Research notes

SUL delivered a softer trading update, with all divisions seeing a deceleration in LFL sales through Mar/Apr (group LFL -2%) and group gross margin compression. Weaker consumer sentiment from inflationary pressures (fuel and rates) weighed over the key Easter period as the promotional environment remains intense. Limited earnings visibility and a challenging backdrop persist, with capital management initiatives unlikely to feature in FY26. HOLD maintained.

Following a review of our research universe, we discontinue coverage of Proteomics International Laboratories (PIQ AU). Our forecasts, target price and recommendation should no longer be relied upon for investment decisions.

ALX recommended its investors ignore IFM’s hostile off-market takeover bid, citing the offer price as too low, the timing opportunistic, and the offer highly conditional. It also disclosed it initiated a sale process for its interest in Chicago Skyway which, if successful, could be value accretive (at least to our valuation). While the Chicago Skyway divestment process is underway we moderate our rating from TRIM to HOLD given potential for value realisation above what we consider to be the intrinsic value of the asset and hence driving our ALX valuation up close to where the share price is currently trading.

MI6 has awarded an A$59m contract for a 400-person accommodation village at Bullabulling, marking a key step toward development. Ongoing drilling continues to support resource growth, conversion and strike continuity, reinforcing confidence in the scale and quality of the system. As a result, our confidence in Bullabulling’s commerciality strengthens and update our model to reflect a larger-scale operation, lifting Stage 2 milling capacity to 8Mtpa (from 7Mtpa) and increasing forecast production to ~228kozpa. Our revised development scenario aligns with expectations from A$220m financing partner Franco-Nevada. We maintain our BUY rating and lift our price target to A$1.40ps (from A$1.20ps), driven by the increased scale and improved production profile under our revised development scenario.

Microsoft is an American multinational technology company that develops and markets software, services and hardware. The company is best known for its software products, including Microsoft Windows operating systems, the Microsoft Office suite and the Internet Explorer web browser. Its five main operating segments include: Windows & Windows Live Division, Server and Tools, Online Services Division, Microsoft Business Division, and Entertainment and Devices Division.

The Lottery Corporation (TLC) has secured a 40-year extension of its Victorian Public Lottery Licence to 30 June 2068, paying a $1.145bn upfront premium funded entirely by debt. The duration and timing of the renewal was a mild surprise given the licence was historically offered on 10-year terms and wasn’t expiring until June 2028. We view the deal as strategically positive, but near-term earnings absorb the cost. Higher D&A and interest from the new debt drag our FY26/27/28F EPS estimates down 3%/13%/15% respectively, partially offset by a beta reduction reflecting materially lower licence renewal risk. Near-term, lotteries performance remains the key swing factor, with sustained jackpot fatigue a backdrop that could drive further consensus downgrades. The 3 June Investor Day is the next key catalyst, where new CEO Wayne Pickup will outline refreshed strategy. Our target price lifts to $6.00 (from $5.70). We upgrade TLC from Hold to Accumulate.

JBH provided a solid 3Q26 sales trading update, showing the ongoing resilience in demand for its product categories. Management did caution going into one of the key trading periods (EOFY), that they were seeing supplier component costs increases, stock availability shortages and ongoing heightened competitive activity. We see this as likely reflecting potential margin pressure in the 4Q. We have made minor revisions to earnings (<1%), and our valuation lowers to $82.90 (from $83.50). We maintain our ACCUMULATE recommendation.

We have reviewed our FY26 and FY27 forecasts and conclude the company is set to deliver a strong 2H26 and continue that growth trajectory into FY27. We have made no changes to our FY26 forecasts and revised down our FY27/28 forecasts reflecting a higher R&D spend than we had forecast as additional products are evaluated. As a result of changes to forecasts and a higher risk-free rate (House view) our DCF based valuation has reduced to A$1.56 (was A$1.83). PNV is one of the most shorted stocks on the ASX. If PNV can demonstrate a growing profit profile the short position could be reduced materially. We maintain our BUY recommendation.

DGT is set to divest its Chicago asset (CHI1) at a 5% premium to purchase price, while also investigating the disposal of the LAX development sites (which face an increasingly uphill battle for rezoning). The sale of CHI1 should see proforma gearing decline, giving the business scope to pursue the expansion of the higher returning SYD1 asset. The announced sale and the reiteration of FY26 guidance is a positive for DGT, removing leverage concerns and providing a pathway toward the repositioning of SYD1. Whilst guidance beyond FY26 was scant, management did allude to improved earnings through FY27 and subsequently higher dividends. Today’s announcement de-risks DGT and sees us increase our target price to $3.60/sh (as we remove our risking factor), whilst retaining our BUY recommendation.

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