Investment Matters

Company News

Property sub-portfolio

Clients’ investment in Harrick Road (positive impact) has had a significant valuation uplift.

An independent valuation of the properties held by the Harrick Road Unit trust has seen a 27% uplift in value, from $1.29 per share to $1.69.

The uplift was supported by firm prices for warehouse space and industrial property more broadly.

In addition, with the development work at both properties now complete, the trust has paid shareholders a distribution of 1.9 cents per share – a distribution yield of 1.5% (pre-uplift).

An investment owned exclusively by clients of First Samuel, it has returned approximately 26% per annum since 2018. 

Australian Equities sub-portfolio

De Grey Mining (ASX: DEG) is a new position in client portfolios.

De Grey is a gold miner based in the northern region of Western Australia.

The company’s Mallina Gold project is a relatively new discovery set in the Pilbara Craton (interestingly, home to some of the earliest evidence of life on land). 

A resource of 9 million oz of gold has been identified to date – which is expected to support the production of approximately 450 thousand oz of gold per year at an all-in sustaining cost (AISC) of $1,111-1224/oz.

The project is still in its early days; however, we see further upside as it matures and additional resources are discovered and proven up.

The opportunity ahead of De Grey is considerable, as it holds a 150km package of tenements in a relatively underexplored region.

Clients established a position as part of a $125m capital raise to fund further exploration and infill drilling, which will help advance the project to the pre-feasibility phase.

From a portfolio perspective, the position replaces Northern Star in the basket of gold companies’ client hold.

Previously, clients' gold portfolio consisted of a long-life, low-cost producer in Newcrest, a mixed gold and base metal exposure in Aurelia Metals and another low-cost producer in Northern Star.

Substituting Northern Star for De Grey provides greater leverage to the price of gold, as well as further upside that is not directly related to the price of gold (‘gold alpha’) through further exploration and proving up of existing resources.

The Pilbara Craton – a relatively unexplored region.


 Source: De Grey Mining.


Reliance Worldwide (positive impact) provided a trading update and announced a small-scale acquisition.

The more significant of the two was the trading update.

While there were a number of moving parts, the update revealed underlying demand across regions continues to be very, very strong.

For instance, underlying revenue growth in the key Americas geography has grown 12% year on year, on the back of what were already strong numbers last year.

However, we did see some hesitance by the market on the day of the announcement – with some concern around a contraction in operating margins due to input cost inflation (resin, copper, steel, shipping and freight).

We are confident in Reliance’s pricing power and the value proposition it presents to distributors and customers and took the opportunity to top up clients’ holdings.

This was rewarded with shares in the company ending the week 10% higher.

The company also announced it will acquire Ezy-Flo, a manufacturer of appliance supply lines, flexible water connectors, gas connections and other services for US$325m.

In many ways, Ezy-Flo looks a lot like Reliance.

While driven by housing activity - it relies on the much more stable repair, renovation and remodelling market.

It is recognised as a reliable brand, has demonstrated pricing power and has strong relationships with distributors (such as Lowe’s and Home Depot) as well as appliance manufacturers (OEM’s).

Fundamentally its products benefit from similar dynamics to Reliance. Appliance connectors are the lynchpin of any appliance installation. With connectors representing a small cost relative to appliances (and the cost of failure), consumers and distributors alike look for reliability and durability – and are willing to pay a premium for it, providing favourable dynamics.

The price paid for the business was reasonable – with upside if Reliance can execute well.

EZ-Flo’s product range

EZ Flo

 Source: Reliance Worldwide


Origin Energy (positive impact) announced it has sold a portion of its stake in the Australia Pacific LNG Project (APLNG).

The APLNG asset produces approximately 700 petajoules of liquified natural gas per annum, sourced from upstream gas fields, which is predominantly exported to Asia.

Origin had held a 37.5% stake in the project, alongside Sinopec and Conoco Phillips.

On Monday it announced it will sell 10% to EIG, a global energy investor, netting proceeds of approximately $2.0 bn.

The value of Origin’s stake in the project implied by the sale was well in excess of our expectations and will help ease concerns about its debt levels in the near term.

Furthermore, the sale gives Origin more balance sheet flexibility to invest in new opportunities (including large scale batteries) and pivot with a changing energy market. This flexibility and ability to adapt underpins the long-term value we see in Origin.