Is mining services the most underappreciated sector?
Be afraid, very afraid. That’s seems to be the mantra most investors are adopting when it comes to engineering contractors as the sector appears to be running from one disaster into another.
The rush of bad news for the sector comes at a time when the industry has been accumulating intangible assets at its fastest pace on record. This could have significant implications for earnings, and I’ll explain later.
It’s near impossible to focus on anything but the negatives with Ausenco (AAX), the latest company to request a trading suspension as it prepares to release what is likely to be disappointing news to investors. This development follows shocking earnings updates from industry leaders WorleyParsons (WOR) and Forge Group (FGE). See my update on Forge below.
Ausenco will probably need a capital injection, not unlike Forge, with media reports stating that the latter needs to be bailed out by its bankers due to problems with two large power plant construction projects.
We are likely to see a pick-up in asset write-downs in the current financial year, as demand for engineering services and equipment has not increased quite as quickly as some of these companies had hoped.
The write-downs will likely be focused on their intangible assets (non-physical assets like goodwill), as the value of these assets tend to be much harder to justify in a downturn.
The value of intangibles has ballooned by more than 10 times in just a decade to around $7 billion, which could potentially leave some wallowing in red ink given that intangible asset values are twice the expected pre-tax profit for the sector.
The growth in intangible assets stands in contrast to tangible asset values. The amount of tangible assets, like plant and equipment, has increased at a more modest pace to $35 billion in 2012-13 from $6 billion in 2002-2003.
The high level of intangibles isn’t the only thing that makes the sector vulnerable to profit shocks – the industry’s slim operating margin of 5.7% is another point of contention, as it leaves little buffer if profitability were to deteriorate further. The historical average margin should be closer to 7% and it will be a while before we see any mean reversion.
However, those who have steered clear of the sector shouldn’t be smiling either. It would surprise many, but engineering services and equipment companies have on the whole been outperforming the market.
This group of stocks have generated returns of over 30% since the start of the 2014 financial year – around the time when the market bottomed. This is 15% ahead of the S&P/ASX All Ordinaries. Resource services and equipment providers on the Uncapped 100 have also given investors reason to cheer. Suddenly, our August article A mining services revival doesn’t seem like such a bum steer.
Ignoring Forge, as it is still in a trading halt (although it will likely plunge when it resumes trading), six out of seven contractors in our emerging companies index have seen their share price appreciate over the past five months, with the average price gain of 52%.
It is easy to get lost in the bad news, but the share price movements show the sector is far from being at crisis point despite well-documented company-specific blow-ups.
In fact, companies like RCR Tomlinson (RCR) and WDS (WDS) have issued positive outlook statements recently, and even those that have come out with bad news have said that their tender book is looking pretty full.
“It’s the company’s strategic positioning – the fact that we’ve got businesses that are slightly out of sync with each other that provides a high degree of [earnings] stability,” answered WDS’ chief executive, Terry Chapman, when asked by Eureka Report on how the company is managing to navigate the difficult market.
Chapman also stressed that contractors should have good cash flow, as WDS has, and this has enabled the company to pay a generous dividend on a quarterly basis.
There is certainly an amount of luck thrown into the mix as well for WDS. Its main business had been servicing the coal mining industry, but management made a decision to expand into the energy space. It struggled to gain much traction with its diversification strategy, and the stock suffered as a result.
However, the energy bet is paying off as growth in that division has more than offset the slowdown in coal mining, and Chapman thinks demand from coal miners won’t pick up until 2014-2015.
That mining services stocks are only suitable for those with a stronger stomach for risk is stating the obvious, but I think the risk-reward balance makes the sector an attractive place to look for value buys for those happy to ride out the volatility over the next 12 to 18 months.
WDS may be up 44% at 85 cents since we rated it an “outperform” on August 14, but I think there is further upside to the stock given its robust yield of around 10% once franking credits are included.
NRW Holdings (NWH) was also highlighted as a “buying” opportunity in that same article, and I continue to hold a positive view on the stock.
The civil and mining engineer is one of the most cash generative companies of its peers with a free cash flow yield of around 20% (i.e. the amount of free cash it generates for every dollar shareholders invest) and management has achieved a very impressive three-year average return on equity of over 24%.
This doesn’t mean a profit downgrade can’t be lurking in a dark corner, but I think some of that is already priced into the stock as it is trading on a 2013-14 forecast price-earnings multiple of around 6 times and is on a 11% fully franked yield.
