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April 28, 2026

Stock in Focus – Bollore SE

Jordan Lipson, Portfolio Manager, Cromwell Phoenix Global Opportunities Fund

The Bollore Galaxy – An Update

As many readers may be aware, the portfolio has long held an exposure to entities controlled by the Bollore Family. The portfolio’s largest holding is Compagnie de l’Odet (Odet), a French-listed holding company controlled by the Bollore’s. Past generations of Bollore’s were in the business of thin paper manufacturing for uses such as rolling tobacco. In the 1980’s Vincent Bollore was an investment banker. He saw that the old family business was struggling mightily and decided to acquire the distressed business and recapitalise it. Bollore needed to raise external capital to diversify the company’s business interests but wanted to maintain operational control. Like any good investment banker, Bollore achieved this through complex structuring.

The current organisational chart is presented below to demonstrate this complexity, but for the sake of this article there are two key entities, both listed in France. They are:

Compagnie de l’Odet (Odet)
Bollore SE

These two companies own meaningful stakes in each other, creating an “ownership loop”. This structure can make the group difficult to analyse at first glance and importantly obscures the true value of the underlying assets.

org chart

Simplicity hidden by complex structure

Once one picks through the complex structure, understanding the underlying assets owned by both Bollore SE and Odet is relatively simple.

Odet predominantly derives its value from its stake in Bollore SE, while Bollore SE owns:

5.6 billion euros in net cash (mostly raised through the timely sale of its logistics business at the top of the cycle)
An 18.4% stake in Amsterdam-listed Universal Music Group (UMG), the world’s largest music publisher
Smaller media and other investments (Including Vivendi)

Some action towards discount closure

At period end, valuing UMG at its prevailing share price, Odet’s net asset value is more than 280% above its share price (not a typo!). As such, nirvana for Odet’s external investors has always been the prospect of simplification of the corporate structure and perhaps assets being distributed, so that the discount is captured (ignoring any tax complexities). The actions of Vincent Bollore have always been unpredictable. To date, steps towards simplification have been erratic and incremental, however the direction of travel has broadly been positive. Bollore SE and Odet released their annual results during the period. Given the simple nature of the underlying assets, the results held very few surprises. The one major surprise was the announcement that Bollore SE would pay a special dividend of 1.50 euros per share, which represented more than one third of Bollore SE’s share price at the time of announcement. Furthermore, Odet announced that it would pay out two thirds of the dividend it received to its shareholders.

A special dividend is particularly important to holding companies trading at discounts to their NAV. When a holding company trades at a discount, investors are essentially buying $1.00 of underlying assets for a lower price, such as $0.50. A special dividend unlocks this “trapped” value because every dollar distributed is paid out at 100% of its worth, allowing shareholders to realize the full value of the assets regardless of the stock’s discounted market price. Odet’s share price rallied on the dividend news, but after one ascribes full value to thespecial dividend payment, the discount to NAV has actually widened.

In essence, the vast majority of Odet’s value is driven by cash and its indirect holding in UMG.

“At period end, valuing UMG at its prevailing share price, Odet’s net asset value is more than 280% above its share price (not a typo!)”

The UMG conundrum

Music has proven to have universal appeal (excuse the pun) across all ages and regions. UMG is the world’s largest music publishing business, having represented 9 of the top 10 artists globally across each of the past three years, including Taylor Swift and Lady Gaga. For readers of a different generation, UMG also owns timeless assets such as rights over The Beatles back catalogue. UMG can be thought of as a toll booth on music consumption.

Since its separate listing in 2021, UMG has typically traded at a premium valuation, given the high-quality nature of its business. Very recently, concern has grown that artificial intelligence (AI) may threaten the quality of this business, both by enabling solo artists to self-publish and by allowing AI to create the music itself. This threat has caused UMG’s share price to drop from a high of almost 29 EUR per share to lows of approximately 15.50 EUR per share. According to S&P CapitalIQ consensus estimates, UMG trades at a 2026 Price to Earnings ratio less than of 16x, which compares to the S&P 500’s price to earnings ratio of just under 26x.

The quality of the music business has been tested before. Physical sales of music, mostly CDs, peaked in 1999. The proliferation of music piracy meant that it took until 2021 for music sales to reach that absolute level again (see below). Adjusted for inflation, music sales are still below that 1999 level.

music-report

Streaming services, and their global appeal completely changed the game for musicians and publishers. UMG’s more bullish investors would say that these streaming services have pricing power beyond what they currently charge and are also supported by the tailwind of a growing global middle class that can afford these services. If this is true it would likely mean robust earnings growth for the company for many years to come. UMG’s detractors would say AI developments will take power away from music publishers and extreme believers in AI would say it takes relevance away from the skill and creativity of musicians and songwriters.

Should concerns turn out to be overblown and UMG once again trades at its previous highs, Odet’s NAV would expand to a ~370% premium to its current share price! Alternatively, even assigning zero value to UMG leaves Odet’s NAV at a ~65% premium to the prevailing share price, showing the high margin of safety inherent in this investment. While there are legitimate debates about the future of music, we believe the long-term appeal of professionally produced content remains strong. However, an investment in Odet could still be an excellent investment, even if that belief proves to be optimistic.

The Longer Game

The ultimate result for investors would be a return to glory for UMG, alongside a return of capital from Odet. In recent times, the number of boxes in the organisational chart above has reduced as some simplification has occurred. The Bollore Family has also tried to remove more entities from that chart, yet faced resistance from minority shareholders. Odet itself has bought more and more Bollore shares. This activity (which effectively amounts to a buyback) has accelerated since the entities released their full year results. Most importantly, the recently announced special dividend shows a willingness to return capital to external shareholders and also moves cash around the different entities within the Bollore Galaxy. This may be tactical and act as a prelude to Vincent Bollore’s next move. Possibilities are the basis of much speculation amongst shareholders, but only the Bollore’s know the true endgame. In the short term the distribution allows shareholders to receive a meaningful portion of the NAV back at 100 cents on the dollar. Not a bad outcome for now.

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April 28, 2026

Cromwell’s continues to be part of the NABERS Sustainable Portfolios Index 2026

Cromwell has been recognised in the NABERS Sustainable Portfolios Index (SPI) 2026, reflecting the strength of our portfolio‑wide approach to sustainability and asset performance.

Cromwell Diversified Property Trust (DPT) ranked 3rd in the 2026 Office Energy SPI for our investment portfolio. Across nine properties (222,309 sqm), the Renewable Energy Indicator (REI) increased from 21% to 57%, driven by the integration of onsite solar energy, the continued purchase of 100% green power where Cromwell purchases electricity at operationally controlled assets since Jan 2024, and electrification initiatives at HQ North and the McKell Building.

Additionally, Cromwell Direct Property Fund (DPF), managed by Cromwell Funds Management, ranked 4th in the index. Across seven assets (63,153 sqm), the Renewable Energy Indicator (REI) increased from 36% to 82%, driven by the integration of onsite solar energy into the portfolio. This increase is further supported by the continued purchase of 100% green power for the majority of Cromwell’s operationally controlled assets since 2024, with full 100% green power procurement achieved by January 2025.

The NABERS SPI benchmarks the performance of building portfolios like ours across energy and water efficiency, waste management, indoor environment quality and carbon neutrality, spanning Australia’s office, shopping centre and hotel sectors.

We are proud to be part of a growing community of leaders who are setting the standard for sustainable practices in the built environment.

See the highlights of the NABERS SPI 2026 here or the full results here.

NABERS-SPI

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February 26, 2026

Cromwell announces HY26 results

Cromwell Property Group (ASX:CMW) (Cromwell or the Group) announces its financial results for the half year ended 31 December 2025.

