DMXCP Monthly ReportMay 2026 – DMX
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An investment company managed by
DMX Asset Management Limited ACN 169 381 908 AFSL 459 120 13/111 Elizabeth Street, Sydney, NSW 2000 DMXCP directors Roger Collison, Dean Morel, Steven McCarthy |
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Dear Shareholder,
DMXCP’s NAV decreased 1.0% (after all accrued fees and expenses) for May 2026. The NAV as at 31 May 2026 was $2.8162, compared to $2.8448 as at 30 April 2026. The All-Ordinaries Accumulation Index increased 1.2%, the Small Ordinaries was up 1.9%, while the Emerging Companies Index rose 0.9%.
May Performance Despite some strong re-rates in the portfolio during May, much of the portfolio drifted down on little news, as investors continued to be cautious towards industrial micro-caps, particularly less liquid ones. Material contributions came from EDU Australia (ASX:EDU) which increased 20%, Senetas (ASX:SEN) up 27%, and Bioxyne (ASX:BXN) which was up 38%. However, these positive contributors were insufficient to offset a number of detractors, the most material being Verbrec (ASX:VBC) down 17%, Advanced Braking (ASX:ABV) which fell 21% and Change Financial (ASX:CCA) down 21% - all of which fell on no specific company news.
During the month we attended several investment conferences, where a number of companies that we own or that we are following closely were presenting. The feedback from management of many of these companies, as well as from other companies that we speak to, is that they continue to experience ongoing impacts from the Middle East conflict, including from delays in decision making, cost inflation and supply chain and logistics challenges. When combined with recent interest rate uplifts in Australia, these business headwinds more broadly are reflected in the Australian third quarter GDP growth moderating to a modest 0.3%.
While our portfolio companies continue to grow at much higher rates than this, including many recording strong double digit growth, we do expect some pull back in growth over the next few months. As we noted last month while our holdings, to date, are generally delivering good results notwithstanding the current economic uncertainty, the deterioration in economic conditions does pose an increasing risk to earnings. Energy One (ASX:EOL) is an example of one where growth expectations have been somewhat tempered. During the month it updated the market and confirmed it was comfortable with its FY26 consensus revenue (~$72m) and EBITDA (~$15m, 20-22% margin). However, it also noted that it now expects FY26 ARR growth of 13%, which will be below the 15-20% target previously communicated to the market. The shortfall, in part due to timing of project commencements, means that EOL’s FY27 revenue base starts below the level the market had been expecting. This timing impact is partly explained by two large multinational industrial customers actually increasing the scope of their projects and delaying the implementation, however even allowing for this, growth has clearly decelerated from where it was six months ago. Positively, the underlying pipeline remains extremely strong and continues to grow at >20% and the key tailwinds here (energy transition and volatility, and battery optimisation) remain very much intact. However, in an uncertain market, any shortterm earnings concerns are aggressively punished, so it was not surprising to see EOL down 12% for the month, and is now ~40% off its highs.
Australian Microcap Investment Conference
One of the events we attended during the month was the Australian Microcap Investment Conference, where three of our portfolio positions were presenting, each of which provided solid updates:
• Laserbond’s (ASX:LBL) new CEO, Rob Freeman, presented an encouraging outlook, highlighting significant international growth opportunities for LBL’s product division, with new components designed for the oil and gas sector gaining traction. In relation to LBL’s services business, LBL noted that the equipment replacement cycle was normalising, and LBL are seeing improved efficiencies from recent machinery upgrades. And having secured the significant $2.4m opportunity with Komatsu (to be delivered and have its revenue recognised this half), Management believesthere are further potential near term opportunities with Komatsu. Additional OEM deals outside of Komatsu are also in advanced negotiation. This interest clearly demonstrates the commercial value of the LBL technology / intellectual property. LBL also highlighted the progress with Gateway – its 40% owned associate which had an LBL laser cladding cell installed last year. In the first half Gateway’s revenue increased 24% to $25m. Taking full ownership of Gateway would result in LBL consolidated revenue exceeding $100m – providing LBL with a compelling opportunity to scale its margins.