The other good thing about NRW is it has lower write-down risk, with intangible assets worth $32.5 million on its books, which represents less than 4% of total group assets.
NRW will have to take a pretty big profit downgrade before it looks expensive and I encourage risk-tolerant investors to buy the stock at these levels.
LogiCamms (LCM) is the remaining “outperform” call we have in the sector. The stock is almost flat since we wrote about it on August 7 after it retreated 27% over the past month.
The sharp fall in the stock prompted the ASX to issue a “please explain” notice to the company, but management said the stock’s decline is due to negative sentiment surrounding the sector and that nothing has changed operationally.
That is good news as management is predicting “year-on-year earnings growth” thanks to its acquisition of oil and gas engineering group Independent Technology Holdings in May this year, although it didn’t provide a specific forecast.
The company also said it has an opportunity pipeline of around $490 million, and managed to more than double its earnings before interest, tax, depreciation and amortisation (EBITDA) margin to 10.9% over the last two financial years.
These factors, coupled with its expected yield of around 9% once franking credits are included, puts the stock in a good position to ride out the challenging times ,and I reiterate my “outperform” recommendation on the stock.
Investor fear towards the sector is understandable and these stocks are not for the faint hearted, but the overused quote from investment great Warren Buffett comes to mind – “be greedy when others are fearful”.
Think big, go smalls!
Update on Forge Group (FGE)
It’s little wonder Forge Group (FGE) lost sight of two critical projects that cost shareholders dearly. The phone number for its media contact on the press release went through to St John Ambulance.
The engineering contractor can’t get a phone number right even as it tries to reassure investors that it is on top of the crisis-stricken Diamantina and Angelas power station construction projects, which are forcing the group to take a $127 million profit write-down for 2013-14.
Perhaps the telephone number was deliberate. After all, shareholders were left haemorrhaging, with the stock suffering its worst pounding on record as it plunged to its lowest level since the global financial crisis.
The stock was suspended from trade at the start of November and it resumed trading this morning, with an 80%-plus freefall to around 76 cents – its lowest since 2009.
The engineering contractor took nearly a month to hammer out a bailout financing deal with Australia and New Zealand Banking Group (ANZ), which will see shareholders massively diluted through a warrant issue that would give the lender the right to exchange the warrant for shares at just 1 cent a pop.
It’s hard to fathom that just two problem contracts from its very large order book can do this much damage. The group is now expecting to post an earnings before interest, tax, depreciation and amortisation (EBITDA) loss of $85 million to $90 million for 2013-14.
Excluding the power station construction projects, pro-forma EBITDA should range between $45 million to $50 million, according to management.
The pro-forma EBITDA is still about half of consensus estimates forecasts and there are still many unanswered questions that will dog the stock.
Management has yet to return calls, and I recommend existing shareholders to hang on until I can get further clarification to form a view on whether the worst is over (it seldom is when a material project blows up).
In the meantime, I am downgrading the stock to “neutral” from “outperform”.
"Outperform" recommendations on the Uncapped 100
|Name||Code||Date of rec||Price||Author||Article Name|
|eBet||EBT||26-Jun-13||$1.130||Brendon Lau||Small cap with biggest earnings upgrade|
|Silex Systems||SLX||03-Jul-13||$2.320||Brendon Lau||Why a dog can be an investor's best friend|
|Newsat||NWT||03-Jul-13||$0.400||Brendon Lau||Why a dog can be an investor's best friend|
|Tiger Resources||TGS||03-Jul-13||$0.190||Brendon Lau||Why a dog can be an investor's best friend|
|M2 Telecommunications Group||MTU||10-Jul-13||$6.020||Brendon Lau||Big expectations for small caps|
|Starpharma Holdings||SPL||17-Jul-13||$0.940||Brendon Lau||Five bargains for under a buck|
|Colorpak||CKL||17-Jul-13||$0.725||Brendon Lau||Five bargains for under a buck|
|GI Dynamics||GID||17-Jul-13||$0.600||Brendon Lau||Five bargains for under a buck|
|Horizon Oil||HZN||17-Jul-13||$0.355||Brendon Lau||Five bargains for under a buck|
|Collins Foods||CKF||07-Aug-13||$1.760||Brendon Lau||The next dividend dazzelers|
|LogiCamms||LCM||07-Aug-13||$1.470||Brendon Lau||The next dividend dazzelers|
|NRW Holdings||NWH||14-Aug-13||$1.140||Brendon Lau||A mining services revival?|
|WDS||WDS||14-Aug-13||$0.590||Brendon Lau||A mining services revival?|
|Thinksmart||TSM||21-Aug-13||$0.355||Brendon Lau||Biggest smalls earnings surprises|
|Beadell Resources||BDR||28-Aug-13||$0.865||Brendon Lau||Short-selling gold signals|
|Universal Biosensors||UBI||04-Sep-13||$0.680||Brendon Lau||Smalls in a sweet spot|
|Specialty Fashion Group||SFH||18-Sep-13||$0.930||Brendon Lau||Small cap surprises for 2014|
|Mint Wireless||MNW||02-Oct-13||$0.180||Brendon Lau||Four new stocks for the Uncapped 100|
|YTC Resources||YTC||09-Oct-13||$0.260||Brendon Lau||Xmas sale starts early for small caps|
|Ridley Corporation||RIC||16-Oct-13||$0.850||Brendon Lau||Appetisers from the agri stocks field|
|Wide Bay Australia||WBB||16-Oct-13||$5.600||Brendon Lau||Appetisers from the agri stocks field|
|STW Communications||SGN||30-Oct-13||$1.580||Brendon Lau||Small consumer stocks at Christmas crossroads|
|Retail Food Group||RFG||30-Oct-13||$4.580||Brendon Lau||Small consumer stocks at Christmas crossroads|
|Nanosonic||NAN||06-Nov-13||$0.830||Brendon Lau||First profit, first choice for stock pickers|
|AMA Group||AMA||06-Nov-13||$0.365||Brendon Lau||AMA chief's double plan|
Uncapped 100 - Australia's most interesting small cap stocks
|Small cap stocks covered by the Uncapped team|
|Code||Name||Rationale||Market cap ($)||Total return 1-year (%)||Sector (GICS)|
|NHF||NIB Holdings /Australia||Only listed health insurer. Widely held. Good performer.||1,095,315,430||30.54||Financials|
|MTU||M2 Telecommunications Group||Amazing growth story and well run company. High free float and strong insto support.||1,056,575,806||66.95||Telecommunication Services|
|GEM||G8 Education||Only listed childcare operator. Acquisition strategy paying off with stock delivering solid gains.||981,989,868||148.26||Consumer Discretionary|
|MMS||McMillan Shakespeare||One of the best performers since the GFC, but ongoing risk of change to FBT rules will hang over the company.||901,739,990||-2.12||Industrials|
|ARP||ARB Corp||Well covered but good candidate for core holding due to quality management.||883,184,692||15.34||Consumer Discretionary|
|AAD||Ardent Leisure Group||Widely held stock. Earnings more defensive than anticipated. Good yield. Potential core holding.||814,161,987||53.28||Consumer Discretionary|
|MRM||Mermaid Marine Australia||Its strategically located facility on WA coast gives it a key advantage over competition in servicing Gorgon & Pluto projects.||752,630,005||1.85||Industrials|
|BGA||Bega Cheese||Corporate interest in Australian food companies makes the cheese maker worth following.||706,378,662||154.66||Consumer Staples|
|AUB||Austbrokers Holdings||The insurance broker is a strong performer. Widely held and well liked by small cap investors.||690,127,991||53.33||Financials|
|SRX||Sirtex Medical||A shining star in the biotech space and one of the best performing stocks in 2012. Great product (liver cancer treatment) and bright outlook.||673,862,366||8.24||Health Care|
|RFG||Retail Food Group||Owns a number of well know franchise brands. Widely followed by instos.||626,482,727||52.17||Consumer Discretionary|
|SGN||STW Communications Group||One of few companies able to benefit from online shift. Widely held and good insto support.||603,723,633||47.01||Consumer Discretionary|
|BDR||Beadell Resources||Will be a very big FY14 for miner as it has to prove it aims to produce 200,000 ounces of gold a year.||573,277,283||-29.61||Materials|
|AMM||Amcom Telecommunications||Well covered junior telco but good candidate for core holding.||511,124,329||54.24||Telecommunication Services|
|CWP||Cedar Woods Properties||Property developer with good ROE and earnings growth track record.||491,796,997||64.22||Financials|
|TGR||Tassal Group||Salmon farmer is finally turning a corner with an improved harvest strategy and growing demand for product.||468,089,935||139.03||Consumer Staples|
|TOX||Tox Free Solutions||Widely held stock in the waste solutions business. Its unique because it operates in a defensive-growth niche.||467,680,664||25.11||Industrials|
|SEA||Sundance Energy Australia||Analysts have a favourable take on the oil & gas explorer, but stock is still under radar of most. Sundance provides exposure to prospective Eagle Ford shale.||467,238,098||22.42||Energy|
|MYX||Mayne Pharma Group||Sizeable generic drug maker with interesting board members.||436,681,458||171.93||Health Care|
|CCP||Credit Corp Group||Strong price run attracted good investor interest. Leveraged to any rise in loan defaults. Not well covered by press.||426,719,910||19.74||Industrials|
|MYS||MyState||Well regarded and could make good alternative to bank stocks. Has good yield and earnings growth over past few years.||425,425,934||44.37||Financials|
|BRU||Buru Energy||Substantial size but not often covered by press. Widely held with good insto support.||423,679,291||-52.67||Energy|
|RCR||RCR Tomlinson||Good first half FY13 result and outlook, but will its fortunes change this year with the mining capex slowdown?||421,025,482||68.35||Industrials|
|ACR||Acrux||One of the most successful Australian biotechs in recent history. Widely held by instos.||408,810,791||-9.24||Health Care|
|NXT||NEXTDC||The cloud computing company is an IT sector darling. Fairly widely held and followed.||408,680,939||5.32||Telecommunication Services|
|HZN||Horizon Oil||One of better regarded small energy stocks that doesn't receive much media attention.||383,838,623||-32.04||Energy|
|MOC||Mortgage Choice||Has a good track record and is leveraged to any housing recovery. The stock is also liquid with good insto support.||366,389,954||99.83||Financials|
|CCV||Cash Converters International||Strong performance is attracting investors. It's Australia's only listed pawn shop and pay day lender.||363,423,126||-1.68||Consumer Discretionary|
|FGE||Forge Group||Good track record has been marred by a recent shock downgrade and capital raising. How long will it take to redeem itself?||360,186,462||17.25||Industrials|
|NWH||NRW Holdings||One of the better regarded mining & civil contractors with good track record in delivering on projects.||347,215,576||-25.59||Industrials|
|SLX||Silex Systems||Its uranium enrichment technology could become one of Australia's best innovations given its potential to change the nuclear power industry.||344,001,465||-38.6||Information Technology|
|IPP||iProperty Group||Worth watching as it is trying to be the REA Group of Asia.||333,773,102||111.49||Information Technology|
|TGA||Thorn Group||One of few retail stocks that is performing well despite its flat outlook for FY14. The Radio Rentals chain owner is also well supported by instos.||329,062,714||23.57||Consumer Discretionary|
|BNO||Bionomics||One of the larger cancer treatment developers in this market.||325,603,180||178.82||Health Care|
|AEU||Australian Education Trust||Well performing childcare centre property owner. Good yield story and outlook.||309,652,740||36.65||Financials|
|UXC||UXC||Company has turned corner and enjoyed re-rating. What's next?||288,588,440||-5.66||Information Technology|
|SHV||Select Harvests||Noteworthy for turbulent past and exposure to soft commodity market.||280,984,406||259.47||Consumer Staples|
|TFC||TFS Corp||The sandalwood products company offers exposure to both the agri and cosmetics industry. It will start commercial harvest this year.||280,746,613||113.15||Materials|
|VOC||Vocus Communications||Telecom stocks are in favour but Vocus is one of the least covered||276,563,629||111.42||Telecommunication Services|
|RKN||Reckon||Fierce competition for cloud base accounting software puts it in firing line.||275,422,516||-7.02||Information Technology|
|GID||GI Dynamics Inc||Largely forgotten by investors but could attract attention this year as it looks to gain US approval to use its intestinal liner on diabetics.||272,984,589||12.9||Health Care|
|RIC||Ridley Corp||High corporate interest in the sector and the shrinking pool of agri listed stocks make Ridley worth following.||267,800,842||-16.88||Consumer Staples|
|GXL||Greencross||Acquisitive veterinary group. Good profit growth and share price performance, but gets little press.||267,544,556||127.86||Health Care|
|IMF||IMF Australia||Litigation funder is unique stock. Stock not liquid but its outlook appears promising given the number of potential class action lawsuits.||267,195,557||13.64||Financials|
|TGS||Tiger Resources||Future lies in its Kipoi copper mine expansion in the Congo but miner is fully funded with DRC govt holding 40% stake in tenement. Next 12mths will be interesting.||257,611,115||27.88||Materials|
|SPL||Starpharma Holdings||Noteworthy for its good pipeline of innovations. Well run, widely followed.||244,381,866||-46.91||Health Care|