Cromwell Chief Executive Officer, Jonathan Callaghan, said: “This has been a successful half-year for Cromwell, with disciplined execution and solid operational performance across the platform.” Key highlights for the six months to 31 December 2025 include accelerated growth, strengthened financial performance, and continued progress across strategic initiatives.

View HY26 Results Presentation View HY26 Results Announcement Listen to HY26 Results

Key Highlights

Growth accelerated with the acquisition of an industrial management platform and a 19.9% stake in a $472 million Australian industrial portfolio (the Cromwell Industrial Partnership (‘CIP’)), establishing the foundation for a core pillar of the Group’s growth strategy.
Group AUM rose 13.2% to $5.0 billion, driven by the industrial platform acquisition and stronger portfolio valuations.
Operating performance strengthened, with operating profit up 1.5% for the six months ended 31 December 2025.
The Group’s strong balance sheet provides financial flexibility for growth, with gearing at 30.2%¹, significant liquidity of $418 million, and 71%¹ of debt hedged, all as at 31 December 2025.
Investment Portfolio valuations increased by 3.6%¹, driven by a successful leasing strategy and high portfolio occupancy of 97.2%¹.
Investment management pipeline continues to build momentum with the Barton1 development progressing on schedule and within budget.
Distribution guidance of 3.0 cps is reaffirmed for FY26.

We continue to build momentum as we progress our strategy and position the Group to deliver sustainable long-term growth.

Jonathan Callaghan, Cromwell Chief Executive Officer

Financial performance

Cromwell reported an increase of 1.5% in operating profit to $55.9 million, supported by the continued strong performance of the Investment Portfolio, which recorded valuation gains of $72.0 million during the period. The Group reported funds from operations (FFO) of $55.3 million, equivalent to 2.11 cents per security, reflecting a payout ratio of 71.0%.

Net Tangible Assets (NTA) increased to $0.58 per security, up from $0.56 per security at 30 June 2025. NTA remains above the current trading price, highlighting the upside potential relative to the Group’s underlying asset base.

Gearing remains low at 30.2%¹, providing substantial balance sheet capacity and maintaining significant headroom against debt covenant limits. Cromwell’s $418.0 million of liquidity supports continued flexibility for disciplined capital deployment into growth initiatives.

Investment portfolio performance

Cromwell’s Investment Portfolio delivered a strong performance over the six months to 31 December 2025, with valuations up 3.6% since FY25 to $2.1 billion¹, driven by resilient asset fundamentals and improving market conditions. The uplift reflects both sustained leasing activity across key assets and continued stabilisation in valuation metrics as capital markets regain confidence.

Occupancy remains high at 97.2%¹, supported by leasing of more than 23,000 square metres during the period. Material uplift was seen at Cromwell’s asset at 400 George Street, Brisbane, where key leases have been extended to 2030 following the exercise of a three‑year lease option by QLD State Government.

Positive market momentum is expected to continue through the remainder of the financial year, supported by firming demand for high‑quality real estate and constrained supply of office space. Together, these factors position the portfolio well for ongoing stable earnings and enhanced returns for investors as the Group continues its growth trajectory.

Strategic growth initiatives

Cromwell advanced its growth strategy during the half through three key initiatives.

Expansion into Australian industrial real estate

Cromwell completed Phase 1 of its transaction with Straits Real Estate Pte Ltd (SRE), acquiring a 19.9% interest in SRE’s industrial portfolio and its management platform, Terre Property Partners (TPP). TPP adds $567 million in AUM, deep industrial expertise and a proven team, strengthening Cromwell’s on-the-ground capability and supporting further growth in investment management.

Phase 2, launching shortly, will bring additional capital partners to the portfolio as it grows through acquisition and development. The existing seven-asset, $472 million logistics portfolio (cap rate 6.1%) provides scale and diversification, with assets in key logistics hubs of Bayswater (VIC) and Salisbury South and Port Adelaide (SA).

Cromwell Funds Management 100 Creek Street Brisbane building

New wholesale fund launched

Cromwell launched the Cromwell Creek Street Investment Trust, with a ~$102 million capital raise underway to acquire 100 Creek Street, a 24-level, ~20,000 sqm Brisbane CBD tower. The asset is 94.3% occupied with a diversified tenant base.

The Fund targets an 8.0% p.a. monthly distribution yield, 100% tax-deferred distributions for the first two years, and a 15% target equity IRR over five years. Independent research has rated the Fund “Recommended.”

Investment Management update

Growth in Cromwell’s Investment Management business was driven by the acquisition of TPP and the 19.9% interest in CIP during the period, and the Group now manages $2.8 billion across Australia and New Zealand.

The Cromwell Direct Property Fund (DPF) holds seven² assets valued at $470.3 million, with the five direct assets valued at $396.5 million, representing a 1.3% valuation increase since at 30 June 2025. Portfolio occupancy remains high and unchanged at 96.4%, with the portfolio’s cap rate tightening to 7.7%.

DPF has commenced the wind up process following the Periodic Liquidity event voted for by investors in late 2025. As part of this process, the sale of 545 Queen Street settled on 19 December 2025, delivering $77 million in net proceeds after selling costs.

Outlook

The Group has made strong initial progress in implementing its strategy to grow third‑party funds under management, broaden our capability set and investor base, and bring to market new products in the office and industrial sectors, with continued work underway in the retail sector, which remains a key focus.

Capital deployment will continue to support growth through both organic initiatives and targeted inorganic opportunities, with an emphasis on strategic, value‑add acquisitions in Australia’s core sectors in partnership with new, aligned capital partners.

Cromwell will maintain strong occupancy across its Investment Portfolio to support income during the current growth phase, underpinned by targeted leasing campaigns, spec‑suite delivery, and capital works designed to enhance occupancy, grow WALE and rental income.

The Group continues to monitor its capital management position by preserving gearing headroom to enable opportunistic transactions, proactively managing refinancing to protect interest costs and liquidity, and maintaining disciplined capital allocation.

The Group reaffirms its expectation of an annual distribution of 3.0 cents per security for the 2026 financial year.

Footnotes:

Excluding 475 Victoria Ave, Chatswood, which is classified as held for sale and includes Barton1, currently under development.
DPF assets are comprised of 5 direct assets and 2 assets in underlying unit trusts.

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January 22, 2026

Stock in Focus – Young & Co.’s Brewery PLC

Jordan Lipson, Portfolio Manager, Cromwell Phoenix Global Opportunities Fund

Old business in a modern world

Young & Co.’s Brewery PLC (Young’s) has been an investment within the Cromwell Phoenix Global Opportunities Fund since its inception six years ago. Its history goes back far longer than that, with connections to its previously owned brewery dating back to at least the 1500s, but likely longer than that. Today Young’s owns and operates 288 predominantly freehold pubs across the United Kingdom. A combination of cyclical and structural factors have led to extreme pessimism in the UK pub sector, however Young’s is well run, financially sound and trades at a meaningful discount to readily assessable value. Furthermore, the portfolio accesses this opportunity at a further discount, given its unique shareholding structure. This makes Young’s an attractive investment, squarely within the portfolio’s investment universe.

Looking back

Records of the Ram Brewery, based in Wandsworth in Southwest London, date back to 1581, when it was run by Humphrey Langridge. After changing hands and being passed down generations, the brewery was sold to Charles Allen Young and Anthony Bainbridge in 1831, who had supplied brewing equipment to the previous owners of the brewery. It was then inherited by Charles Florance Young in the late 1880’s, at which point Young & Co.’s Brewery Ltd was established. Not long after, in 1898, the business was listed on the London Stock Exchange. The company’s history of pub ownership also goes back centuries, with a Young family partnership acquiring 88 pubs alongside the brewery. This was an early form of what is now known as “vertical integration”, with the pub’s major focus being the sale of beer made by the Ram Brewery.

