduced productivity at altitude remain, the analysts note the project team is actively assessing and mitigating these risks.

It’s felt the partnership between BHP and Lundin Mining is functioning effectively.

Lundin has led operational and early-stage development activities, Barrenjoey explains, while BHP is contributing technical expertise and procurement advantages. Notably, Vicuna is leveraging BHP’s scale to secure equipment, including 150-tonne haul trucks, more efficiently.

BHP’s experience delivering large-scale projects such as Spence, Jansen and South Flank is expected to support execution.

Early works are already underway, with site preparation progressing and a larger mining fleet scheduled to arrive in late 2026.

Planned capital expenditure of around -US$800m in 2026 signals to the broker an intent to advance the project rapidly, with potential to accelerate timelines if conditions allow.

Barrenjoey values BHP Group’s stake in Vicuna at US$9.7bn, based on a long-term copper price of US$5.00/lb, highlighting the project’s strategic importance and long-term growth potential despite its early stage.

The broker maintains its 12-month target price of $54 and Neutral rating for BHP Group.

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