@tomsmithidg mine for $AIM is from Oct-25 $2.60 ($1.30 - $3.60), and as far as I am concerned nothing has changed.

It didn't seem too aggressive when the SP hit the lofty heights of $0.96, but with the SP languishing today at $0.58 amidst the "AI kills everything" thesis, it looks somewhat out of touch with the market. Let's see where we are at EOY 2026!

It remains contingent on the business remaining on track for Tony's FY29 targets, so I'll review after the HY result.

I have KYP at roughly 46 cents vs today's 20c (not accounting for excess cash they hold atm of about $10m). Same problem as Mike I think - AI kills everything - has hit most of my SaaS stocks this year. My main metrics are roughly topline growth will be around 9 to 10% p.a. for the foreseeable (it was 13% to 30 June 2025 for prior 5 years), costs will be relatively flat (growing at inflation rate) as will capex given most of the development has been done. At the end of my DCF I have a 3% growth rate, pretty much inflation rate (maybe should be more given what's happened recently!).

As much as I'd like to, it's too hard for my pick - Tambourah Metals (TMB) - as it's a junior explorer.

There's too many moving parts and any valuation could be doctored and any feaso can be made to look good depending on the variables inputted! Primarily the amount of Gold in the dirt, and then the gold price.

I'd like to see the Beatty Park, Baxter South and Tambourah showing a firmer pathway forwards. Looking around, there's some other similar companies in similar stages with similar results with far higher market caps.

Please don't take my word for it as it could all end up in a steaming pile of s**t

XRG Valuation Update - Draft (2/2/26)

A draft update on valuation for XRG is in the range $0.134 (DCF) to $0.157 (Mkt cap $109m on average multiples) which is up from my indicative valuation from last January of $0.097. I will work more on it once the half year results are out and update my valuation formally then.

For this draft I have assumed iFly is sold by FY27, but for no cash upside (just stripped out), also I don’t assume any new products other than the current Operator XR-2 and it maintains it’s current ~40 customer a year increase rate (I have ignored distributor sales). I have added a new big customer each year worth A$2m in annual revenue, modelled on the Texas DPS deal and kept DoD revenue flat at A$3m a year.

A DCF of cash flows are below using a high 15% discount rate. I have assumed capex remains at FY25 levels given I don’t add any sales for new developments underway.

The projection of the P&L is below and a mixed metric valuation based on P/FCF, P/S and PE across 3 years and also discounted at 15%. The average PV market cap is $108.8m which divided by the current shares gives a share price of $0.157.

Note the valuation is just to see what it might look like in this situation. We have a lot of moving parts and opportunities in play for XRG currently. However I see any risk over estimation on sales of the current OP-2 system as more than covered by excluding opportunities to expand via Distributors, new product offerings (AI integration, large fixed facility, counter drone, cloud) in Law Enforcement plus the upside of Defence which has an opportunity many times that of Law Enforcement.

Disc: I own RL+SM

I'm happy with the progress of my pick, GR Engineering Services (GNG) however I'm not good at valuations, my past attempts have tended to be wildly inaccurate with the benefit of hindsight, so I tend to instead try to pick price targets that I believe the companies can reach, which are based on the combination of fundamentals and sentiment.

What I have noticed with both GNG and LYL whose core competencies are almost identical in terms of the various studies they do for precious metals, base metals, and so-called green metals, plus designing and building processing plants for the same group of clients, is that during the past two days when their main metals exposure, gold, has been knocked down a fair bit and gold companies have been well in the red, is that GNG and LYL have done alright.

LYL has been in the green for the past three trading days, including today, rising from $15.09 on Wednesday (28th Jan) to close at $16.00 today (they're my pick in the three year high conviction comp) and GNG (my pick in this one year comp) closed up +6 cps today after only falling 5 cps on Friday, so they've risen from $4.03 on Jan 19th to close at $4.40 today, with Friday (-6 cents) being their only day in the red over the past 9 trading days (including today).