Young’s and the Young family were titans of the UK beer scene. Those who grew up in London in the 1900s would probably have ordered many a pint of Young’s Original, or Young’s Special. Young’s was run by John Young for much of the late 1900s, until he retired as Chairman in 1999. The brewery was known to be a family business, that deeply cared about its staff, with many generations of family members working at the Wandsworth site. Historically, it is fair to say occupational health and safety standards were traded for a positive work environment, with Ram being the last “wet brewery”, with staff able to have a healthy sampling of the product at work until the 1970s. Ram was the longest continually running brewery in the UK until 2006 when it was decided that it would close its doors. The now valuable property was to be sold off for much needed residential housing. Up until it closed, beer was still delivered by horse to pubs serving Young’s within a two mile radius of the brewery. The iconic site hosted an animal paddock and was visited by both the Queen and the Queen’s mother. John Young passed away in 2006 not long after the decision to close the brewery was finalised. The last batch of beer produced at the site was served at his funeral.

“In this tough environment, Young’s grew like-for-like sales by 5.7% in the previous financial year and has grown that figure by more than inflation for over a decade.”

Moving on

At the time the brewery closed, it was likely losing money, or making a minimal return on capital and the core of the business was the ownership of the pubs. The Young family continue to be meaningful shareholders to this day, with Torquil Sligo-Young previously working in the business, and now a member of its board of directors. Whilst now a professional pub operator, this connection has arguably been a key to business success. It has facilitated a focus on high quality operations, investing in the pubs it owns and maintaining a conservative financial structure. This contrasts with some of the large UK pub owners, without controlling shareholders, who have used immense financial leverage to grow their businesses and have hurt non-associated shareholders. This financial strength shone through across the covid-affected period, allowing the company to keep going with only the addition of modest debt, well below its full debt capacity.

That is not to say that Young’s won’t buy pubs. They have actively rotated and grown their portfolio of pubs, achieving solid returns on capital. Most recently, Young’s completed the acquisition of fellow listed pub owner, The City Pub Group, which added 51 pubs to the portfolio, predominantly in London and the South of the UK. This was a win-win transaction, with City Pub’s small size leading it to be undervalued by the market. Young’s as a larger organisation can achieve greater returns from the portfolio with easy wins, such as combining two sets of listing and board costs into one and achieving discounts on product sourcing. As a well-capitalised organisation, Young’s will likely be able to invest more capital into the pubs making them more attractive to patrons. The combination has progressed well, with staff onboarded and profit margins for the pubs beginning to show expansion.

More recently, as sentiment around UK pubs has soured, so too has the price of Young’s shares, particularly the voting A shares. The management team and board have shown capital allocation discipline, undertaking a buyback at discounted prices. This option is only available to the company because of its financial discipline.

State of the market

As previously mentioned, sentiment around UK pubs is poor. Firstly, they had to see off the depths of pandemic closures. Many large pub companies came away from that experience with very stretched balance sheets. Subsequently, pubs have had to face rising cost of goods sold, affected by food inflation, electricity cost hikes, additional taxes on alcohol and this year they will face a meaningful increase in the UK National Insurance rate. These factors have combined with generally lower rates of alcohol consumption in the Western World. The number of pubs in the UK has dwindled from more than 60,000 in the early 2000s to approximately 40,000 today. Much like the Ram Brewery, part of this can be ascribed to higher and better use of the properties. The UK still maintains a higher number of pubs per capita than Australia, but pales in comparison to our Irish friends, who frequent the same number of pubs as Australians, despite having approximately one fifth of the population.

Despite the challenging operating environment, Young’s has performed admirably. Thankfully, there are many listed UK pub companies, with long histories of financial information allowing us to form a clear picture of the industry over time. Listed players have meaningfully outperformed the broader pub market over time, as independent operators have struggled to compete against the scale and professionalism of larger operators. Amongst listed peers, Young’s has maintained either the best or second-best performance depending on the time of measurement. The only other company that compares is JD Weatherspoon, who not surprisingly has a controlling and aligned major shareholder who cares deeply about the company. JD Weatherspoon was a previous successful investment for the portfolio. Today Young’s is however best placed, with London outperforming the rest of the UK and its more upscale pubs better placed for today’s market environment than Weatherspoon’s highly affordable options.¹

In this tough environment, Young’s grew like-for-like sales by 5.7% in the previous financial year and has grown that figure by more than inflation for over a decade. This has been aided by premiumisation, with sales of cocktails far outpacing the growth in sales of beer and wine. Young’s business model is also somewhat decentralised, with a lot of the key decisions about pubs handled at the pub manager level and support provided from central management. Supporting this, 85% of Young’s general managers have been internally developed, with many in upper management beginning their careers pulling pints.

The value

Given the quality of management and the pubs owned, one may expect Young’s to trade at a premium valuation. That is not the case today. Young’s values its property at market value on its balance sheet, allowing for a simple calculation of its net asset value (NAV). As at the end of December 2025, the company’s Voting A shares traded at more than a 40% discount to this value. The assumptions used in these valuations are also likely to be conservative and significantly undervalue the freehold estate when compared to similar Australian properties, which can trade at capitalisation rates below 5.0%.

But wait there’s more! In 2005, Young’s simplified its capital structure to maintain two classes of shares (down from three) and moved to the Alternative Investment Market (AIM) from the main listing segment of the London Stock Exchange. Young’s lists both its voting A shares and its non-voting shares (under code AIM:YNGN). Its non-voting shares have traded at a meaningful discount to the voting shares for a long time. Over the past 8 years the discount has averaged 33% and was as wide as 50% in 2021. This discount has somewhat closed, and ended the period just over 20%, aided by the fact the aforementioned share buyback is taking place solely amongst the non-voting shares. The portfolio has only ever invested in the non-voting shares, which has cushioned some of the pain of Young’s weaker share price performance, as the discount has closed.² We are more than happy to relinquish this voting power as management, the board and the Young family have done a very good job in charge of the business for a long time. We would only ever vote with management and see no need in telling some of the best operators in the sector how to do their job. The discount we receive for giving up these voting rights is also extremely attractive. At period end the non-voting shares traded at a 54% discount to the readily assessable NAV of Young’s. At that valuation we are happy to keep a watchful eye on the cyclical factors affecting the industry and hopefully enjoy the returns created by a best in class management team with a well-positioned portfolio.

Footnotes

A “small breakfast” of a fried egg, bacon, sausage, beans and a hash brown can cost as little as £2.99 at Weatherspoons!
The Young’s non-voting shares ended the period at a small discount to the portfolio’s cost base.

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November 27, 2025

Stock in Focus – Alkane Resources

Jordan Lipson, Portfolio Manager, Cromwell Phoenix Global Opportunities Fund

Sitting on a Gold Mine

The Cromwell Phoenix Global Opportunity Fund’s mandate is simple but wide: to seek out attractive opportunities across the small-cap universe where securities trade at discounts to readily assessable net asset values (NAVs), or where special situations create strong risk-adjusted return potential. This allows us to go wherever opportunities may present. Towards the end of 2024 an opportunity presented to invest in gold miners. A fast-rising gold price and a muted response from gold miners led to a compelling investment opportunity. These purchases, along with a timely addition in May this year, meaningfully contributed to returns over the period.

