Coffee Microcaps July 2025 Newsletter

FY26 The Year of Microcaps?

Hi Everyone

Well, FY25 has wrapped up, and it was a mediocre year for ASX microcaps, but at least we seem to be trending in the right direction. The S&P/ASX Emerging Companies Index finished down 0.41% for the month. June is historically the worst month for ASX microcaps. Although the index finished down for the month, its performance was well above the average for June, which is -2.64% historically. Indeed, in 13 out of 22 (59%) observations, the month of June has recorded a negative return for the index. We must also remember that the average return for July is +4.38%, and historically, it has been the best month for ASX microcaps. July has produced a positive monthly return in 17 out of 21 (81%) months based on historical data. Q1 of the financial year is also seasonally the best quarter for ASX Microcaps.

I also saw a post noting that the Russell 2000 in the USA has gone over 900 days without hitting a new all-time high, its longest streak in 14 years. I wanted to look at ASX microcaps for something similar, but I dont have the daily data, so I am basing this off the month-end index closing data. The last monthly all-time closing high was in March 2022, and as of June 30, 2025, we remain 11.59% below that level. It has been 39 months since the index hit a new all-time high. This is the second-longest streak in history, beaten only by the glacial recovery from the depths of the GFC, when the index took 157 months (October 2007 - November 2020) to post a new all-time high. Hopefully, we dont have to wait another 118 months to post a new all-time high!!!

I predict (for what predictions are worth) that we won't, as the trend seems to be heading in the right direction, and we appear to have bottomed about 18 months ago. A good Q1 FY26 should hopefully push us to a new all-time high.

Upcoming Coffee Microcaps Zoom Webinar Events

For those who are unfamiliar, I regularly host presentations from ASX Microcap companies via Zoom Webinars.

I am currently booking companies for the end of July 2025 once 4Cs start hitting the ASX announcement platform. Keep an eye on our social channels for updates on when those events are announced.

The ASX Microcap companies that present generally have the following four criteria.

•Under AUD 300m in market capitalisation

•In revenue and approaching cashflow breakeven or already profitable

•Outside the resources and biotech sectors

•"Industrial Microcaps” Include microcap technology, financial services, consumer goods, industrial products or services business, healthcare stocks, etc.

I have created a separate email list for invitations to these Zoom webinar events, so I am not sending spam to all my subscribers. If you want to be added to the events list, please email me at mark@coffeemicrocaps.com, and I will add you. I would love for you to join us for these free events.

I want to thank Raas Research for sponsoring all the Coffee Microcaps Virtual events.

Coffee Microcaps YouTube Channel

All the Zoom webinar events are recorded and uploaded to the Coffee Microcaps YouTube Channel. In addition to the ASX microcap company presentations, I interview leading ASX microcap fund managers about some of their top picks. Occasionally, we also have presentations or interviews with international microcap investors.

If you're unable to join the Zoom webinars due to work, family, life, or other commitments, consider subscribing to the Coffee Microcaps YouTube channel and click the bell to receive notifications when new content is added.

Also, the description section of each video on YouTube has relevant chapters, so you can jump to the start of a specific company presentation if that’s what you are after in a particular video.

DMX Asset Management Microcap Fund Manager Interview Series

I was joined by Steven McCarthy, Portfolio Manager at DMX Asset Management, to discuss two microcap stocks from the portfolio: Edu Holdings Ltd (ASX: EDU) and RPM Automotive Group Ltd (ASX: RPM).

Edu Holdings Ltd is a higher education provider; however, crucially, given the tightening of rules around international students and EDU sources, the majority of its students are from onshore here in Australia. Its key course is a degree in early childhood development, and Steven likes the long-term nature of the revenue stream, given that it's a multiple-year programme. Student numbers are increasing, which should start to have a more significant impact on results moving forward, he believes. It is an interesting stock to watch in a sector that has become unloved.

RPM Automotive Group Ltd is a stock that has struggled somewhat in recent times. Still, Steven notes that their new tyre recycling facility and service offering, which has resulted from a change in government regulations mandating onshore tyre recycling by the industry, has the potential to add a new growth driver to the business. The first plant was recently commissioned in Melbourne, and plans are in place to expand its footprint facilities alongside its distribution and retail footprint across the country. It will be interesting to hear the commentary on how the new division is performing when they report in August.

You can watch my interview with Steven by clicking the button below.

Coffee Microcaps Conference Sydney

I have just booked a room at the State Library of NSW for the next in-person conference, which is scheduled to take place on Tuesday, 16 September 2025.

Please mark this date in your diary if you plan to attend.

I will provide more details in subsequent newsletters on which companies will be presenting at the event.

Content Recommendation

As part of this newsletter, I would also like to highlight some valuable content worth sharing with my subscribers.

Another one of my regular investing podcasts is the Australian Investors Podcast, hosted by Owen Raszkiewicz. Owen sat down with Luke Laretive and Ben Richards from Seneca Financial Solutions in a series of podcasts over the past few weeks to discuss all things small-cap. I really enjoyed the sessions with Luke and Ben, and they covered a range of stocks, including Catapult Group International, Zip Co, Euroz Hartleys Group, Australian Finance Group, and VBX, amongst several others. This series of podcasts is well worth listening to if you're looking for some new names to add to your watchlist ahead of reporting season or if you're seeking new ideas to research.

If you want to stay up-to-date on all things Coffee Microcaps and are not already a subscriber, be sure to subscribe via the button below.