Shares Trade 16% Below NTA as Cadence Plans Buy-Back and DRP

Strong Finish to FY25

Cadence Capital Limited (ASX, CDM) closed the 2025 financial year with a profit after tax of $6.3 million, reflecting a 3.4% increase in its fund value. Chairman Karl Siegling highlighted a robust second half where the fund gained 7.3%, reversing earlier underperformance. This recovery was largely fuelled by mining and resource stocks, particularly gold miners, which outperformed the broader market.

Gold Sector Outperformance

The fund’s exposure to gold mining companies proved prescient. Evolution Mining, a key holding, soared 123% over the past year, significantly outpacing the 44% rise in the Australian dollar gold price. Other gold-related investments such as Robex Resources, New Gold, and West African Resources also contributed positively, especially in the last six months. This surge came after a period in 2024 when gold miners lagged behind the rising gold price, a gap that has now closed.

Dividend and Capital Management

Cadence declared a 3.0 cent final dividend, 50% franked, bringing the full year dividend to 6.0 cents per share. This equates to an 8.8% yield based on the current share price of $0.68, or a 7.5% yield relative to the pre-tax net tangible assets (NTA) of $0.805. The company encourages shareholders to participate in its dividend reinvestment plan (DRP), which will operate for the final dividend. To support shareholder value, Cadence plans an on-market buy-back of shares issued under the DRP when trading at a discount to NTA. Currently, shares trade at a 16% discount to pre-tax NTA, presenting a potential opportunity for investors.

Market Outlook and Strategy

Looking ahead, Siegling pointed to a complex global backdrop marked by slowing growth, political uncertainty, and central bank easing. The Reserve Bank of Australia’s recent rate cut and anticipated US Federal Reserve easing reflect this environment. However, he warned of upside risks to longer-term interest rates and inflation, driven by monetary loosening and fiscal deficits. These dynamics could enhance gold’s safe haven appeal, reinforcing the fund’s core exposure to gold equities, which remain attractively valued.

Meanwhile, outside the resources sector, Cadence observes that price-to-earnings expansion is outpacing earnings growth, making many equities more expensive. The company expects ongoing market volatility to create trading opportunities and remains committed to its disciplined investment process that has weathered past cycles.

Balancing Opportunity and Caution

Cadence’s FY25 results underscore a cautious but opportunistic stance, leveraging gold’s momentum while navigating broader market challenges. The combination of a solid dividend yield, share price discount to NTA, and strategic buy-back plans suggests management is focused on delivering shareholder value amid uncertain times.