ASX Stock of the Day: HMY - 1H25 Earnings Surge, Strong Fundamentals Point to Future Growth

FutureGate | February 20 2025

Overview

Today’s standout performer on the ASX is $HMY, which has demonstrated a robust 1H25 earnings surge compared to 1H24, with impressive growth across key metrics. The company’s solid performance amid a challenging macroeconomic environment positions it as a standout contender for growth in FY25 and FY26.

Key Financial Highlights:

- Loan Book: $783M, reflecting a 4% growth compared to 1H24. This indicates steady expansion in their lending activities, contributing to a stronger foundation for future growth.

- Revenue: $64M, up 7% year-on-year, which underscores a healthy increase in business volume and operational efficiency.

- Net Profit After Tax (NPAT): $2.3M, representing an exceptional 350% increase compared to the same period last year. The company is poised for an even more substantial performance in the coming periods, forecasting a NPAT of $5M for FY25 and $10M for FY26.

- Cost-to-Income Ratio: A notable improvement of 300bps, now at 18%. This reflects the company’s disciplined cost management and operational efficiency in driving profitability.

- Market Capitalisation: $70M, making $HMY an appealing micro-cap stock with significant upside potential if its strong growth trajectory continues.

- Cash Position: $47M in cash, providing the company with a solid liquidity cushion to support future investments and strategic initiatives.

Growth Prospects

The forecasted NPAT of $5M for FY25 and $10M for FY26 demonstrates the company’s robust earnings potential as it continues to scale its loan book and operational capacity. The 7% revenue growth is commendable in the current environment, and we expect these figures to rise as the company capitalises on its solid loan book growth.

Moreover, $HMY’s 18% cost-to-income ratio indicates a continued focus on cost efficiency, which could help maintain margins as it grows, making it a company well-positioned for the future.

Investment Thesis

$HMY’s strong half-year results are indicative of a company with robust fundamentals, an expanding loan book, and efficient operations. With a cash-rich balance sheet, growing profitability, and solid market positioning, the stock offers a compelling growth story.

At a market cap of $70M, it remains a relatively small player but has the potential to deliver significant returns for investors who are willing to look beyond the micro-cap status. This is a stock to watch for FY25 and FY26 as it builds on this performance.

Conclusion

HMY continues to demonstrate impressive growth across key financial metrics, positioning it for accelerated earnings growth in FY25 and beyond. The company’s focus on improving cost efficiency, paired with a strong balance sheet, provides the foundation for strong returns. Investors looking for a micro-cap with significant upside potential should consider $HMY as a key pick for their portfolios