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Case Studies

BBY's has extensive experience in solving problems for its corporate clients.

In the following success stories, BBY solved numerous capital raising issues, delivered M&A outcomes, strengthened the share registers of the companies concerned and assisted shareholder communications.


BBY’s top-ranked Senior Energy Analyst identified the potential of BURU Energy at the time it was spun out from Australian Worldwide Exploration Limited, AWE.

Scott Ashton produced his first comprehensive report on BRU on September 1st 2008 titled "Unleashing the Canning – Exploration Success Could Deliver Huge Upside", with a potential valuation of A$3.21ps. The price at the time was A$0.30 and BRU’s market cap was A$48.6M.

BBY was the only broker to initiate comprehensive company research on what BBY was convinced was a compelling story, with BRU "providing a cheap entry point to a leveraged Canning basin exploration oil play with large upside potential."

Immediately after initiation, BBY conducted over 100 one-on-one meetings with potential investors across Australia and in overseas investment markets, highlighting BRU’s compelling investment case.

Scott Ashton has since released over a dozen notes on BRU, rating the stock a "Strong Buy". BRU has continually re-rated and BBY’s support has been unwavering, at times broking around 60% of the stock on a month-by-month basis, and acting as broker to the Block Trade of over 13% of the company in July 2011.

BBY clients have reaped the rewards of our insights and efforts with the BRU story, with some clients realising a gain approaching 1000% since initiation (March 2012).

BBY’s target price has also climbed with a "Strong Buy" and price target of $5.00 per share supported by a DCF valuation of A$4.70 per share.

As of March 2012, BBY clients who bought in to Buru at the coverage initiation price of $0.30 would see returns of approximately 1,097%.



In late 2007, Coalworks was introduced to BBY through a corporate relationship. CWK had a vision to be a leading energy producer in Australia, building an inventory of coal assets in world-class coal provinces and bringing them into production and profitability.

After the completion of the company’s A$2.5M Pre-IPO (managed by BBY), CWK was able to drill its first major project, Oaklands North, and deliver a large JORC resource. BBY then acted as underwriter to CWK’s IPO which listed on the ASX in May 2008, raising A$25M. BBY introduced CWK to global institutional and high net worth investors that were aligned with CWK's visions.

Following the IPO, BBY was appointed CWK’s Corporate Adviser as it developed its portfolio of coal assets to include Vickery South and Ferndale, and continued to market the company via roadshows and presentations.

In December 2010, BBY raised ~A$30M via a placement to global institutions. As part of the placement, Nathan Tinkler’s Boardwalk Resources took a 19.9% position. In conjunction with the placement, BBY also acted as adviser to CWK on a A$25M 50/50 JV with Boardwalk Resources Ltd (BWK) to develop its Ferndale coking and thermal coal project.

CWK then announced that it planned to spin off its non-core assets the Hodgson Vale and Ashford projects into Orpheus Energy Limited (OEG), who will also focus on near-production Indonesian coal opportunities. BBY assisted OEG in completing a A$3.45M Pre-IPO was the lead manager to the Orpheus IPO listedo on the ASX.

Over the course of 2010, the share price of CWK gained approximately 200% and was a stellar stock market performer.

In August 2012, CWK was acquired by Whitehaven Coal (WHC). Clients who bought the stock on BBY’s BUY recommendation in 2008 at A$0.19 per share would have experienced a 426% return at the acquisition price of A$1.00.


In August 2008, BBY reported that Credit Corp Group (CCP) was undervalued with its shares trading at a 40% discount to Net Tangible Assets (NTA). BBY flagged this as an opportunity and documented CCP’s Corporate Turnaround Road Map.

As part of the Road Map, BBY identified key milestones which would act as positive catalysts including; the appointment of a permanent CEO, further restructuring of the business, removal of litigation risk, clarity around operating strategy, balance sheet de-leveraging and visible earnings growth.

In July 2009, BBY placed a STRONG BUY recommendation on CCP as the company had made good progress on its turnaround. This included management changes, balance sheet de-leveraging and improved earning visibility. By August 2009, CCP had executed most of the turnaround steps previously identified by BBY in August 2008 and we maintained our STRONG BUY recommendation.

Credit Corp is now Australia’s largest debt buyer, with an excess of $3.6 billion in outstanding receivables. Since July 2009, CCP’s share price has rallied 706% from A$1.22/sh to A$9.83/sh, achieved during a time where consumer credit growth rates declined from 8% in 2008 to 2.5% in 2012.



With bullish share price momentum since late 2010, Western Australian gold explorer Excelsior Gold Limited (EXG) was recorded as one of the top 20 highest performing stocks on the ASX for 2012.

Receiving minimal coverage and focus in the Materials space, BBY recognised the exploration potential of EXG’s Kalgoorlie North Gold Project, and commenced MONITOR coverage in August 2012. As EXG continued to demonstrate exploration success with the discovery of significant extensions to its Zoroastrian deposit, and provided further evidence the deposit could underpin a standalone operation, BBY upgraded its coverage to STRONG BUY in January 2013, with a price target of A$0.45 per share (NPV of A$0.58 per share).