Gold vs Gold Miners

When the price of gold goes up, gold miners benefit more than you may inherently think. This is because a mine is leveraged to the price of gold in a way simply owning gold bars isn’t. Despite the immense challenge of running a mining operation, the underlying economics are relatively simple. Costs include the energy, people, infrastructure and equipment it takes to get gold ore out of the ground (and often process it) and revenue is the amount purchasers pay for the gold. For the most part, the cost of extracting the gold does not change when the gold price does, while revenue is directly linked to the gold price. A simple example highlights just how much leverage a gold miner might have to the price of the shiny metal. Let’s say it costs $1,500 to extract an ounce of gold, and the price of gold is $2,000 per ounce. The miner will clearly make $500 for every ounce of gold it mines and sells. Now let’s say the price of gold increases by 50% to $3,000 per ounce. It still costs $1,500 per ounce to get the gold out of the ground¹ but now my pretax profit has increased by 3 times to $1,500 per ounce ($3,000 – $1,500) despite the gold price only increasing 50% (Figure 1).

This example is dramatically oversimplified and misses much nuance, but what naturally follows, is that when the gold price increases, the price of a gold miner should go up even more (all else equal). In the example in Figure 1, a 50% increase in the gold price has led to the mine becoming 200% more profitable. Figure 2 shows what actually happened in 2023 and 2024. Rebasing values to 100 as at the start of 2023, it shows returns for junior gold miners compared with returns of the gold price.

Figure 1

Figure 2

“Across 2023 and 2024 the price of gold rose 43% (in USD), whereas gold miners only rose ~17%.”

As can be seen above, across 2023 and 2024 the price of gold rose 43% (in USD), whereas gold miners only rose ~17%. This is the opposite of what would be expected to happen. Some of this relates to a more challenged cost environment, but that alone can’t explain this outcome. What happened next is shown in Figure 3. It expands on from Figure 2, beginning in 2023 and continuing until the end of the September 2025 quarter.

As can be seen, the environment for gold has been extremely conducive since the end of 2024. The gold price continued to rise, and gold miners have finally seen the upside leverage to the gold price reflected in their own share prices.

Figure 3

What happened?

Analysing exactly why gold miners underperformed the rally in the gold price initially is an imprecise activity, however observations can be made. It is worth noting that brokers provide widely available net asset values (NAVs) for gold miners. Often, they provide two; one using their own assumed gold price, and another assuming the current (or spot) gold price remains stable. At the end of 2024, NAVs using spot prices showed many gold miners trading at a price to NAV of less than 0.5. Official published NAVs, using broker predictions of future gold price, were much lower. This was a result of “expectations” of a lower future gold price. In reality, brokers are hesitant to quickly move assumptions when information changes. This would require constant republishing and changes of opinion, none of which is practical or in their interest. This is not a criticism, as their job is to provide analysis, information and generate trades, not necessarily to be a hands on investor. In the case of gold however, there is a liquid spot and futures market², which allows investors to observe the value of gold today and of the price at which it can be hedged in the future. This gold price can simply be utilised in a model to derive a valuation. The benefit of using a market-based gold price, relative to a single market participant’s expectation, is the “skin in the game”. The World Gold Council reports that over US$200 billion of gold is traded per day, and each buyer and seller is incentivised to maximise their own profit.

At the end of 2024, spot and futures prices were meaningfully higher than many broker estimates. To be fair, they were probably higher than many of the estimates in other investors’ financial models, however these models are not publicly available. With the gold price sustained at higher levels, the outcome was predictable. Brokers (and probably other investors) moved their gold price assumptions higher thereby increasing valuations. As the gold price continued to increase, this cycle continued, with assumptions and valuations consistently stuck in the past. The recent rally in gold miners reflects a catch up in those assumptions.

Alkane Resources

Alkane Resources has long been listed on the Australian Stock Exchange and has been a holding of the domestically focused Cromwell Phoenix Opportunities Fund for many years. In April 2025, Alkane announced a transformational merger of equals proposal with Canadian-listed Mandalay Resources. The transaction was structured to have Alkane acquire Mandalay Resources and for shareholders of Alkane to end up owning 45% of the combined business with Mandalay shareholders owning the remaining 55%. This provided an opportunity for this portfolio to purchase a position in Mandalay, which was trading at a small discount to the merger price implied by Alkane’s Australian share price, and more importantly a meaningful discount to the merged company’s NAV and our assessment of valuation. The merger was highly likely to close as the transaction was recommended by both sets of board members and supported by major shareholders.

The merger represented an attractive proposition for both sets of shareholders. Mandalay had struggled for market relevance, as a closely held stock, listed in Canada, with assets in Australia and Sweden. For Alkane, the merger transforms the business from a single-mine producer into a multi-mine company, reducing asset-specific risk and improving production and earnings resilience. Furthermore, Alkane’s operating results have been burdened by legacy hedging contracts, whereas Mandalay is unhedged, providing the combined group with more direct exposure to movements in the gold price. The increased scale of the combined company has facilitated greater investor interest and attracted meaningful passive investment inflows. Alkane was added to the ASX 300 Index in late September and also received an upweighting in the US$8 billion VanEck Junior Gold Miners ETF (GDXJ), reflecting its enhanced market capitalisation and improved free float. Furthermore, the combined company is being run by long-time Alkane CEO Nic Earner, for whom we have a great deal of respect.

The merger was approved and successfully closed in early August. The portfolio’s holding in Mandalay until August marginally detracted value relative to indices, however since August, the holding (in what is now the merged Alkane Resources) has returned almost 66% in CAD. The position has been trimmed as it has risen, however remains 3.0% of portfolio assets at period end.

Current positioning

With the recent rally in the price of gold miners, it is reasonable to wonder if they still represent an attractive investment opportunity. The answer in our view is broadly yes. The same biases that led to undervaluation in the past are still prevalent today as the gold price climbs higher. The portfolio has however been a net seller of these stocks for risk management reasons, as we do not wish to have too large an exposure to this one specific theme. The price to (spot) NAV of many gold stocks remains near 0.5, despite the strong performance. If current gold pricing holds, gold miners should produce strong profitability, cash flow and returns in the future.

As at period end, direct exposure to gold miners represents approximately 9.5% of the portfolio.

Footnotes

In reality, a strong gold market would lead to tighter labour market conditions and other factors that would increase the cost of mining, but this is small in comparison to the increase in profitability. There may also be a royalty associated the gold mined, which is a variable cost based on the gold price.
This is merely a market where a participant agrees to buy or sell a commodity at an agreed price at a point in the future. It can be used to speculate (or hedge) on the future price of the commodity. All things equal, a futures price should be the spot price adjusted for the time value of money and storage costs.

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November 27, 2025

CEO Update

Jonathan Callaghan, Chief Executive Officer, Cromwell Property Group

We recently held our Annual General Meeting, where we reflected on a transformative year for Cromwell. FY25 marked a turning point as we simplified our business, strengthened our balance sheet, and laid the foundation for sustainable growth. I am pleased to share some of the key achievements and strategic initiatives that position us for an exciting future.

Operational highlights

Our Investment Portfolio continues to perform exceptionally well. Occupancy sits at a sector-leading 97.6%, and our weighted average lease expiry remains strong at 5.0 years. During the year, we leased over 51,000 square metres, including a landmark 15-year pre-lease to the Commonwealth Government at our Barton, ACT development—a future flagship asset for our Investment Management business.

Financial performance

We delivered an operating profit of $108.6 million and funds from operations of $105.7 million, equating to 4.0 cents per security. While these figures reflect the impact of our European exit and prior-year one-off fees, they underscore the resilience of our Australian earnings base. Importantly, we reduced Group gearing from 38.9% to 28.2% through $1.6 billion in non-core asset sales, and we now have $504 million in deployable liquidity. This strong position enables us to provide distribution guidance for FY26 of 3.0 cents per security—the first time in several years—supported by secure income streams, 69% of which come from Government and other blue-chip tenants.

Strategic direction

Our strategy is clear: transition toward a capital-light investment management model while maintaining a high-performing portfolio. Recent initiatives demonstrate this approach in action.

