Research notes

Light & Wonder (ASX: LNW) delivered an in-line result, with strong Gaming and iGaming performance offsetting continued softness in SciPlay. Grover continues to track ahead of expectations, while North American (NA) outright sales hit a record. We were encouraged by management’s articulation of AI as both an offensive growth lever and a defensive moat. Net/net, we view AI as enhancing LNW’s competitive edge rather than eroding it, and the recent share price weakness appears disconnected from the durability of its land-based earnings base. We revise our EPSA estimates by both -3% and -2% respectively across FY26-27F, reflecting slightly improved Gaming and iGaming momentum, offset by SciPlay and lower buyback assumptions. In our view, LNW trades on an undemanding valuation given: (1) supportive NA EGM demand; (2) litigation overhang behind it; (3) a balance sheet set to delever through 2026 (MorgansF: ~2.9x); and (4) Grover providing a high-return, recurring revenue vertical growing ahead of expectations. We upgrade to BUY, however lower our price target to A$195 (previously A$200).

1H26 result was broadly in line with expectations, with FY26 shaping as a foundation year ahead of a step-change in ounce growth from FY27 and beyond, underpinned by ~10 years of reserves. Key positive: Continued uplift in the price of gold has delivered a material uplift in revenue (+50% pcp) and underlying EBITDA (+92%) despite ounce production effectively being flat pcp. Key negative: legal settlement fees regarding Plutonic’s K2 prospect (A$49m) eroded NPAT which was not fully captured in our forecasts. We maintain our BUY rating and A$14.56ps price target.

KSL’s FY25 underlying NPAT (K120m) was +20% on the pcp, but -8% below MorgansF on a higher bad debt charge than we forecast. On the higher debt charge, this was based on a management decision to tidy up a small group of old loans at this result (a more one-off event). Outside of this, we saw this as another relatively solid performance by KSL, punctuated by +20% revenue and NPAT growth respectively on the pcp. We make relatively nominal changes to our KSL FY26F/FY27F EPS of -2%/+2%, based on a broad review of earnings assumptions. Our PT is lowered to A$1.57 (previously A$1.78) Trading on ~6x FY26 earnings and expected to deliver ~30% FY1 EPS growth at a ~20% ROE, we see KSL as too cheap. BUY maintained.

PXA’s 1H26 core NPAT (A$21m) was up +90% on the pcp and double Visible Alpha consensus (A$9.3m).  FY26 Core NPAT guidance was also lifted from A$5m to A$15m, to $15m to A$25m. We saw this as a robust result overall. Whilst PXA clearly benefited from an improved volume environment in both Australia and the UK in 1H26, the +3% improvement in the group EBITDA margin highlighted strong cost control, and benefits from efficiency improvements. In our view, revised FY26 guidance still appears conservative, whilst the key stock catalyst of the launch of the Natwest remortgage product, is tracking to schedule. We lift our PXA FY26F/FY27F cash EPS by >+10% on the stronger than expected 1H26 result, and re-modelling for PXA’s new divisional disclosures. Our PT rises to A$17.01 (previously A$16.09). ACCUMULATE maintained.

OCL's 1H26 result was broadly in line with our forecasts with NPAT of $18.7m +10% YoY (+7.4% ahead of MorgF $17.4m), whilst Underlying EBITDA increased +10.9% to $25.9m (+4% vs MorgF $24.9m). ARR grew +12% YoY to $120.0m however this was ~3.2% below expectations due to timing of customer conversions and currency headwinds ($121.4m on a CC basis). OCL's FY26 ARR guidance has been reset to 10-14% (CC basis). Our EBITDA forecasts reduce by -4% across FY26-FY28F, driven by adjustments for ARR guidance and our expectations around timing of investment/margins and currency movements. Our blended DCF/EV/EBITDA based price target revises to $16.70/sh (from $20.00/sh). We see tailwinds remaining supportive of OCL’s long-term growth momentum. Following the recent pullback in OCL’s share price we move to a Buy rating (from Accumulate).

AIM’s 1H26 revenue was broadly inline with expectations while higher expenses once again resulted in underlying EBITDA coming in materially below our and consensus expectations. Management have now retracted their FY29 aspirational revenue and EBITDA targets and have refocussing the priorities. We reduce our forecasts and price target on lower earnings. We move to a Hold recommendation as we await traction on revised strategic priorities going forward.

TPG’s FY25 result was in line with guidance and consensus expectations, as was its underlying EBITDA and capex guidance for FY26. The highlight was continued strong mobile subscriber growth. For many years TPG/Vodafone has struggled to grow mobile market share. However, over the course of 1HCY25 and 2HCY25 it has ignited growth and outpaced peers in terms of mobile subscriber growth. Its network quality and brands are resonating with consumers and medium-term mobile growth could soon become a trend. We make non-material underlying forecast changes. Our target price lifts to $4.40 from $4.20 and we retain our Accumulate recommendation.

While COL’s 1H26 result was slightly softer than expected, execution remains strong in the core Supermarkets division. In line with commentary from Woolworths (WOW), COL said customers remain value conscious and the grocery market continues to be highly competitive. In Liquor, the market remains subdued with competitive intensity increasing, particularly in 2Q26 as Endeavour Group (EDV) stepped up its investment in pricing and promotions. We adjust FY26-28F underlying group EBIT by -2%/-2%/-2%. Despite the slight downgrade to earnings, our target price remains unchanged at $22.90 due to a roll-forward of our valuation to FY27 forecasts. With a 12-month forecast TSR of 15%, we upgrade our rating to ACCUMULATE (from HOLD). In our view, COL continues to perform well with key Supermarkets metrics such as customer scores, sales growth, cost discipline and store execution remaining solid. We hence view the recent share price pullback as an attractive entry point.

FY25 shows IME has quietly crossed the line from fixing the business to being a cleaner, cash-positive platform. Following a prolonged period of fixes, patches, and operational clean-up, IME appears to be finally shifting into a phase where the benefit of that groundwork has some room to compound. The combination of a cleaner revenue mix, leaner cost structure and a healthier balance sheet positions the company to convert incremental software growth and Aquila+ efficiencies into improving operating leverage. Staying positive here but note the cash buffer is better but not bulletproof. Upgrading target price to A$0.50 (from A$0.35) and retain our Speculative Buy recommendation.

Return to profitability with stronger Personal Injury (PI) recoveries and stable costs driving EBITDA to $21.1m and NPAT to $6.7m. Deep Class Action (CA) pipeline with multiple in-principle settlements; cashflow to normalise in 2H as ~$17.6m in delayed receipts are collected. Clear 2H execution focus on PI momentum, CA conversions and scaling tech initiatives to support further margin expansion.