I say that to point out that sentiment towards both GNG & LYL remains positive with greater volume on the buy side than the sell side most days (every day in LYL's case) and the share price rising most days, to the point that they have bucked the trend and risen over the past two days despite the gold sector being firmly down on those days (friday and today).

If you look at another company that is also exposed to gold, to a lesser degree, Codan (CDA), who make and sell the world's best gold detectors, they managed a 10 cent rise on Friday but fell -$1.55 today, although they still look expensive to me at today's closing price of $37.63 - I remember buying them at $10 down to $4/share a few years ago and saying here that they would overcome their challenges and be making new highs soon enough - they certainly have exceeded my expectations - although I don't hold them currently because I think they've been overbought and due for a downward re-rating at some point in the next year or two, despite their recent guidance upgrade.

I know that P/E ratios only tell part of the story and are just one factor in a valuation process, however with profitable companies who have no or negligible debt, and whose earnings tend to rise more than fall every year, P/E ratios are useful for comparitive purposes. Commsec has Codan's P/E ratio as 55.51 today, which aligns with my thinking that there's already a heap of growth priced in.

But Codan is not a software company, even though they're trading like one; Codan are a technology sector hardware manufacturer and retailer (in both their Comms and Metal Detection segments), so my thinking is that there too much growth or too many years of growth already priced in with Codan (CDA). Basically they're being priced like a capital light software company where most top line sales are going to fall through to bottom line profits. But that's not what Codan are. They a great company. They're managed very well. They're certainly growing at a good clip. But they don't have that exponential growth potential that their P/E ratio is suggesting. They manufacture and then sell stuff. There is plenty of tech involved in their gear, but it's still gear, not software.

By contrast, Commsec says the P/E ratios for GNG and LYL today are 21.81 and 14.78 respectively, and if you consider the recent metals falls (which kicked off because of Trump's new Fed Chair pick) as a healthy correction and/or temporary downturn in a longer uptrend, then there's a strong likelihood that both GNG and LYL are going to get busier with more studies and mill builds over the next few years; So with growing earnings, either those P/E ratios will reduce or the share prices will increase. Or both.

GNG and LYL are services companies, who are relatively capital light, because their main value is in their IP and their people, and their clients cover the cost of all the components of their construction contracts - so neither GNG nor LYL have to outlay huge amounts to complete their contracts, or to win them, it's mainly people and time plus their own internal processes and know-how (IP). They are also the best at what they do in the southern hemisphere and in LYL's case possibly the world. So great industry position, relatively capital light, highly profitable, high ROE companies, both with superb management with heaps of insider ownership (so good alignment) that are getting a positive re-rating already, which I believe has further to run based on their current P/E ratios and their positive outlooks.

The drawback is the lumpy EPC/EPCM revenue because most of what they do are one-off contracts. The contracts often stretch over multiple years, but they end. GNG does also have multi-year recurring revenue contracts for the operation and maintenance of oil and gas facilities through their GR Production Services (GRPS) division, however that is a much smaller division than their main GRES (Australia) business which does tend to have lumpy revenue because of the one-off nature of their contracts. GPRS grew from their acquisition of Upstream Production Solutions in late 2013/early 2014.

They also have a GRES (US) business that emerged from their acquisition of Hanlon Engineering & Associates, Inc. (HEA) in January 2020. Their other two divisions are Mipac (acquired in May 2021) and their most recent acquisition, Paradigm Engineers, acquired in March 2024, although they have recently integrated Paradigm and Mipac so Paradigm is now technically part of their Mipac Engineering division. So they are growing via acquisition as well as organically, but it is measured and mostly bolt-on aquisitions of complimentary businesses. They have very conservative management, probably because so much of the company is held by their founders and management (including current Board members).