• Comms Group (ASX:CCG), presented its medium-term strategy as it looks to become a leading cloud communications, collaboration and secure managed IT solutions provider across the Asia Pacific region. CCG is targeting +10% organic revenue growth through its global and secured managed IT divisions, and longer-term EBITDA margins of +15% as the business scales its corporate overhead costs. With FY26 revenue guided to over $75m, a medium-term target of $100m revenue and $15m EBITDA is not unreasonable here, compared to its current EV of ~$45m – providing a material re-rate opportunity. In relation to year-to-date trading, the CEO noted a strong revenue performance across the business with all divisions seeing organic revenue growth and building their pipeline. Wins across a range of corporate and government clients has seen new ARR of $7.7m (compared to expected FY26 revenues of $75m) signed in the 9 months to 31 March 2026.
• Raiz (ASX:RZI) – provided an update on the progress of its new product development initiatives that it is hoping to introduce and begin to sell to its customer base this calendar year. The first half of FY27 is expected to see RZI launch its US-listed equities trading to enable direct access to investing in the US market as well as direct ASX trading where infrastructure development is underway to enable direct single HIN trading for direct ownership. Before this can take place, RZI is working on implementing instant payment functionality to enable real-time trading capability. Importantly, this trading capability is likely to extend a user’s journey on the RZI platform, particularly for those users who wish to move beyond passive investing. On assumptions of $2 per trade pricing, 24 trades per year and 25% take up across its user base, this could increase RZI’s profit by >$2m per year. In the meantime, RZI also confirmed its FY26 EBITDA in the range of $4.5m - $5.5m, which is a solid uplift versus its FY25 EBITDA of $2.8m. Post month end, we were surprised to see the exit of RZI’s long-term CEO, Brendan Malone, who had performed well, seeing the business into a strong financial position with a maiden profit. His replacement is well-credentialled - Craig Keary, who previously led Selfwealth (ASX:SWF) to a contested takeover.
Sub $20m market cap opportunities
Among our positions in some very small companies, (which typically have lower portfolio weightings) we are seeing evidence that the market disinterest and sell off of many of these names in recent times has reached a level where significant mispricing is now apparent:
• Investsmart (ASX:INV) during the month entered into a binding agreement to sell its Intelligent Investor business (being its subscription business and its four active ETFs to TeamInvest Private Group (ASX: TIP) for $16m. This represented a 300% premium to INV’s enterprise value of $4m at the time of the announcement. Post transaction, INV will focus on creating value from its InvestSMART branded proprietary investor wealth platform, digital investment advice and it’s growing Professionally Managed Accounts business.
• Knosys Limited (ASX: KNO), announced in May that ANZ had signed a contract extension for the continued use of its enterprise software, KnowledgeIQ (KIQ) with a contract value for the 2-year period of $3.8m. KNO will receive this as an upfront payment. This cash payment represented a 100% premium to KNO’s enterprise value of $2m at the time of the announcement. The transaction also highlights the IP value of the KIQ software, which serves a critical role as a system of record in the AI value chain, being a customer’s primary source for specific organizational data, and ensuring data accuracy, integrity, and consistency across its processes.
We continue to be active in this part of the market, including adding to our position in Motio (ASX:MXO), an out-ofhome digital advertising business, during the month. In an update at the start of May, MXO noted that its sales activity had hit record highs. MXO’s forward revenue is up 13% at the same time last year with MXO’s Q4 tracking to exceed its previous record quarter (Q4 FY25) with FY27 expected to start strongly. A key growth driver for MXO is the expansion of its health network with 960 venues at 31 December 2025 increasing to a forecast 1120 at 30 June 2026 (+17%), and 20-30 new locations being added each month which will all incrementally contribute to FY27 revenue growth. We think MXO should achieve ~$2.4m cash EBITDA and NPAT of ~$1.6m for FY26 – with a ~$15m market cap, $4m cash and a strong growth outlook heading into FY27, we think MXO represents an attractive growth set up from here.
Concluding thoughts
While the current market conditions and risk off sentiment are not ideal, we do not own the market/index. There remains investor appetite for companies with strong balance sheets that are profitable and have attractive growth profiles. For companies that are releasing positive news and updates, the market is generally receptive. Attractive opportunities do get rewarded, as we have seen with the likes of BXN (+100% this year, in a challenging market) while EDU continues its re-rate and is up 200% in the past 12 months. While the deterioration of economic conditions does pose an increasing risk to earnings, as we have mentioned above and in previous monthly updates, our companies are generally delivering good results and growing nicely. The three companies that we highlighted from the Australian Microcap Conference (LBL, CCG, RZI – all mid/upper sized weighted positions for us) are good examples of the types of companies that we own, growing their revenues organically well in excess of market at double digit rates. Ultimately, it is the sustained growth of these companies that will increase the intrinsic value of the portfolio over time, and not the peculiarities of the market.