Landmark Barton, ACT development

We have commenced development of a fully electric, 6-star rated office building in Barton, ACT, for a Commonwealth Government tenant. This project, due for completion in 2027, will be a prime opportunity to attract capital partners when the time is right.

Growth in AUM through strategic industrial portfolio acquisition

We have entered into a conditional agreement to acquire a 19.9% interest in Straits Real Estate’s Australian Industrial portfolio and its management platform, Terre Property Partners. The portfolio comprises seven high-quality industrial assets with total value of $470 million, located in key logistics hubs across Victoria and South Australia.

The acquisition will cost $47.6 million for the portfolio stake and $2 million for the Terre Property Partners platform. It will be funded from existing group liquidity and is expected to deliver stable, recurring income to the Group through distributions from our partial portfolio ownership and fund management fees. This transaction will grow assets under management by approximately $540 million, which includes two single assets also currently under Terre Property Partners’ management.

This strategic acquisition aligns well with Cromwell’s existing portfolio, enhancing asset and income diversification while strengthening our position through new capital partnerships.

Looking ahead

Cromwell will continue to expand its Funds Management platform through organic growth, scaling existing products, and strategic acquisitions. We will leverage our strong capital position and improving market conditions to accelerate growth, drive recurring fee income, and deliver long-term value for our investors.

Turning operations into strategic advantage: Cromwell’s Facilities Management Team leads the way

Cromwell’s Facilities Management (FM) team has been named FM Organisation of the Year by the Facilities Management Association of Australia — a recognition that reflects not just operational excellence, but strategic value. The FM unit consistently outperforms industry benchmarks, proving that focused leadership and smart execution can drive enterprise-wide impact. For investors, this signals Cromwell’s ability to deliver the deep expertise and capability typically associated with large-scale organisations, while maintaining the agility, responsiveness, and personalised service of a boutique team. Below is an overview of the team’s key achievements that contributed to this national recognition, along with insights into how a high-performing FM function supports investor outcomes through enhanced asset performance, tenant satisfaction, and operational resilience.

The role of Facilities Managers

Facilities Managers oversee the day-to-day operations of Cromwell’s buildings, ensuring they are safe, efficient, and aligned with tenant needs. Their responsibilities span maintenance, compliance, sustainability, and service delivery — all of which directly influence tenant satisfaction and asset performance. At Cromwell, the FM team plays a pivotal role in translating strategic objectives into operational outcomes, working closely with Asset Managers to ensure every decision supports long-term portfolio value.

Performance that drives value

Cromwell’s Facilities Management (FM) team’s tenant-first mindset continues to deliver industry-leading tenant satisfaction results. Their performance places them in the top quartile of peers in the Future Forma survey, with standout results in service-request responsiveness.

For investors, this translates into higher tenant retention, reduced vacancy risk, and more stable income streams. By actively engaging with tenant feedback, including insights from the annual Future Forma survey, the team addresses asset-specific issues and enhances the overall experience across the portfolio — a key factor in protecting and growing long-term asset value.

With a data-driven approach and strong ESG leadership, the team has supported Cromwell in achieving Net Zero Scope 2 market-based emissions and maintaining top-tier NABERS and Green Star ratings. Initiatives such as solar installations, operational optimisation, and GreenPower procurement have contributed to a 95% reduction in Scope 1 and 2 market-based emissions intensity. Safety and compliance have also been strengthened through the implementation of a new incident management dashboard, real-time risk reporting, and ISO 14001 and ISO 45001 recertifications — reinforcing a culture of accountability and continuous improvement.

Key milestones

Recent initiatives have delivered measurable improvements across tenant experience, environmental performance, and operational efficiency:

Continued to achieve strong tenant satisfaction outcomes in the Future Forma survey, maintaining top-tier performance.
Record NABERS results, with six assets achieving 6.0-star ratings and six reaching 5.5-stars through lifecycle-aligned optimisation.
Cromwell’s first NABERS Waste Ratings via Bintracker and tenant education
Enhanced incident reporting in partnership with AESC, improving safety oversight and responsiveness.
Agile Work Framework tailored to FM, supporting psychosocial safety, retention, and team performance.

These milestones reflect the team’s commitment to continuous improvement and strategic alignment with Cromwell’s ESG and operational goals.

Learning experiences driving service excellence

Cromwell’s FM team fosters a culture of continuous learning to enhance service delivery, embedding insights into daily operations and strategic planning.

A key learning has been the value of high-quality data in driving smarter decisions. Improved visibility of energy, water, waste, emissions, and safety metrics has enabled targeted interventions with measurable environmental, financial, and safety outcomes. For example, tenant usage data informed plant room tuning and LED upgrades, boosting energy efficiency and comfort.

Lessons from solar installations have streamlined future rollouts, while feedback loops including post-implementation reviews and tenant surveys have strengthened engagement, contributing to a strong FM satisfaction score, well above industry benchmark.

Insights from pilot programs and Bintracker have shaped waste education campaigns and supported Cromwell’s first NABERS Waste Ratings. All change initiatives are developed collaboratively by the Facilities Leadership team and broader FM representatives, ensuring solutions are fit-for-purpose and genuinely support operational needs—making day-to-day processes easier and more effective.

Elevating industry standards

Beyond internal performance, Cromwell’s FM team contributes to sector-wide advancement. They actively participate in:

Property Council of Australia working groups
NABERS stakeholder panels
Industry events such as the Queensland FMA’s World FM Day, where Head of Facilities Management, Chris Eske presented on “Thriving in a World of Change”

Internally, quarterly FM forums distil site-level insights into technical guidelines and procurement frameworks, driving consistent performance uplift. Externally, Cromwell shares learnings through Insight magazine, LinkedIn, and its website — offering replicable models for peers seeking to improve sustainability and service delivery.

Conclusion

Cromwell’s FM team exemplifies how operational capability can be transformed into strategic value. Through leadership, innovation, and a relentless focus on tenant experience and sustainability, the team continues to deliver outcomes that exceed industry benchmarks. Their achievements support Cromwell’s organisational goals and contribute to raising the standard of facilities management across the sector.

Update: The awards concluded on 4 December, and we’re proud to announce that Cromwell’s Facilities Management team has been named FM Organisation of the Year. Congratulations to the entire team on this outstanding achievement!

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August 8, 2025

Stock in Focus – BWP Trust

No More Bunnings Snags!!!

Phoenix Portfolios Managing Director, Stuart Cartledge

Phoenix has long discussed the importance of assessing governance in its investment process. The much-repeated Charlie Munger quote “show me the incentives and I will show you the outcome,” rings as true today as when he first said it. As such, we have maintained a preference for internally managed vehicles over those managed externally by fund managers focused on growing their funds under management. In June, BWP Trust (BWP) announced a major transaction, comprising the internalisation of management, along with a lease reset for many of the Bunnings tenanted properties owned by the trust. These interlinked transactions removed two of the key “snags” that were holding back our investment in the stock.

Snapshot

Key update
In June, BWP Trust announced two major changes:

Internalisation of management – Ending its external management by Wesfarmers, BWP paid $142.6 million (10.6x FY26 EBIT) to take control.
Lease reset – Extended lease terms on 62 Bunnings properties, increasing the WALE from 4.6 to 9.5 years, boosting property value by an estimated $50 million.

Why it matters

Better alignment: Internal management means decisions now serve unitholders directly, as opposed to serving the dual interests of unitholders and the external manager.
Cost savings: Expected to save over $5 million annually, with 2% dividend accretion in FY26.
Improved asset quality: Longer leases make properties more attractive and saleable.
Capital investment: $86 million committed to property upgrades, with $56 million rentalised and $30 million co-funded with Bunnings.

