08 Aug 2025
Click here for a PDF of this newsletter The Australian share market had a buoyant run in July 2025 with the S&P/ASX All Ords Accumulation Index climbing 2.9%, marking a record close. Smaller companies performed even better with the S&P/ASX Emerging Companies Accumulation Index gaining 4.0%. The Cyan C3G Fund pulled back 3.4% after some recent stellar individual stock performers gave back some of their prior gains. The market’s ongoing strength and optimism following its recovery from the April correction was further enhanced by the landmark US and Japan trade deal, which lowered tariffs and injected further confidence into equity markets worldwide.
While the RBA kept rates unchanged at 3.85% – much to the surprise of market commentators – inflation eased to 2.1%, well with the RBA target band of 2-3% which sees expectations remain for an upcoming rate cut. This is further supported by slowing domestic GDP growth at just 1.5% which, concerningly, is largely being driven by government spending.
In line with the market’s record high, the ASX 200’s forward P/E ratio now exceeds 19x, well above historical averages and driving the valuation gap between small and large caps even wider. Perhaps the first signs of this abating came from Commonwealth Bank (CBA) which, after a 51% gain over the year, declined 3.7% in July as analysts flagged a disconnect between prior upward price momentum and modest earnings expectations. Resources were instrumental in driving the market higher with the best performers in including Lynas (LYC), Fortescue (FMG), Woodside (WPL) and Newmont (NEM) all up 10-20%. Takeover activity at the smaller end was again a feature with bids for Johns Lyng (JLG), Mad Paws (MPA) and Silk Logistics (SLH).
Click here for a PDF of this newsletter Month in Review With July’s 4C cash-flow statements the main investor focus, it was pleasing to see a consistent theme of strong growth and positive momentum across the Fund’s holdings. Alcidion Group (ALC +15%) delivered a record-breaking quarter, achieving its highest-ever quarterly operating cash flow of $7.4m, which contributed to full-year cash flow of $5.8m and a closing cash balance of $17m. The company also reconfirmed its guidance for an FY25 EBITDA exceeding $4.5m. Importantly ALC won new sales in FY25 of $73.8 m in total contract value (TCV), a 109% increase year-on-year which sets the business up for an exciting FY26 and beyond. From an investment perspective, the outlook is particularly bright as ALC’s cost base is relatively fixed and new contract wins will see a large proportion of revenue hit the bottom line. With a market cap around $150m there is significant upside versus competitors in the healthcare IT space.
Domestic lender and credit data company, Beforepay Group (B4P +25%) demonstrated a significant increase in profitability and growth in its key metrics. Customer numbers improved 12% while lending (advances) increased 18%. Critically, this was accompanied by a material improvement in its net default rate, which dropped to 0.56% from 1.24% in the same period last year. This delivered a net profit before tax of $2.4m for the quarter, a 76% increase year-on-year. With a number of new contract wins from its data science division, Carrington Labs, the company is also looking to an exciting FY26 as investor attention refocuses on this previously unloved stock. Bioxyne (BXN +17%) is a manufacturer of medicinal cannabis and psilocybin products which reported positive cashflow of $1.5m for the quarter and $6m for the year. The company’s unaudited FY25 revenue of $29.3m exceeded guidance and was more than 200% above FY24. BXN, through its subsidiary, Breathe Life Sciences, has expanded its manufacturing capacity in Brisbane, and recently won a new manufacturing and supply agreement for the German market. BXN is well funded for further expansion, ending the quarter with $7.6m in cash on hand.
The Fund was hurt by a swift fall in Locate Technologies (LOC -58%) after benefiting from two stellar months of gains totalling almost 300%. Whilst the Fund did reduce its holding in July, the speed of the pullback did impact the NAV. As discussed previously, Locate is the first Australian company to activate a Bitcoin treasury function which has seen huge investor interest globally. The pullback over July is likely linked to capital raises the company has conducted during the month, totalling $1.4m and the pause in its acquisition of BTC. This aside, the company reported record quarterly revenue from its Locate2U software division and a closing cash balance of $1.8m plus BTC to the value of $2.2m. We expect future announcements re the company’s ongoing treasury strategy in the coming weeks which we expect will reboot interest.
The Fund also experienced some pullbacks in July in Acusensus (ACE), Beamtree (BMT) and Touch Ventures (TVL). Media There were a number of media pieces done during the month as listed on our website and Linkedin. Outlook July’s market momentum is encouraging, buoyed by retail resilience, RBA rate‑cut hopes and some better than expected underlying results. Volumes and corporate activity are much improved with a number of placements, takeovers and prospective IPOs keeping market participants busy. The momentum in the large cap stocks is keeping the valuation gap between small and big caps stretched. Investors will be watching closely through the August reporting season for any signals on valuation sustainability, particularly at the top end. We feel this risk is limited at the smaller end with many companies having pre-released their results through July, and those that haven’t, are largely on undemanding valuations. The Cyan C3G Fund has been seen some increased volatility on a monthly basis (mostly on the upside), which has resulted in strong outperformance over the past year. There are growing opportunities in the local market and we feel the momentum towards the smaller end is only accelerating into the close of CY25. Notably the Cyan C3G Fund’s history has shown strong performance during periods of interest rate easings which bodes well for the current cycle.
Please stay in touch with our intra-month commentary via Linkedin or feel free to contact us at any time. Dean Fergie and Graeme Carson Cyan Investment Management AFSL No. 453209 An investment in the Cyan C3G Fund can be made by clicking here |
