Investment Matters

Company News

Australian Equities Portfolio

Worley energy

Worley (positive impact) held their Investor Day this week.

While a more muted affair than we were used to (given they only recently held a Sustainability Day) we were impressed with the breadth and depth of capability that Worley was able to display in the ‘sustainability’ domain.

The company recently announced it will be investing $100m into initiatives to accelerate its sustainability pathways. It expanded on this, highlighting it will focus on several key domains, including green hydrogen, carbon capture and storage and offshore wind.

To date, the company has completed more than 100 green hydrogen projects, 205 carbon capture and storage and a raft of offshore wind projects.

Worley aspires towards ‘sustainability’ linked work constituting 75% of its revenues within 5 years while maintaining a level of growth in its traditional oil and gas domain. This would represent significant growth over and above its current revenue base.

Furthermore, leading indicators of future activity remain robust, with a growth in headcount and backlog as well as its factored sales pipeline.

We expect investors to gain a greater appreciation of the potential Worley has as they become more comfortable with its capabilities, ability to leverage existing relationships and ‘pivot’ towards sustainability linked spending (what is expected to be a huge area of growth over the next decade).

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Wide Open Agriculture

Wide Open Agriculture (ASX: WOA) is a new position that entered the portfolio this week.

Most clients participated in a capital raise last week, which provided funds for the construction of a plant-based manufacturing facility. The position is a small holding that we we see the potential to add to in the future.

The short-term story

The company is a sustainable food and beverage producer.

It sources and produces sustainably farmed meat (‘Dirty Clean Food’ including grass-fed beef, lamb, pasture-raised poultry and pork), plant-based milk (‘Oat Up’ oat milk) as well as ready to eat meals.

Of particular interest is a unique (and patented) method it has to process Lupin into a viable plant-based source of protein. Lupin is typically used as fodder, with little human consumption in Australia and is, therefore, a relatively cheap crop for use as a food ingredient.

Wide Open’s (CSIRO developed) unique formulation has expanded the crops potential to be used as an additive for gelling and thickening – to be used in products such as plant-based meat and dairy analogues.

This provides significant potential market for Lupin as a based plant protein, that is sustainably sourced, with little to no phytoestrogens.

Wide Open recently announced its OatUp product will be retailed in Woolworths, in addition to the 350+ outlets it is already available in across Australia.

It has formulated a protein-enriched version of OatUp with a significantly enhanced nutritional profile relative to other oat-based milks.

Why are its products gaining traction? Consumers are increasingly becoming conscious of not just what they eat but where and how it has been produced – from farm to plate. This is in addition to a move towards plant-based diets more broadly. These are mega-trends that we anticipate Wide Open Agriculture will be a beneficiary of.

The bigger picture

The bigger picture is that Wide Open has the potential to be a significant agent of change.

By providing a commercial market for cover crops such as lupin and sustainably farmed produce, Wide Open is accelerating the shift towards regenerative agriculture.

We see significant potential for the company to be a larger player in the sustainable farming value chain and a proponent of regenerative farming practices.

Such practices not only have the potential to improve the economics for farmers but employment in the agriculture sector and the environment.

Soil can act as a “carbon sink” – with regenerative farming practices enhancing soil carbon levels and reducing atmospheric carbon dioxide. These practices are a net positive in the battle to slow anthropogenic climate change.

The economic value generated in the future from these activities and this expertise could be very large.

Clients can find out more at:

https://www.dirtycleanfood.com.au/

https://www.oatup.com.au/

Income sub-portfolio

Think Commercial Mortgage Back Securities 2 were added to client portfolios.

The security represents the D tranche of a mortgage-backed security issued by ThinkTank.

The instrument comprises approximately 835 underlying loans to SME’s, with loans backed by a mixture of commercial and residential property.

The security offers an attractive yield in the current environment, is BBB rated and is expected to have a life of 3 years according to historic repayment schedules.