Valuation and outlook

BWP now trades at $3.52/unit, a 7% discount to its pro-forma NTA of $3.79/unit.
Historically traded at a premium due to strong tenant (Bunnings) and reliable dividends.
Due to the above changes, Phoenix has started buying BWP units again.

A brief history

BWP conducted an initial public offering (IPO) in 1998, initially comprising 16 hardware retail properties tenanted by Bunnings Warehouse and 4 properties under development, to be tenanted by Bunnings. These properties were vended into the trust by Wesfarmers, the owner of the Bunnings Warehouse business. 99 million units were to be issued to public shareholders, with 33 million units subscribed to by Wesfarmers, all at an offer price of $1.00 per unit. Of the 20 initial properties, 15 are still owned by BWP. Their valuation has increased from $133.1 million to $644 million today, representing growth of 6% per annum. The IPO portfolio was vended to BWP at an initial yield of ~9.0%, whilst the most recent valuation showed a capitalisation rate of 5.4%. Despite this, much of the value appreciation has been driven by rent growth, with increases in rental payments growing 4.3% per annum for the properties held since IPO. Returns to shareholders have also been solid, with BWP producing a total return of 11.8% per annum since IPO.

It is not only per share metrics that have grown. The units on issue have grown to 713.5 million, increasing more than 4x when compared to 1998. Much of this equity issuance did occur in capital raises above, or near net tangible asset backing. This growth may well have served BWP unitholders well, diversifying the portfolio and creating a more relevant entity, but it is worth acknowledging that on a per share basis, unitholders would have done perfectly well merely holding onto the initial portfolio. It is not questionable that the external manager of BWP, Wesfarmers, has very clearly benefited from this growth, as the recent transaction proves.

These interlinked transactions removed two of the key “snags” that were holding back our investment in the stock.

Coming to today

How much has Wesfarmers benefitted from BWP’s growth? In June, BWP announced it would internalise management of the company, paying Wesfarmers $142.6 million, representing 10.6x the management company’s estimated 2026 Financial Year (FY26) earnings before interest and tax (EBIT). In FY26 this will produce cost savings to BWP of more than $5 million, however this likely understates the true savings, as this includes transaction costs (associated with this deal) and does not include benefits of additional scale. The deal is also 2% accretive to the FY26 dividend. As fees are charged as a percentage of assets under management, growth under the old structure would naturally lead to an increase in management costs. Adding an additional Bunnings property to an internally managed vehicle, however, should barely make a difference to administration costs. This creates a better alignment of interests, meaning any decision to grow is more likely to be solely in the interests of unitholders, as opposed to serving the dual interests of unitholders and the external manager.

Connected to this deal is the announcement of an extension and reset of the lease terms of 62 Bunnings leases. This increases the weighted average lease expiry (WALE) of Bunnings tenanted properties owned by BWP from 4.6 years to 9.5 years. An independent expert has assessed that this is likely to increase the value of the properties owned by BWP by ~$50 million. This may understate the true value uplift as it does not directly consider the optionality inherent in the leases. Bunnings tend to have options embedded in their leases to extend the lease. The options have a cap and collar of 10%, meaning the rent can only increase or decrease as much as 10% upon option exercise. As Bunnings controls the option, they will likely exercise it on any strongly performing stores and likely won’t on any underperforming stores, which are more likely to be in inferior locations. With the WALE having decreased to 4.6 years this was a key concern. The lease extension does not extinguish this concern, however, it does push it out 5 years. Additionally, Bunnings properties with longer WALEs are meaningfully more saleable, with recent transactions very supportive of independent valuations.

The final element of the transaction is a commitment to capital expenditure by BWP. $56million of this is to be rentalised at a fair rate, whilst an additional $30million will be equally and jointly funded by BWP and Bunnings to improve some older properties. This amount won’t be rentalised, however should support asset values and prove a commitment by Bunnings to stay in that space.

What to do about it?

For much of its history, BWP has traded at a premium to its net tangible asset backing. A strong, prominent covenant and steadily growing dividends attracted a large retail shareholder base to the stock, supporting valuation over time. Given elevated share prices, along with an awareness of negative optionality and an external management structure with poor incentives, Phoenix has very rarely held any position in BWP¹. As at the end of June, BWP traded at $3.52 per unit, approximately a 7% discount to the pro-forma net tangible asset backing of $3.79 per unit. The capitalisation rate used to deduce this value compares favourably to recent transactions. All told, this transaction removes two “snags” with investing in BWP. Namely, a relatively short WALE, creating a large degree of uncertainty in the short to medium term and perhaps more importantly, aligns incentives between BWP’s management and those of independent unitholders². Phoenix has also been impressed with the quality of BWP management and board members and the transactions they have undertaken.

Given this and the stock’s reasonable valuation, the portfolio has begun purchasing BWP units for the first time in a long time. Owning a rock solid portfolio of properties leased to one of the strongest tenants in Australia, with a strong, efficient and aligned management team, at a discount to somewhat conservative independent valuations, seems like a worthy investment.

¹ Phoenix has briefly held positions in BWP in times of temporary weakness, but quickly reduced the position as it returned to fair value.

² The proposed remuneration framework laid out in the meeting booklet is top quartile for property companies under coverage, with remuneration outcomes closely linked to shareholder returns.

About Cromwell Phoenix Property Securities Fund

Read more about Cromwell Phoenix Property Securities Fund, including where to locate the product disclosure statement (PDS) and target market determination (TMD). Investors should consider the PDS and TMD in deciding whether to acquire, or to continue to hold units in the Fund.

Find out more

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August 8, 2025

Stock in Focus – Hammond Manufacturing

Jordan Lipson, Fund Manager, Cromwell Phoenix Global Opportunities Fund

More than 100 years ago, Oliver Hammond was on the way to supporting a nine-person family in a small house behind train tracks in Guelph, Ontario, Canada. Seeking to improve the family’s life, Oliver set up a pedal-powered lathe in a backyard shed. Oliver and his two sons worked in the business until Oliver’s early death, at which point his wife, Lillian, continued the business with her sons and daughters. Foot power soon gave way to electricity, and the company, then known as O.S. Hammond and Son began producing radio sets, battery chargers and related devices.

Snapshot

Background

Founded over 100 years ago in Guelph, Ontario, Hammond Manufacturing (HMM) started as a family-run business making radio sets and battery chargers. Today, it focuses on electrical enclosures, racks, and cabinets. In 2001, the company split into two:

HMM (enclosures) with Robert Hammond as Chair and CEO and controlling shareholder of HMM
Hammond Power Solutions (HPS) (transformers) with William Hammond as Chair and controlling shareholder of HPS

Both are listed on the Toronto Stock Exchange and serve similar markets, but their valuations differ significantly.

Valuation gap: HMM vs. HPS

HPS: Market cap over $1.5 billion¹, trades at 17x earnings, with strong investor relations and analyst coverage.
HMM: Market cap just over $100M, trades at 6x earnings, with minimal investor outreach and limited public float (40% owned by CEO Robert Hammond).

Despite HMM’s solid growth (10% revenue and 25% EBIT CAGR over 7 years), it remains undervalued.

Strengths of HMM

Conservative, long-term focus: CEO Robert Hammond emphasizes security and stakeholder value.
Customer-first approach: High inventory levels and custom solutions ensure fast delivery and strong relationships.
Property ownership: Owns over 500,000 sq ft of facilities, held at depreciated cost—adding hidden value.
Clean financials: Transparent reporting and disciplined capital allocation.

Valuation potential

Comparable company: Nvent (owner of Hoffman, HMM’s main competitor) trades at 18x EBITDA.
Recent deal: Nvent bought Trachte (similar business) for 12x EBITDA.
If HMM were valued similarly, its share price could be 4x higher.