Thank you for your continued support and look forward to updating you next month.
DMXCP’s NAV decreased 1.0% (after all accrued fees and expenses) for May 2026. The NAV as at 31 May 2026 was $2.8162, compared to $2.8448 as at 30 April 2026. The All-Ordinaries Accumulation Index increased 1.2%, the Small Ordinaries was up 1.9%, while the Emerging Companies Index rose 0.9%.
May Performance Despite some strong re-rates in the portfolio during May, much of the portfolio drifted down on little news, as investors continued to be cautious towards industrial micro-caps, particularly less liquid ones. Material contributions came from EDU Australia (ASX:EDU) which increased 20%, Senetas (ASX:SEN) up 27%, and Bioxyne (ASX:BXN) which was up 38%. However, these positive contributors were insufficient to offset a number of detractors, the most material being Verbrec (ASX:VBC) down 17%, Advanced Braking (ASX:ABV) which fell 21% and Change Financial (ASX:CCA) down 21% - all of which fell on no specific company news.
During the month we attended several investment conferences, where a number of companies that we own or that we are following closely were presenting. The feedback from management of many of these companies, as well as from other companies that we speak to, is that they continue to experience ongoing impacts from the Middle East conflict, including from delays in decision making, cost inflation and supply chain and logistics challenges. When combined with recent interest rate uplifts in Australia, these business headwinds more broadly are reflected in the Australian third quarter GDP growth moderating to a modest 0.3%.
While our portfolio companies continue to grow at much higher rates than this, including many recording strong double digit growth, we do expect some pull back in growth over the next few months. As we noted last month while our holdings, to date, are generally delivering good results notwithstanding the current economic uncertainty, the deterioration in economic conditions does pose an increasing risk to earnings. Energy One (ASX:EOL) is an example of one where growth expectations have been somewhat tempered. During the month it updated the market and confirmed it was comfortable with its FY26 consensus revenue (~$72m) and EBITDA (~$15m, 20-22% margin). However, it also noted that it now expects FY26 ARR growth of 13%, which will be below the 15-20% target previously communicated to the market. The shortfall, in part due to timing of project commencements, means that EOL’s FY27 revenue base starts below the level the market had been expecting. This timing impact is partly explained by two large multinational industrial customers actually increasing the scope of their projects and delaying the implementation, however even allowing for this, growth has clearly decelerated from where it was six months ago. Positively, the underlying pipeline remains extremely strong and continues to grow at >20% and the key tailwinds here (energy transition and volatility, and battery optimisation) remain very much intact. However, in an uncertain market, any shortterm earnings concerns are aggressively punished, so it was not surprising to see EOL down 12% for the month, and is now ~40% off its highs.
Australian Microcap Investment Conference
One of the events we attended during the month was the Australian Microcap Investment Conference, where three of our portfolio positions were presenting, each of which provided solid updates:
• Laserbond’s (ASX:LBL) new CEO, Rob Freeman, presented an encouraging outlook, highlighting significant international growth opportunities for LBL’s product division, with new components designed for the oil and gas sector gaining traction. In relation to LBL’s services business, LBL noted that the equipment replacement cycle was normalising, and LBL are seeing improved efficiencies from recent machinery upgrades. And having secured the significant $2.4m opportunity with Komatsu (to be delivered and have its revenue recognised this half), Management believesthere are further potential near term opportunities with Komatsu. Additional OEM deals outside of Komatsu are also in advanced negotiation. This interest clearly demonstrates the commercial value of the LBL technology / intellectual property. LBL also highlighted the progress with Gateway – its 40% owned associate which had an LBL laser cladding cell installed last year. In the first half Gateway’s revenue increased 24% to $25m. Taking full ownership of Gateway would result in LBL consolidated revenue exceeding $100m – providing LBL with a compelling opportunity to scale its margins.
• Comms Group (ASX:CCG), presented its medium-term strategy as it looks to become a leading cloud communications, collaboration and secure managed IT solutions provider across the Asia Pacific region. CCG is targeting +10% organic revenue growth through its global and secured managed IT divisions, and longer-term EBITDA margins of +15% as the business scales its corporate overhead costs. With FY26 revenue guided to over $75m, a medium-term target of $100m revenue and $15m EBITDA is not unreasonable here, compared to its current EV of ~$45m – providing a material re-rate opportunity. In relation to year-to-date trading, the CEO noted a strong revenue performance across the business with all divisions seeing organic revenue growth and building their pipeline. Wins across a range of corporate and government clients has seen new ARR of $7.7m (compared to expected FY26 revenues of $75m) signed in the 9 months to 31 March 2026.
