Weekly Reports | 10:00 AM
This week's broker updates highlight Credit Clear's stronger-than-expected earnings, FDC's attractive post-IPO outlook and Greatland Resources' operational progress.
- Credit Clear: Strong Earnings Tempered By Regulatory Scrutiny
- FDC: Capital-Light Builder makes its debut
- Greatland Resources: Havieron Development Gains Momentum
By Danielle Ecuyer
This week’s In Brief quote comes from Lewis Grant, Senior Portfolio Manager for Global Equities at Federated Hermes:
"In many markets, measures of index volatility remain subdued, yet at the single stock level - volatility is increasing.
"But as the market becomes stressed, correlations may spike and volatility could emerge rapidly. We’re already seeing portfolio tracking errors spike higher.
"In this environment, traditional risk models may be less useful and can provide false reassurance."
Credit Clear's AI future (and ACCC overhang)
Credit Clear's ((CCR)) trading update included guidance for FY26 revenue of $60m, above the prior range of $57m-$59m and ahead of Shaw and Partners' forecast of $58m.
FY26 earnings (EBITDA) are expected to be $10.4m, at the top end of the guidance range of $9.5m-$10.5m.
Earnings (EBITDA) increased 41% in FY26, of which an estimated 30% was organic growth.
As highlighted by the analyst, the solid trading update has been overshadowed by ACCC proceedings commenced on June 24 regarding debt collection communications.
Management was quick to address the IT issues while retaining major clients. However, uncertainty remains over any potential financial penalty, detracting from the otherwise robust financial result.
During the June quarter, major utility customers resumed collections after a year-long pause, providing a boost to the Australian business.
Acquisitions, including ARC Europe and DTS, contributed around $0.7m to earnings (EBITDA) over a five-month period. Shaw notes DTS has strengthened Credit Clear’s early-stage collections offering across the 0-60 day period.
ARC Europe is seen as a complementary platform specialising in later-stage collections and providing a broader receivables management solution.
Looking ahead to FY27, earnings (EBITDA) are forecast to increase by 30%, including a full 12-month contribution from ARC Europe and DTS. Revenue is expected to grow by 14%.
The Australian business remains "strong" and, with only a 15% market share, there is scope for further growth.
Management is developing what it describes as a next-generation Artificial Recoveries Intelligence (ARI) platform to organise and coordinate all digital communication channels, including SMS, email, digital voice, chat, self-service and human agents.
The AI platform is designed to improve debt recovery rates, increase wallet share and expand margins.
Due to regulatory requirements, debt recovery continues to require significant human intervention. Credit Clear’s customers believe human oversight remains essential, with a fully automated solution considered too risky.
Shaw retains a Buy rating and notes the stock is trading on around 2.7x FY27 EBITDA compared with the ASX300 at around 8x. The target price is set at 40c.
Welcome to ASX debutant FDC Consolidated
Moelis initiated coverage of FDC Consolidated Holdings ((FDC)), an Australian construction and building services contractor specialising in non-residential construction, fit-out and refurbishment projects.
Moelis and UBS were the lead managers on the IPO, which raised $400.8m and valued the company at around $969m. The IPO was priced at $3.00 per share. Prior to listing, FDC was one of Australia’s largest privately founded commercial construction and fit-out companies.
Revenue in FY25 was split 60% construction and 40% fit-out and refurbishment, spanning industrial, commercial, education, data centres, government and healthcare end markets.
Founded in 1990, the company has a long operating history. The analyst highlights a 90% repeat business rate across its blue-chip customer base, including ASX Top 50 companies such as Woolworths, Westpac and Qantas, along with Hermes, DHL, Charter Hall, Colliers, and others.
FDC also has a strong track record delivering technically complex data centre projects, including Macquarie Data Centre's ((MAQ)) IC2 and IC3 East facilities.
NSW represented the largest geographic exposure at 53% of FY25 revenue, followed by Queensland at 18%, Victoria at 15% and South Australia at 10%. The ACT accounted for 3% and Western Australia 1%.
Industrial projects generated 39% of FY25 revenue, while office and workspace projects represented 27% and 10%, respectively. Data centres accounted for 6%, alongside public spaces.
Revenue grew at a 9.7% CAGR between FY15 and FY25, while the company has won more than 158 Master Builders Association of NSW awards since 2001.
The analyst favours the company’s diversified exposure, with demand supported by population growth, social infrastructure and ongoing building stock renewal.
Positively, the capital-light contractor model supports robust cash flow generation. The prospectus forecasts revenue growth of 11.5% in FY26 and 14.3% in FY27, with EBIT margins expected to remain broadly stable at 5.2%-5.4%.
Work in hand increased to $2.4bn as at April 2026, representing contracted revenue yet to be recognised.
Moelis forecasts free cash flow yields of 10.3% in FY26 and 8.1% in FY27, underpinned by the working capital cycle, the capital-light business model and negligible capital expenditure.
At the end of June, cash on hand was estimated at around $344m with no bank debt and forecast lease liabilities of approximately $4.2m.
The forecast dividend yield is 6.1% in FY27, with a payout ratio of 70%-90% of net profit after tax.
Research starts with a Buy rating and a target price of $4.56.
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