Outlook

HMM trades at a deep discount to both earnings and book value.
While a takeover is unlikely (due to Robert Hammond’s conservative approach), the business is well-positioned for long-term value creation.
Investors may need patience, but the current price offers a compelling opportunity.

1 All currency in this commentary refers to Canadian Dollars unless otherwise noted.

In the 1930s, Hammond created its first electrical racks and cabinets, the products that make up the core of Hammond Manufacturing’s business today. With the exploding demand for electrification in the 1950’s and 1960’s, Hammond became a meaningful supplier of electrical transformers, alongside its enclosures, racks and cabinets. In 2001, the business was split, with the transformer division spun into a new company, Hammond Power Solutions (HPS), and the enclosures business remaining with Hammond Manufacturing (HMM). Robert Hammond is Chair and CEO and controlling shareholder of HMM, while William Hammond is Chair and controlling shareholder of HPS. Both businesses are listed on the Toronto Stock Exchange, serve similar end markets and have similar growth drivers, yet their valuations could not be more different.

A tale of two Hammonds

HPS has unequivocally delivered great results in recent times, with growth driven by demand from data centres as well as other industrial applications. HPS also has a highly professional investor relations function, with detailed quarterly results presentations, slick ESG reporting and analyst coverage by major Canadian investment banks. HPS has been rewarded with a fair valuation. It has a market cap above $1.5 billion¹ and trades on a price to earnings ratio above 17x. While HMM’s business hasn’t quite kept pace with HPS’s eye watering growth, over the past seven years it has grown revenues at approximately 10%
per annum and earnings before interest and tax (EBIT) at a rate of approximately 25% per annum. For all this good work, HMM has been “rewarded” with a price to earnings ratio of approximately 6x. HMM’s market capitalisation is just above $100 million, and shares are almost 40% owned by Robert Hammond leaving limited free float, partly explaining the cheap valuation. Furthermore, HMM’s investor relations function is almost non-existent, with a website out of the early 2000s and major updates from the Chairman limited to concise yearly letters in a mostly black and white annual report. As an example,
the entirety of the most recent letter can be seen here.

The lack of shiny presentations is not of concern. The financial statements are remarkably clean and understandable, and capital allocation priorities are clear, reasonable and focused on long term stakeholder outcomes. This is preferable to well marketed presentations, with highly adjusted earnings figures, which do not resemble the earnings power of the business. Despite this, it may in part explain some of HMM’s cheap valuation.

A safe and secure business

Despite the fast pace of growth, Robert Hammond values running a secure, conservative business. He ends each yearly letter stating, “we continue to build long term security and success for all our associates”. Still retaining family business values, there is a focus on promoting within and allowing “associates” to build a career at HMM. As Robert Hammond describes, “Grandma Lillian” taught the importance of customer service excellence and making your word your bond. This can be clearly seen in the strategy of HMM. It maintains significantly higher inventory levels than competitors so customers can receive their mission critical products in quick time. This held the company in relatively good stead during the COVID-affected period when supply chains came under pressure and demand meaningfully accelerated. The customer focus can be seen in the hands-on customisation options provided to customers and deep relationships with distributors, with sales staff even going on some distributor’s podcasts to spruik their wares.

Beyond this, HMM owns most of its manufacturing and corporate property footprint. This property is held at depreciated cost on its balance sheet. These properties have been acquired over a long period of time, including its main facility and corporate head office in Edinburgh Rd, Guelph, which was built in 1953. More recently, a 97,000 square foot facility was built when it became clear the existing production facilities were a constraining factor to the business. The property portfolio totals more than 500,000 square feet. HMM trades at a discount to its unadjusted book value, however applying a (very) conservative Despite the fast pace of growth, Robert Hammond values running a secure, conservative business. He ends each yearly letter stating, “we continue to build long term security and success for all our associates”. Still retaining family business values, there is a focus on promoting within and allowing “associates” to build a career at HMM. As Robert Hammond describes, “Grandma Lillian” taught the importance of customer service excellence and making your word your bond. This can be clearly seen in the strategy of HMM. It maintains significantly higher inventory levels than competitors so customers can receive their mission critical products in quick time. This held the company in relatively good stead during the COVID-affected period when supply chains came under pressure and demand meaningfully accelerated. The customer focus can be seen in the hands-on customisation options provided to customers and deep relationships with distributors, with sales staff even going on some distributor’s podcasts to spruik their wares.

A comparison

The largest competitor to HMM’s electrical enclosure business is Hoffman, which is wholly owned by US-listed business Nvent. The enitre company has a market capitalisation of more than USD$12 billion and owns related businesses such as those that produce cable management and power management products. Nvent recently acquire Trachte, a business that manufactures control buildings, for USD$695 million, or a price of 12x its forecast earnings before interest, tax, depreciation and amortisation (EBITDA). The company was at pains to equate the quality of this business to its enclosures business, with the CEO stating, “these control buildings are essentially larger enclosures.” If HMM were to be valued at Trachte’s acquisition multiple its share price would be four times higher (without adjusting for HMM’s property ownership). Nvent itself is valued at an enterprise value to EBITDA ratio of approximately 18 times. Valuing HMM at this multiple produces silly outcomes for HMM’s potential equity returns. Nvent’s enclosure business does have higher earnings margins and return on assets than HMM, but much of this is attributable to the fact this segment does not include apportioned centralised costs. In addition, Nvent runs with a leaner inventory profile and does not own its property.

Nvent has refined its portfolio acquiring new businesses and selling those it that no longer fit into its “connect and protect” businesses. In Nvent’s most recent earnings call, its CEO stated, “And on the acquisition M&A pipeline question, I would like to say that where we play in this Connect and Protect space, it’s about a $100 billion opportunity. And remember, at $3-plus billion, we’re one of the larger players. So it’s very fragmented. And I think there’s a lot of opportunities.” HMM’s business would fit perfectly for Nvent’s desires, as there would no doubt be an abundance of synergies to extract. It is highly likely that this would be anathema to Robert Hammond, who prefers to run a more secure, but less efficient business focussed on all stakeholders, including customers and employees. However, it is likely that Nvent would pay many multiples of today’s share price to acquire HMM.

Where to from here?

These valuation exercises are important to do, but an instant realisation event is highly unlikely. HMM does however trade at a price to earnings ratio of approximately 6x and a meaningful discount to any assessment of true book value. These valuation levels imply the business is antagonistic to shareholders or that earnings aren’t sustainable. On the first count, Robert Hammond is a major shareholder and receives below market remuneration. He has also previously discussed that HMM shares are owned by hundreds of employees. On the second, while HMM’s end markets are very much cyclical, the business has produced operating profits each year since 2002 and is the beneficiary of some industries facing an elongated period of secular growth. One such example is the growth in data centre development.

All in all, it is hard to say when and if HMM’s shares will reflect fair value. Its management are long-term oriented and clearly care about all stakeholders. Similarly, precisely assessing HMM’s fair value is challenging and will likely be different to an acquirer, relative to a continuation of the status quo. What can be said is the current share price reflects a very meaningful discount to fair value. We will wait patiently for this value to be reflected while Robert Hammond and the HMM team work to make the business even more valuable in the future.

¹ All currency in this commentary refers to Canadian Dollars unless otherwise noted

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May 14, 2025

Stock in Focus – Nam Cheong Limited

Jordan Lipson, Portfolio Manager of the Cromwell Phoenix Global Opportunities Fund

The Cromwell Phoenix Global Opportunities Fund added 2.1% in absolute terms over the March quarter, outperforming global indices large and small. Nam Cheong Limited (NCL) was the biggest contributor, rising meaningfully as investors become more comfortable with its post-bankruptcy future. This article delves into NCL’s journey, its strategic partnerships, and the factors contributing to its compelling risk/reward opportunity.