|AJA||Astro Japan Property Group||Strong leverage to Japanese economy makes this an interesting stock to watch.||239,273,834||24.11||Financials|
|NWT||Newsat||Potential large cap if it can launch its own satellite in 2015.||233,627,075||-25.47||Telecommunication Services|
|NAN||Nanosonics||A successful medical tech story. Should be close to turning in maiden profit with its disinfection device.||218,142,639||61.17||Health Care|
|MXI||MaxiTRANS Industries||Transport equipment maker posted good interim result. Has appealing yield and growth.||211,592,392||29.88||Industrials|
|SIV||Silver Chef||Strong jump in the share price of the equipment financing group has attracted a good following.||209,148,773||49.19||Industrials|
|WBB||Wide Bay Australia||The building society is trying to turn its fortunes around. Also worth watching for its exposure to Queensland housing market, particularly around major resource projects.||208,371,948||-4.33||Financials|
|NEA||Nearmap||A stellar performer with an Interesting business that offers high quality aerial maps to companies & government.||206,858,047||1475||Information Technology|
|CLH||Collection House||In similar space as Credit Corp. Strong stock performance has attracted a following and the stock appears to be well placed to run further||206,350,647||79.51||Industrials|
|RCG||RCG Corp||The footwear retailer is one of the best performing consumer stocks as online competition is not a big threat. Company has a good yield as well.||196,185,974||99.8||Consumer Discretionary|
|ACL||Alchemia /Australia||One of the few biotechs with revenue stream. Good pipeline of oncology treatments.||194,646,133||9.09||Health Care|
|PFL||Patties Foods||Illiquid stock but has suite of well recognised consumer brands. Defensive yield.||187,844,864||-6.69||Consumer Staples|
|HSN||Hansen Technologies||Operates in a high potential/growth industry but is not covered by press or brokers.||181,446,869||39.01||Information Technology|
|IFM||Infomedia||Interesting tech play in the car parts market. Strong share price gain but gets little air play.||173,823,303||58.79||Information Technology|
|DWS||DWS||Will be a big beneficiary if governments start spending on IT again.||172,733,398||-5.95||Information Technology|
|ESV||Eservglobal||Mobile money transfer company that has been gaining traction. Widely held by instos but low press coverage||166,860,825||103.03||Information Technology|
|DTL||Data#3||Well respected IT company that receives little press coverage.||159,364,075||-3.96||Information Technology|
|SFH||Specialty Fashion Group||In early stages of turnaround. Can the women's apparel retailer sustain the momentum?||151,866,547||32.61||Consumer Discretionary|
|CKF||Collins Foods||One of the few food franchise listed companies.||150,195,007||35.56||Consumer Discretionary|
|MCP||McPherson's||The personal care and household products supplier had been relatively insulated from volatile discretionary spend and online threat, but its latest profit warning shows it's not immune.||144,751,343||-7.53||Consumer Discretionary|
|BGL||BigAir Group||The wireless small cap has gained strong following over past year or two but is often overlooked by investors and the press.||138,446,701||44.88||Telecommunication Services|
|MLB||Melbourne IT||A perennial underperformer could be interesting turnaround story as management is in midst of restructuring the business.||136,720,947||26.02||Information Technology|
|MNW||Mint Wireless||Huge market potential if the mobile card payment solutions provider can gain market traction. Management aiming for $1 billion in transaction value a year.||135,297,256||1870.59||Information Technology|
|GHC||Generation Healthcare REIT||One of the more interesting REITs. Income is more defensive than typical property stock and its greenfield expansion gives it earnings growth potential.||131,955,429||32.89||Financials|
|AZZ||Antares Energy||Liquid with good insto support. Already in production with exploration upside in Texas.||131,324,997||-2.83||Energy|
|POH||Phosphagenics||Sizable biotech with a game changing FY14 year ahead. Good insto following but questions of poor audit and governance standard could dog company.||127,558,243||-13.79||Health Care|
|IMD||Imdex||Drilling company is well supported by instos and should benefit from any rebound in exploration activity.||123,652,992||-54.16||Materials|
