Our top three stocks for Industrials are:


IMDEX (IMD) is the market leader in downhole instrumentation solutions for mining exploration and development, with sales in 102 countries and the presence of an IMD product on ~70% of mineral drill sites globally. The company has been able to successfully leverage its end-to-end product suite, portfolio of intellectual property and market leading cloud-based platform to grow revenues faster than global exploration expenditure trends.

We believe 2020 is positioned to be a transformational year for IMD given: (1) the company had a record first quarter, driven by improving trading conditions globally and growing interest in its technologies; (2) momentum in capital raising, drilling data and structural factors such as the gold price, continue to point to a positive outlook for global exploration spend which should provide a tailwind; and, (3) material growth opportunities from four new technologies that in our view are not reflected in the current market valuation.

IMD has a net cash position, which provides the ability to increase the payout ratio over time and return capital to shareholders. We believe shareholders are exposed to robust FY20e growth in the core business, while certainty surrounding the pricing models and adoption rates of the four emerging technologies presents potential for material upside.


Carbon Revolution (CBR) is a state of the art manufacturing company that has developed the only single piece carbon fibre automotive wheels to Original Equipment Manufacturer (OEM) quality standards with commercial adoption across several major OEM models.

CBR is currently contracted to supply wheels to nine different vehicle programs for Ferrari, Ford, Renault and two additional undisclosed OEMs. We believe there are push and pull factors compelling other OEMs to offer a carbon wheel option, including: (1) the increased average ticket size and margin; (2) carbon wheels act as a key differentiator for competitor vehicles; and (3) there is limited downside risk to OEMs offering carbon wheels as an option beyond the initial costs of design, testing and validation.

The ongoing industrialisation program positions CBR at a significant inflection point. Successful execution of the program can materially increase manufacturing capacity, lower production unit costs and increase the scalability of production; thereby providing the potential for much broader adoption of carbon wheels in the automotive wheel market. While the execution of the industrialisation program presents execution risk, we believe the prospects for hypergrowth and the current trajectory to be EBITDA positive in 4Q20e justifies CBR trading on ~5-6x EV/Sales in the near-term.


FDV offers unique exposure towards fast growing frontier and emerging markets where a structural shift towards the use of online classified platforms is rapidly developing. The company owns an assortment of stakes in 12 online classifieds businesses located in Developing Asia, South/ Central America, and Africa/MENA. Whilst the prospect of investing in emerging markets is inherently risky, we believe FDV exhibits a number of factors that have begun to “de-risk” the company’s portfolio, including: 1) 9 companies within FDV’s portfolio are now annualising revenues of >A$1m, an important milestone for an early stage business; (2) 4 portfolio companies have now begun to trade profitably at the EBITDA level, and have become self-funding; 3) FDV continually evaluates opportunities to optimise its portfolio (recently increasing its stake in fast growing South/Central American Property Portal, Infocasas); and 4) FDV has ~A$10m in cash which ensures the company has the ability to consider further investment opportunities.

We believe FDV is well placed entering FY20, as we forecast that FDV’s Portfolio companies will deliver strong double digit revenue growth in FY20, and believe that the company will continue to benefit from increasing revenue diversification, as up and coming businesses such as E24, Propzy and Infocasas begin to contribute a larger proportion of Group revenues and earnings as these business edge closer to profitability.

Authored by Hamish Murray – Industrials Analyst & James Filius – Analyst at Bell Potter Securities, 17 December 2019
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Carbon Revolution (CBR):
Bell Potter Securities Limited acted as a Joint Lead Manager in CBR’s Nov’19 IPO and received fees for that service.