Weekly Reports | 10:00 AM
This week's In Brief focuses on the growth outlook for emerging producers Rox (gold) and Hillgrove (copper), and an improving booking trend for Helloworld despite the ongoing Middle East conflict.
- Helloworld sees quick recovery in leisure travel demand once the war is over
- Rox's Youanmi development gains momentum following $568m funding package
- Kanmantoo site visit confirms Hillgrove Resources' transformed outlook
By Danielle Ecuyer
This week’s quote comes from Oxford Economics:
"Some survey and news-based indicators suggest that apart from the post-pandemic period, supply chain stress may be at its most intense since at least the early 1990s.
"However, we think the surge in the widely-watched Global Supply Chain Pressures Index likely mainly reflects firms bringing forward orders on fears of shortages, rather than actual bottlenecks.
"Also, the persistent strength of news-based measures may reflect editorial policy favouring stories on inflation rather than fundamental supply chain conditions."
Middle East war a flesh wound
At Helloworld’s ((HLO)) latest June trading update, the adverse impacts of the Middle East war were laid bare for investors.
As detailed by Shaw and Partners, significant numbers of flights via the Middle East to the UK and Europe have been cancelled or re-booked, with airline capacity restricted over March and April.
Middle East carriers have lowered flights per week to 82 currently from 150 previously. There were none during March.
The ongoing war has weighed on Helloworld’s earnings and outlook. Prior to the outbreak of conflict, the broker notes, forward air sales ticketed to leave in 4Q26 were tracking above last year by around 29% for Australia and 16% for New Zealand.
Cancellations and re-bookings have resulted in 4Q26 being on track for a decline of some -4% on the same time last year for both Australia and New Zealand.
Management pointed out around -$170m worth of total transaction value had been re-booked or cancelled. Around 50% of the customers re-booked on alternative carriers while utilising, where possible, non-refundable bookings for hotels, cruises, insurance and car hire.
In the fourth quarter, Helloworld has experienced a shift in income away from the Middle East carriers to lower-yielding deals with some of its Asian carrier partners.
Lower total transaction value has resulted in Shaw downgrading earnings forecasts for FY26 and now estimating underlying earnings (EBITDA) of $58.2m against revised guidance of $57m-$62m. EPS forecasts are downgraded by around -19% for FY26, FY27 and FY28.
On a more upbeat note, management expects demand for leisure travel will rebound to prior levels once the war is over within 60-90 days.
The broker points to forward bookings from July onwards being up low double digits on a year earlier. The travel agent has flagged a similar final dividend to FY25 in FY26.
Target price is lowered to $2.30 from $2.80 with a Buy rating retained.
Jarden also updated following management’s FY26 earnings (EBITDA) guidance cut of around -12% at the midpoint.
This analyst believes management is positioned well to traverse the current challenges, underpinned by its exposure to the over 55-year-old demographic, which typically spends more per trip.
An uptick in July bookings y/y, with a resilient product mix, including more premium seats sold at 53% of sales and a move to higher-yield non-air sales (cruises, insurance, car hire) at 37% of sales versus 34% last year, are also highlighted as positives.
Jarden retains an Overweight rating.
A new sparkle in the sky
Rox Resources ((RXL)) could be Australia’s next new gold miner. The company recently updated investors on its 100% owned Youanmi Gold Project in WA.
The ramp-up in mining across several fronts has commenced, including stripping starting at Youanmi Decline, which has been rehabilitated to offer a cost-efficient access route to the main ore nodes. A third ore source is being developed at the Pollard Decline.
At United North, underground mining is progressing ahead of the definitive feasibility study (DFS) assumptions. Development rates are above plan and an ore drive development is being conducted. Rest-of-mine stockpiles are being built up and, positively, Canaccord Genuity observes mineralisation is broadly aligned with the DFS model. Assay results remain outstanding.
Underground diamond drilling has started, with management aiming for a 12-month forward mining inventory once production is ramped up around June 2027.
The processing plant is also moving ahead, with Rox putting in place a fixed-price engineering, procurement and construction contract with Interquip.
Civil works are expected to start soon, with bulk earthworks nearly finished.
The expected capex as slated in the DFS stands at -$383m, with the Canaccord analyst assuming -$400m.
Positively, Youanmi is well funded post completion of a $200m placement, an $18m share purchase plan and a $350m debt package.
Canaccord believes Rox is developing one of the highest-grade underground mines in Australia and flags it will be Australia’s next newest gold miner.
Speculative Buy rating retained with a $1.30 target price. At spot pricing the net asset value (NAV) stands at $0.95.
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