|WDS||WDS||Widely held with strong insto support. Engineering contractor diversified across mining, energy and infrastructure.||123,029,526||88.23||Industrials|
|AMA||AMA Group||Good turnaround story but under the automotive services group is radar of most.||118,659,088||16.01||Consumer Discretionary|
|SAR||Saracen Mineral Holdings||Emerging gold producer that is widely held by instos. Hitting milestones and looks cheap. Key asset is close to gold majors, which makes it a potential takeover target.||114,588,158||-58.15||Materials|
|JIN||Jumbo Interactive||Innovative small cap facing off industry dominated by giants. Worth watching to see if it can carve out a profitable global business.||110,693,977||20.91||Consumer Discretionary|
|LCM||LogiCamms||Strong price performance and reasonable valuation attracting interest.||108,902,611||53.68||Industrials|
|REX||Regional Express Holdings||Well run airline that is overshadowed by Virgin and Qantas.||101,342,026||-17.12||Industrials|
|RUL||RungePincockMinarco||IT company to resource industry. Facing tough operating climate with new CEO trying to restructure and turnaround company.||98,941,650||55.56||Industrials|
|CAA||Capral||An aluminium manufacturer that is actually holding up relatively well given that manufacturing is on the nose.||94,651,649||25||Materials|
|UBI||Universal Biosensors Inc||Well regarded biotech and one of few that's successfully manufacturing in Australia. Struck deal with a few global medical companies.||94,306,084||-40.66||Health Care|
|DRM||Doray Minerals||Widely held by instos. One of the more favoured gold explorers by brokers.||89,376,060||-24.1||Materials|
|CLV||Clover Corp||One of the star performers in 2012. Operates in growing but relatively stable niche.||81,764,946||-5.67||Health Care|
|EML||Emerchants||Trying to change way corporates and governments disburse cash with its trackable and controllable debit card offering. If company can get $1 billion in loaded value on cards, the stock will surge.||81,034,225||261.11||Financials|
|LGD||Legend Corp||Electronic parts supplier to utilities and other industries. Stable earnings with good yield. Often overlooked.||80,117,592||37.22||Information Technology|
|AOH||Altona Mining||Noteworthy copper play with Xstrata pull-out of Roseby project in Australia and the good ramp up of its Finnish project.||77,174,026||-45.28||Materials|
|BOL||Boom Logistics||Crane hire group is riding out the downturn in construction. It's widely held by instos and is very liquid.||70,043,137||-49.14||Industrials|
|TAN||Tandou||The only direct equity exposure to cotton prices. Also trades water rights and receives little press.||68,002,800||15.5||Consumer Staples|
|CKL||Colorpak||The small cap packaging company has grown via acquisitions over past few years.||65,229,721||40.89||Materials|
|PEN||Peninsula Energy||Widely held by instos and large free float. It's the only uranium miner on the list.||63,892,681||-48.78||Energy|
|OTH||Onthehouse Holdings||Alternative small cap to online property leader REA Group. It is trying to use more timely housing data as a competitive edge against REA.||59,165,951||2.86||Consumer Discretionary|
|KOV||Korvest||The construction products and services supplier has been hit by project delays and deferrals. But its relatively high yield could give it some support.||57,737,343||1.74||Industrials|
|YTC||YTC Resources||Next 12-mths will be eventful after YTC secured funding for its projects from Glencore.||57,602,776||-33.85||Materials|
|CUV||Clinuvel Pharmaceuticals||Interesting skin disorder treatment developer that has done reasonably well over past year||50,255,405||-25.28||Health Care|
|EBT||eBet||Potential alternative to star performer Ainsworth Tech. Has exclusive deal with US poker machine maker WMS.||47,504,543||222.68||Consumer Discretionary|
|TSM||ThinkSmart||Potential turnaround story worth keeping eye on.||47,069,057||56.76||Financials|
|GXY||Galaxy Resources||Good upside potential if it can get its problem-prone Jiangsu plant back on track. Won't be easy to right this ship.||42,314,270||-86.15||Materials|
|UML||Unity Mining||Growing Tassie gold producer with high free float. Valuation looks compelling too.||35,801,888||-59.2||Materials|
|NTC||NetComm Wireless||Under appreciated small IT hardware maker that is punching above its weight. Hardly covered by press.||29,600,975||76.92||Information Technology|
|PGC||Paragon Care||Emerging hospital equipment supplier that has been ignored by market.||21,790,348||110.83||Health Care|
|Source: Eureka Report, Bloomberg|