In August 2012 EXG’s stock was priced at A$0.13 per share, and has risen approximately 85 per cent since BBY’s first report on the stock at this time. In its initiation report, BBY highlighted the latent potential of EXG’s tenement package, management’s experience and knowledge of the local geology, and the company’s substantial drill database, all factors which have helped EXG lift its resource base, with the increases at a discovery cost of less than A$10/oz. The ongoing success at low discovery cost has been the predominant driver of EXG’s share price.

In August 2012, BBY recognized the A$0.13/sh share price could be supported by a toll treatment of the open-cut Zoroastrian (only 174koz of EXG’s 869koz in resources), and the potential for corporate activity given the prospectivity of its tenements, and proximity to the under-utilized processing plant at Paddington. In its January report, with the share price at A$0.24/sh, BBY maintained the view that the 429koz Zoroastrian deposit can become a company maker. With the increase in size and average grade at 2.89g/t, BBY has become increasingly confident in Zoroastrian’s potential to support its own processing plant, with modest initial A$60M capital requirements, which could be partly funded by toll treatment of satellite deposits.

Risks include currency and gold price movements, and there is potential for unforeseen regulatory delays involving permitting infrastructure relocation. Our target price is at a discount to our valuation given BBY’s assumptions in the absence of a published PFS; we expect the gap to close as PFS data is published. Catalysts and near-term news flow for the stock will be ongoing drilling and resource updates, and delivery of its pre-feasibility study in the June quarter 2013, as well as any potential corporate activity which could include toll treatment agreements, JV development agreements, or asset sales.




BBY Research is very proud to have been the first group to initiate coverage of the Fortescue Metals Group (ASX:FMG), placing a “Buy” on the future mining behemoth from day one. At that time in January 2005, the aspiring miner had a market capitalisation of A$594 million. In the same year, BBY secured around US$100M for Fortescue through two convertible notes in January (A$40M) and February (US$70M) through our large offshore institutional clients. Fortescue reached a significant milestone in Q3 2005, when it topped the A$1B market capitalisation level, with the help of a strong US share register introduced by BBY. The following year, BBY helped secure US$400M from Leucadia National Corporation (a NYSE listed company) and in 2007, BBY was a Co-Manager to a placement for Fortescue that raised A$504M.

BBY has hosted several global Fortescue Roadshows and featured Fortescue at a number of its annual Conferences, which have attracted significant strategic offshore investors to the register. Within 3 years from our first buy recommendation, Fortescue had become the best performing stock this millennium returning over 4,200% to investors – an investment of just $1,000 would have turned into $42,000.

BBY has the courage to look at stories with a fresh perspective and back in 2005, we saw the potential of Fortescue. To date, Fortescue remains Australia’s third largest mining company, and its market capitalisation has grown to almost A$17 billion. The market is inefficient and there are always situations where mispriced companies have been overlooked by investors. We take on and unlock these situations into high-potential opportunities for our clients, as we have the right experience to identify viability within companies.


BBY initiated coverage on the Australian child care services provider, G8 Education (GEM) in March 2011. The report captured GEM’s potential to provide promising returns and value to shareholders with its disciplined and cost-focused management, led by Managing Director Chris Scott, who also grew S8 Limited through successful acquisitions.

A stock with minimal coverage in the market and a relatively small market capitalization, BBY identified GEM’s impending success from day one. The rationale for this optimistic view was underpinned by several factors:

  • Management formed by S8 Limited, an organization of great scale which achieved a high CAGR in EPS terms of more than 50% for six years;
  • Operations within markets that have robust demand for childcare and firm support for the industry from government (Australia and Singapore);
  • A fragmented industry, providing opportunity for GEM to grow through acquisition.

BBY saw risks early on regarding external factors beyond GEM’s control in the company’s operating environment. Risks included high labour costs and a labour shortage in the Australian market, worsened in April 2011 when the Australian childcare workers union demanded a 50% pay-rise. These impacted the stock and resulted in a bearish share price movement throughout 2011, resulting in several downgrades to GEM’s 12 month price target. Simultaneously, a legal battle regarding the acquisition of Cherie Hearts in Singapore distracted investors from the strengths of management, with its track record of successful growth.

Since late 2011, an influx of positive milestones has resulted in an upside to GEM’s share price, prompting a confident view of the stock by BBY. Strong Buy’s, Buy’s and Target Price upgrades have been awarded since, most recently a target price of A$2.80 per share in April 2013, a large increase on the target price of A$1.15 per share set on initiation. The presence of the Singapore court case deteriorated and light shone on positive earnings results. Investors also began to recognize management’s ability to increase occupancy in both Singapore and Australia, partially sourced from government family friendly policies. Management also led several acquisitions of childcare and early childhood learning centres, adding 16 well-sized centres to its portfolio in September 2012, secured a financing facility and witnessed a successful capital raising. Additional acquisitions have persisted through 2013, BBY continuing to identify GEM's disciplined approach to its acquisitions, which is paying no more than approximately 4x EBIT, as a positive trait of management and company strategy.

