Duxton Water’s NAV Surges 11% on $121M Government Water Sale
Duxton Water Limited reported its strongest quarterly performance since inception, with NAV per share rising 17 cents to $1.71, driven by a $121.3 million sale of water entitlements to the Australian Government and strategic portfolio moves.
- NAV per share increased 11% to $1.71 in March quarter
- Sold $121.3 million of water entitlements to Australian Government
- Water portfolio valued at $290 million with 58.9 gigalitres held
- Declared fully franked dividend of 3.71 cents per share
- Net debt ratio expected to fall below 5% after transactions settle
Strong Quarterly Performance
Duxton Water Limited (ASX: D2O) has delivered its strongest quarterly result since its 2016 inception, with net asset value (NAV) per share rising 17 cents to $1.71 as of 31 March 2025. This 11% increase over the December quarter was primarily driven by the sale of $121.3 million in water entitlements to the Australian Government, aimed at supporting environmental water flows.
The sale, combined with other portfolio acquisitions and disposals executed at attractive valuations, has enhanced the company’s asset base and cash position. Duxton Water now holds approximately 58.9 gigalitres of water entitlements, down from 91.5 gigalitres at the end of 2024, reflecting a strategic repositioning of its portfolio.
Market Dynamics and Portfolio Strategy
Water entitlement values in the southern Murray Darling Basin increased by around 3% during the quarter, according to the Ricardo Entitlement Index. The most notable gains were in Lower Murray high security entitlements, driven by increased demand from irrigators amid limited supply. Allocation prices remained firm, particularly in the Murrumbidgee and Lower Murray regions, influenced by dry and warm summer conditions that tightened water availability.
Duxton Water’s management intends to deploy proceeds from recent entitlement sales to reduce its debt facility, currently drawn to $116 million of a $130 million limit with National Australia Bank, maturing in 2027. The company also continues to seek well-priced acquisition opportunities to enhance its portfolio quality and returns.
Dividend and Shareholder Returns
Reflecting its strong cash flow and earnings, Duxton Water declared a fully franked dividend of 3.71 cents per share, paid in April 2025. This marks the company’s 16th consecutive dividend since 2017, underscoring a consistent commitment to shareholder returns. The Dividend Reinvestment Plan remains active, offering shareholders a 5% discount on reinvested shares.
The company also continued its on-market share buyback program, purchasing 736,000 shares at an average price of $1.35 during the quarter, signaling management’s confidence in the underlying value of the business.
Financial Health and Outlook
Duxton Water’s net debt to water assets ratio stood at 28% at quarter-end but is expected to fall below 5% once outstanding entitlement transactions settle. Operating cash receipts doubled year-on-year to $6.8 million, supported by higher allocation prices and lease income. The company’s renewed debt facility with NAB provides financial flexibility to navigate market conditions and pursue growth.
Looking ahead, the lease and forward water markets are becoming more active as irrigators secure water for the 2025-2026 season. Duxton Water is actively expanding its leased portfolio to capitalise on this demand, positioning itself as a key supplier of flexible water solutions to Australian farmers.
Bottom Line?
Duxton Water’s robust NAV growth and strategic asset sales set the stage for continued portfolio optimisation and shareholder value creation.
Questions in the middle?
- How will Duxton Water balance debt reduction with future entitlement acquisitions?
- What impact will government environmental water purchases have on market liquidity and pricing?
- Can the company sustain dividend growth amid fluctuating water allocation prices?