• Raiz (ASX:RZI) – provided an update on the progress of its new product development initiatives that it is hoping to introduce and begin to sell to its customer base this calendar year. The first half of FY27 is expected to see RZI launch its US-listed equities trading to enable direct access to investing in the US market as well as direct ASX trading where infrastructure development is underway to enable direct single HIN trading for direct ownership. Before this can take place, RZI is working on implementing instant payment functionality to enable real-time trading capability. Importantly, this trading capability is likely to extend a user’s journey on the RZI platform, particularly for those users who wish to move beyond passive investing. On assumptions of $2 per trade pricing, 24 trades per year and 25% take up across its user base, this could increase RZI’s profit by >$2m per year. In the meantime, RZI also confirmed its FY26 EBITDA in the range of $4.5m - $5.5m, which is a solid uplift versus its FY25 EBITDA of $2.8m. Post month end, we were surprised to see the exit of RZI’s long-term CEO, Brendan Malone, who had performed well, seeing the business into a strong financial position with a maiden profit. His replacement is well-credentialled - Craig Keary, who previously led Selfwealth (ASX:SWF) to a contested takeover.
Sub $20m market cap opportunities
Among our positions in some very small companies, (which typically have lower portfolio weightings) we are seeing evidence that the market disinterest and sell off of many of these names in recent times has reached a level where significant mispricing is now apparent:
• Investsmart (ASX:INV) during the month entered into a binding agreement to sell its Intelligent Investor business (being its subscription business and its four active ETFs to TeamInvest Private Group (ASX: TIP) for $16m. This represented a 300% premium to INV’s enterprise value of $4m at the time of the announcement. Post transaction, INV will focus on creating value from its InvestSMART branded proprietary investor wealth platform, digital investment advice and it’s growing Professionally Managed Accounts business.
• Knosys Limited (ASX: KNO), announced in May that ANZ had signed a contract extension for the continued use of its enterprise software, KnowledgeIQ (KIQ) with a contract value for the 2-year period of $3.8m. KNO will receive this as an upfront payment. This cash payment represented a 100% premium to KNO’s enterprise value of $2m at the time of the announcement. The transaction also highlights the IP value of the KIQ software, which serves a critical role as a system of record in the AI value chain, being a customer’s primary source for specific organizational data, and ensuring data accuracy, integrity, and consistency across its processes.
We continue to be active in this part of the market, including adding to our position in Motio (ASX:MXO), an out-ofhome digital advertising business, during the month. In an update at the start of May, MXO noted that its sales activity had hit record highs. MXO’s forward revenue is up 13% at the same time last year with MXO’s Q4 tracking to exceed its previous record quarter (Q4 FY25) with FY27 expected to start strongly. A key growth driver for MXO is the expansion of its health network with 960 venues at 31 December 2025 increasing to a forecast 1120 at 30 June 2026 (+17%), and 20-30 new locations being added each month which will all incrementally contribute to FY27 revenue growth. We think MXO should achieve ~$2.4m cash EBITDA and NPAT of ~$1.6m for FY26 – with a ~$15m market cap, $4m cash and a strong growth outlook heading into FY27, we think MXO represents an attractive growth set up from here.
Concluding thoughts
While the current market conditions and risk off sentiment are not ideal, we do not own the market/index. There remains investor appetite for companies with strong balance sheets that are profitable and have attractive growth profiles. For companies that are releasing positive news and updates, the market is generally receptive. Attractive opportunities do get rewarded, as we have seen with the likes of BXN (+100% this year, in a challenging market) while EDU continues its re-rate and is up 200% in the past 12 months. While the deterioration of economic conditions does pose an increasing risk to earnings, as we have mentioned above and in previous monthly updates, our companies are generally delivering good results and growing nicely. The three companies that we highlighted from the Australian Microcap Conference (LBL, CCG, RZI – all mid/upper sized weighted positions for us) are good examples of the types of companies that we own, growing their revenues organically well in excess of market at double digit rates. Ultimately, it is the sustained growth of these companies that will increase the intrinsic value of the portfolio over time, and not the peculiarities of the market.
Thank you for your continued support and look forward to updating you next month.