So - what's a good price target for GNG - I reckon they can get to $6.70 (hopefully $7) by March 2028, so just over two years from now, and I'd like to see them put on half of that +$2.30 SP rise by the end of this year, so let's call it $5.55 by December 31st 2026 - that sounds about right. I think that's conservative given their strong tailwinds, but a lot will depend on what metal prices do from here, especially the gold price.

Fri 6th Feb 2026: I bought another 10,000 GNG today @ just under $4.20 (buy prices ranging from $4.18 to $4.20) - they are looking more expensive than LYL on a P/E ratio basis however GNG haven't yet had the sort of run up that LYL have, and I'm thinking that I currently know more about the various advanced studies that GNG are doing than I know about LYL, so I reckon GNG might just report better than LYL this month. LYL are reporting on the 18th. I have just emailed Omesh Motiwalla at GNG and asked when they plan to report, and he usually replies promptly, sometimes even on weekends, so I'll share that date here once I get it - they rarely announce the date in advance on the ASX announcements platform like LYL and most other larger companies do.

Due to today's GNG top-up, GNG is now my largest position across my real money portfolios, overtaking LYL. GNG is 14% and LYL is 13.9%, but they are fairly close to each other. LYL could easily overtake GNG as my largest position once again if their share price goes back over $16. I now have circa 28% of my share market investments in those two companies.

I'm still getting my head around this valuation caper, so I thought I'd have a look at what the current price reflects.

If I look out 5 years with a 10% discount rate, assume 10% dilution and adopt a PE of 30, then todays price of $0.115 requires FY31 revenue of $80M with a 12% NPAT margin. Given FY25 revenue was $40.8M and in the first half of FY26 they've already booked $43.1M, I think $80M is very achievable. The main variable (apart from the PE obviously!) is the NPAT margin, which will need to triple from current margins, although as they've only recently achieved profitability, the current margin may not reflect the ongoing margin of the business.

But then again, I chose ALC for this comp based more on a speculative takeover, of which I have no idea how likely or when this may happen!

I said here on Friday night (6th Feb) that I'd emailed GNG's CFO Omesh Motiwalla to ask him when they are going to report this month. He replied this morning (Monday morning, as my email was sent after hours on Friday):

Hi John,

Thanks for your email and we appreciate your support as a long-term shareholder. Thanks also for your analysis below and I note your comments.

I can confirm that we will release our half year results on 25 February 2026.

Kind regards,

Omesh

--- ends ---

So, they're reporting on Wednesday 25th February. For some context relating to his "comments" reference, here's an excerpt from my email to Omesh on Friday evening:

Also, just a suggestion, one thing that doesn't seem to be well understood about GNG & LYL is that you're both relatively capital light companies due to most of your work being services work using not too many people and using your own IP, and people often think of E&C companies as capital heavy, i.e. having huge amounts tied up in each contract and employing everybody who is working on each project you are involved in.  

I reckon that LYL are starting to try to break that perception down a bit in their presentations, and I think it would be helpful for investors and prospective investors to have more of an idea of your financial exposure to the average project in terms of the average level of capital tied up and people employed. 

I know you do a lot of fixed price contracts, but you have the experience, track record and risk management to do that and do it well. Some people are scared away by the fixed price model and/or the perception of companies like GRES being capital heavy and therefore at greater risk of financial ruin if one or more major projects go pear-shaped - such as BHP putting West Musgrave on hold when you guys were in the middle of that project. 

To be clear, these issues do not concern us, as we have followed you long enough to have confidence in your abilities to navigate risk, but it might be worth adding something along those lines into a future presentation - i.e. a slide or two about your risk management and/or not being a super-capital-heavy business.

--- ends ---

Not sure if they'll add anything into their next or subsequent presentation(s) along the lines I've suggested, however I think it would be good if they did.

Ditto…if the starting gates haven’t opened can I submit PHX, a roughie with not much form, but with terrific potential in a stolid industry thar craves order and ease of operation.

Gotta risk-it for the biscuit @Goldfish , love how some of our Strawpunters here are playing hard to win it.