2 ideas in 200 words #5
2 Key Ideas from the recent Macquarie Australian Conference
Long-term Buy
Iluka Resources Limited (ASX: ILU)
We crunched a stack of updates at the recent Macquarie conference in Sydney, and Iluka was towards the top end of the opportunities that we identified. To recap, ILU is developing two major transformational assets in the Balranald mineral sands mine and Australia’s first fully integrated rare earths refinery at Eneabba.
ILU is currently trading at a market cap of $1.8bn. Yet they have $1bn in inventory on hand and their 20% stake in ASX-listed Deterra (DRR) is worth $400m. The extensive network of mines and development projects are being valued at virtually nothing.
There is scepticism around their ability to extract higher prices for strategic minerals, but they have a 70-year track record of doing just this.
Accumulate
ASX: IPH Limited (IPH)
The other update we were keen to hear was from IPH, and specifically around the declining Australian market share. On that point, we gained some confidence that this was a conscious effort to focus on the higher margin (international) referral work.
On the negative side, the Canadian Government patents office has had enormous technology issues. IPH is #1 in this market, and the disruption will push a lot of FY25 work into FY26; meaning the FY25 year may be a little soft. The market is ahead of this, and IPH is trading close to a 7-year low.
With just 2 months before the new FY, the market will increasingly look forward into what is likely to be a strong FY26. Now is the time to dust off the file and do the work.
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Katana Asset Management was founded in September 2003 as a boutique investment management firm. Katana employs an all opportunity investment mandate being style, sector and market cap agnostic.
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Katana Asset Management was founded in September 2003 as a boutique investment management firm. Katana employs an all opportunity investment mandate being style, sector and market cap agnostic.
Expertise
Katana Asset Management was founded in September 2003 as a boutique investment management firm. Katana employs an all opportunity investment mandate being style, sector and market cap agnostic.
Expertise
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