Given the context of a tough market, GEM has sought to shine through as an absolute “gem” with its rising share price, earnings and investor confidence, supported by strong government incentives and support for the childcare industry which the firm operates in.  

In October 2011, the time of our recommendation change to BUY from UNDERPERFORM, GEM traded at A$0.50/sh. As of June 2013, those who bought GEM at this time, have seen a 404% increase in share price. 


At BBY, we believe in having the courage to look at stories from a fresh perspective. When Linc Energy (LNC) was referred to BBY by a corporate client in late 2005, we foresaw the potential in the Group’s coal assets and plans to develop their Underground Coal Gasification technologies. We thus backed LNC through marketing road shows across Australia, Europe, Asia and North America and were the lead broker in the successful ASX Initial Public Offering (IPO) on 10 May 2006 at A$0.25. Following key capital raisings led by BBY, the company reached an all-time high of A$5.19 in September 2008. In that same year, BBY played an instrumental role in LNC’s takeover of Sapex Limited, and we were awarded “Corporate Deal of the Year” by the Australian Stockbrokers Foundation for one of our hugely successful LNC capital raisings. With the aid of BBY’s drive and commitment to the prosperity of the company, LNC became the best-performing ASX stock in 2008. BBY has since raised over A$270 million for LNC in six capital raisings, including an August 2009 A$57.4 million placement and a A$20 million Underwritten Share Purchase Plan, where we successfully introduced large strategic investors from Australia and offshore.

Despite LNC’s successful run on the ASX, the company announced on 2 October 2013 that it would be delisting from the ASX and requesting regulator and securities exchange permission to list immediately on the Singapore Exchange (SGX). This strategic decision was made in an aim to improve access to oil & gas and energy investors from around the world. As an international capital markets centre and an emerging oil and gas hub, Singapore is an ideal platform to facilitate LNC’s long term Asian growth strategy.

LNC has been a stellar performer on the ASX since listing. Clients who took part in the IPO and sold when it delisted have seen a 300% return. While this company is no longer trading on the ASX*, clients can still buy and sell LNC shares on the SGX** through BBY.

BBY is proud to have supported this company through the various stages of its development.

*The ASX is Australia's primary securities exchange. The ASX has an average daily turnover of $4.685 billion and a market capitalisation of ~A$1.4 trillion, making it one of the world's top-10 listed exchange groups.

**The SGX owns and operates Singapore's Securities and derivatives exchange, as well as their related clearing houses. The SGX has an average daily turnover of S$1.4 billion and a market capitalization of ~S$7.8 billion.


BBY’s reputation of making the right calls is evident in our insights regarding the journey of Swick Mining Services (SWK).

BBY initiated coverage on SWK in June 2012, placing a STRONG BUY recommendation on the stock, and consistently maintaining it since. BBY clients have reaped the profuse rewards of this call, as share prices have rallied since initiation, jumping from $0.29 to $0.38 in late March 2013 – a 31% increase.

SWK is a provider of underground drilling services using proprietary mobile rigs, and is uniquely positioned in the market as they design, develop and use its own underground diamond drillings rigs as opposed to relying on third party products from suppliers. The overall result is; lower capital costs, a higher reliability rate and higher drilling rates than its competitors. Recently, the company has also entered the growing world of robotics, with the purpose of developing its own rigs, improving safety and simultaneously reducing labour costs.

SWK’s underground drilling business targets low-cost Brownfield production related contracts, shielding itself from volatile Greenfield exploration expenditure. June 2012 saw BBY commend the company’s revenue being heavily tied to gold and copper/gold production - commodities which had a positive price outlook. Company focus has been directed to these commodities since making its nickel contracts and focus redundant.

These competencies are the reasons why BBY has unswervingly backed SWK’s story.

Moving away from optimistic stock news, BBY’s confidence in SWK has also been maintained by milestone company achievements, including increased improvements in rig utilization, particularly in its North American operations, expected to develop further. SWK has also seen growing ROIC, further progression in drilling and productivity rates relative to competitors, as well as having small exposure to steel making materials, meaning that the stock will avoid large falls if demand for steel slows.

In strengthening its call, BBY has actively compared SWK to similar companies such as its Canadian counterpart, Orbit Garant. It has been shown that by being leveraged to exploration spend, as opposed to production in brown-field operations like SWK, has made Orbit Garant a poor performer.

Outlook for SWK remains bright; BBY is praising the firm on cracking the North American market with a contract win with Nyrstar, for actively pursuing opportunities in Europe and SWK’s continual investment in R&D, which has the aim of using technology to double metres per man hour. The concurrent slowing in gold prices also prompted BBY’s Industrials Team to identify low C1 cash costs (<US$1000/oz) at the mines where the stock has rigs. Although current contracts held can easily be cancelled on short notice, BBY assures that SWK is favorably positioned and that closing down production due to cost concerns is highly unlikely given the favourable cash costs of production. 

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