Weekly Reports | 10:00 AM
This week's In Brief highlight improving earnings momentum across Bravura Solutions, Capricorn Metals and Centuria Industrial REIT, supported by company-specific growth catalysts.
- Bravura Solutions' margin expansion and customer retention drive earnings upside
- Capricorn Metals' Mt Gibson expansion sets path to 400koz-plus gold production
- Centuria Industrial REIT looks to rental growth and leasing upside
By Danielle Ecuyer
This week's quote comes from The Palmer Group's Shelly Palmer:
"On July 16, Hugging Face disclosed that an autonomous AI agent had breached its internal systems. OpenAI later confirmed the agent was one of its own models, which had escaped an internal red-team evaluation.
"Hugging Face's security team then hit a problem it did not expect: when investigators tried analyzing the attacker's code with commercial AI services, the models refused.
"A safety filter cannot tell an investigator reading exploit code from an attacker writing it, so the hosted models blocked the request.
(...)
"This is a teachable moment about planning. The day an attacker breaches your system is the wrong day to learn that your AI tools will not help you respond."
Bravura's successful restructuring
According to Shaw and Partners’ take on Bravura Solutions’ ((BVS)) FY26 result, management continued to exhibit improved operational execution, with growth increasingly being generated from the installed customer base.
The investment case for the stock is also being borne out by lower churn risks and ongoing cost management, which are boosting margins.
Turning to the FY26 financial metrics, revenue advanced 10% y/y and cash EBITDA rose 76%, with a 27% margin, both pre-announced and meeting upgraded guidance.
Underlying cash costs declined by -6% y/y and were better than expected. Positively, gross free cash flow beat the analyst’s forecast.
A final 15c per share dividend was announced, with scope for a $50m on-market share buyback.
The balance sheet ended FY26 with $50.3m net cash, no debt and around $100m in debt facilities. As pointed out by Shaw, that brings forth considerable capital flexibility.
FY27 revenue guidance of 0%-6% growth is essentially in line with consensus, but the quality of the composition is viewed as better.
The existing customer base is growing as a percentage of revenue, reducing the need for new logo (client) wins. All key contracts were renewed in FY26 and one of the expected churn customers has been extended.
Management continues to expand its potential market with a push into UK workplace pensions, annuities and digital advice, the analyst explains. The company’s message, “as our customers grow, we grow”, marks a move away from higher churn rates, Shaw suggests.
FY27 guidance implies a rise in EBITDA margin to around 30%-31% at the midpoint from 27% in FY26, despite modest revenue growth.
FY27 cash EBITDA guidance came in around 8%-9% above consensus due to the higher margins. The analyst has upgraded FY27-FY29 cash EBITDA forecasts by 9%-12%.
Target price is lifted to $3.30 from $2.50. Shaw reiterates its Buy rating on the stock.
Capricorn update a net positive
Capricorn Metals ((CMM)) is another stock which has been attracting analysts’ eyeballs.
June quarter production of 30koz was pre-reported and AISCs were in line at $1,648. FY26 production met guidance, coming in at the upper end, and AISC of $1,629/oz also met guidance and is noted for being the lowest in the gold sector.
FY27 guidance of 137koz-147koz was in line with both consensus and Canaccord Genuity’s expectations.
However, FY27 AISC guidance was 9%/11% higher than expected. The difference is attributed in part to the higher gold price applied in Reserve optimisations, or simply, lower grade ore that previously was not worth processing is now profitable.
Post commissioning of the Karlawinda Gold Project over the September quarter, management expects it will operate at a long-term production rate of 150koz for the remaining three quarters of FY27.
Regarding the Mt Gibson Gold Project (MGGP), Capricorn now plans to develop both open pit and underground mines, rather than relying on open pit only.
The recently released preliminary feasibility study increases production to 260koz p.a., including underground. The study shows average production of 183koz p.a. at AISCs of $1,973/oz over a 19-year mine life, up from the analyst’s prior estimate of 140kozpa at $2,290/oz over 17 years.
Pre-production capex totals $474m versus $348m, and site development is targeted to start in the December quarter, with commissioning in the March quarter, which is in line with expectations.
Technical studies for Stage 2 for a second processing hub at Golden Range, around 75km north of the Mt Gibson project, have also started.
Management has outlined a five-year “aspiration” target to lift group production to 500koz p.a., including the higher production rate of around 150kozpa and Mt Gibson’s 260koz production rate over the four-year open pit and underground mining period.
Canaccord Genuity forecasts group production to exceed 400kozpa by FY31, with Mt Gibson forecast to reach 260kozpa and lift total production to 411kozpa.
Following the JunQ26 result, forecast FY27 production is increased 1% to 143koz, while forecast AISC rises 9% to $1,960/oz.
The broker also upgrades its Mt Gibson assumptions to average production of 170kozpa over 19 years, from 140kozpa over 17 years, while lowering forecast AISC to $2,024/oz from $2,290/oz.
Pre-production capex for Mt Gibson increases to $475m, comprising $250m in FY27 and $225m in FY28.
Canaccord retains a Buy and raises its target to $19.05 from $15.85.
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