Almost 70 years ago, a 14-year-old Tan Sri Datuk Tiong Su Kouk (Tan Sri) was given 3.40 Malaysian Ringgit (less than AUD 2) to start a career as a fishmonger. A hard work ethic and a focus on customers ensured early success. In his 20s, Tan Sri saw the benefits of technology from Japan, in particular the newly discovered food freezing technology. Malaysians were initially unwilling to trust that frozen food would be edible, so Tan Sri gave out frozen food for free to convince customers to buy his produce. This innovation led to the creation of CCK Consolidated, a vertically integrated leader in frozen foods in Malaysia, which is still in business, controlled by Tan Sri and listed on the Malaysian Stock Exchange. Staying close to the seas, Tan Sri subsequently partnered with Chinese shipbuilders to start a business known as Nam Cheong Limited (NCL).

NCL today is the owner of 36 offshore support vessels (OSVs) which service the Malaysian offshore energy sector. Running NCL has been anything but smooth sailing. The company built and acquired as many boats as it could during the last offshore drilling boom, heavily relying on debt, much like others in the industry. This business is exceptionally cyclical and NCL was forced to initially restructure its debt in 2018 to meet payments to creditors. Whilst business was hardly thriving, things somewhat steadied, until the COVID-19 pandemic caused oil prices to retreat and cripple the OSV business.

This led to NCL declaring bankruptcy. Share trading was halted, and negotiations began with lender banks. With a recovery on the horizon, after meaningful negotiations, the final restructure agreement was signed and approved on 1 March 2024. Under the terms of the deal, much of the debt would be converted to equity, Tan Sri would provide more capital to the business in return for new equity, and the remaining debt would be converted into “equity friendly” liabilities, to be repaid over an extended period at below market interest rates.

Phoenix in the Market

Phoenix has followed the OSV market for some time, with the domestic Cromwell Phoenix Opportunities Fund initially investing in MMA Offshore (MRM). This investment was a significant contributor to performance as it eventually received a takeover bid at a robust valuation. This portfolio has also successfully invested in industry leader Tidewater (NYSE:TDW) previously. Both these investments provided relevant background for assessing NCL upon its restructure and eventual relisting on the Singapore Stock Exchange. In particular, valuations could be more precisely assessed using the independent expert’s report associated with MRM’s takeover.

What happened next?

Upon relisting, NCL’s shareholders included the banks who had converted their debt to equity, prior NCL investors who had been diluted and were forced to hold their shares through bankruptcy for 4 years and Tan Sri, who was unlikely to trade his shares. Unsurprisingly, the banks were large scale sellers upon relisting, trying to recoup some of their investment as quickly as possible. Furthermore, any potential buyers would have to assess both complex financial statements and detail provided in the bankruptcy documents to gain an understanding of the current state of the NCL business.

Despite the rocky history, the truth was that business was booming. As a result of the cyclical downturn in the sector, the number of OSVs in operation had shrunk materially and there was no prospect of any new vessels being built, given that day rates were less than half of what was needed for newbuilds to break even. Further aiding NCL is Malaysian law, which preferences Malaysian-flagged vessels for Malaysian offshore activities, which are dominated by state owned enterprise, Petronas, which has increased activity in recent periods. NCLs fleet is also (almost incomparably) young at just over 7 years old. NCL’s current financials are encumbered by existing contracts, which were set at historic day rates. Profitability is likely to improve when these contracts conclude, and pricing is reset at current market rates.

Upon relisting, NCL traded at less than SGD 0.15 per security. Sadly, we missed this initial opportunity, however after assessing the detail of the transaction, we initially purchased a stake in NCL at SGD 0.365 per security. Using somewhat conservative estimates, NCL’s market net asset value (NAV) was assessed to be at least SGD 1.30, making this opportunity appear highly attractive. It is worth noting that NCL is not at all promotional, continues to have (temporarily) complex financials, and does not provide market updates beyond legal requirements.

Tan Sri does however have a history of solid governance and has demonstrated care for stakeholders, so we were happy to partner with him over the medium term as NCL’s value became evident. This has occurred more rapidly than anticipated, with NCL finishing the period at a share price of SGD 0.66. We sold some of our holding in NCL during the quarter as the risk/reward proposition has now become less compelling and to limit position sizing given the volatile nature of the OSV sector.

Cromwell Global Opportunities Fund

Value of $100 invested at inception

Past performance is not a reliable indicator of future performance

Conclusion

At period end, NCL remains a top 5 holding as it continues to trade at a substantial discount to NAV. Recent market updates have been mixed, with the global OSV industry somewhat slowing due to the decline in the oil price. However, Malaysian competitor Keyfield Services recently released a strong result and provided an optimistic outlook statement. In particular, Keyfield stated “based on supply and demand analysis of OSVs in Malaysia, there will be a critical shortage of AHTS < 80MT beyond 2030, unless owners acquire new vessels”. These vessels represent the majority of NCL’s NAV. There is no doubt NCL operates in a cyclical industry which has seen countless bankruptcies over time, so an investment is not without risk. However, with a young fleet, market tailwinds, extremely shareholder friendly debt and an aligned controlling shareholder, NCL still represents a compelling risk/reward opportunity.

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Learn

Stock in Focus – Bollore SE

Jordan Lipson, Portfolio Manager, Cromwell Phoenix Global Opportunities Fund

The Bollore Galaxy – An Update

Simplicity hidden by complex structure

Some action towards discount closure

“At period end, valuing UMG at its prevailing share price, Odet’s net asset value is more than 280% above its share price (not a typo!)”

The UMG conundrum

The Longer Game

Explore the Stock in Focus series

Stock in Focus – BWP Trust

Stock in Focus – Hammond Manufacturing

Stock in Focus – Nam Cheong Limited

News

Cromwell’s continues to be part of the NABERS Sustainable Portfolios Index 2026

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Key Highlights

Financial performance

Investment portfolio performance

Strategic growth initiatives

Investment Management update

Outlook

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Stock in Focus – Young & Co.’s Brewery PLC

Learn

Stock in Focus – Young & Co.’s Brewery PLC

Jordan Lipson, Portfolio Manager, Cromwell Phoenix Global Opportunities Fund

Old business in a modern world

Looking back

“In this tough environment, Young’s grew like-for-like sales by 5.7% in the previous financial year and has grown that figure by more than inflation for over a decade.”

Moving on

State of the market

The value

Footnotes

Explore the Stock in Focus series

Stock in Focus – BWP Trust

Stock in Focus – Hammond Manufacturing

Stock in Focus – Nam Cheong Limited

Learn

Stock in Focus – Alkane Resources

Jordan Lipson, Portfolio Manager, Cromwell Phoenix Global Opportunities Fund

Sitting on a Gold Mine

Gold vs Gold Miners

“Across 2023 and 2024 the price of gold rose 43% (in USD), whereas gold miners only rose ~17%.”

What happened?

Alkane Resources

Current positioning

Footnotes

Explore the Stock in Focus series

Stock in Focus – BWP Trust

Stock in Focus – Hammond Manufacturing

Stock in Focus – Nam Cheong Limited

Learn

CEO Update

Operational highlights

Financial performance

Strategic direction

Landmark Barton, ACT development

Growth in AUM through strategic industrial portfolio acquisition

Looking ahead

Read more about the latest strategic developments

Learn

Turning operations into strategic advantage: Cromwell’s Facilities Management Team leads the way

The role of Facilities Managers

Performance that drives value

Key milestones

Learning experiences driving service excellence

Elevating industry standards

Conclusion

More insights from our property team

Cromwell Unveils Landmark Project and Debt Refinance

Strategic Asset Enhancement: Unlocking Long-Term Value at 400 George Street

An inside look: Transforming office spaces

Key update
In June, BWP Trust announced two major changes: