Research notes

TWE’s Investor Day was the positive share price catalyst we were expecting. Solid depletions growth continues and the mid-point of FY26 EBITS guidance was slightly ahead of consensus estimates. Importantly, Ascent or TWE’s transformation program is expected to deliver sustainable, high-quality earnings growth and deleverage the balance sheet over the medium to long term. We have upgraded our FY27 and FY28 forecasts. Given TWE’s low trading multiples and our belief that new management can deliver more acceptable returns overtime, we reiterate our BUY recommendation with a new A$5.95 price target.

The Lottery Corporation’s (TLC) Investor Day in Sydney highlighted two key areas: resetting the operating model and reframing how the market should think about TLC’s growth potential. Three standalone business verticals (Lotteries, Digital, Keno) will replace the prior structure from 1 July, generating ~$10m of annualised savings on a full run-rate basis, which will be reinvested into digital capability, AI and product development. No medium-term financial targets were provided. Importantly, the VIC licence extension to 2068 means that over 90% of lotteries turnover is now licenced until at least 2050. Near-term opex guidance was trimmed $10m at the midpoint and all existing guidance was reaffirmed. Our EPS forecast reduces by 5% in FY26 following a mark-to-market of lottery volumes. We retain an Accumulate rating on TLC, and our 12-month target price reduces to $5.90 (previously $6.00), following near-term revisions across both Lotteries and Keno. We continue to rate TLC given its long-dated licences and infrastructure-like characteristics, proven pricing power and a largely variable cost structure that insulates margins through economic cycles.

We initiate coverage on G50 Corp with a SPECULATIVE BUY rating and price target of A$2.14ps. A US-centric asset portfolio (Golconda and White Caps) provides growing exposure to both precious metals (gold and silver) and critical metals gallium and antimony, both of which are being increasingly recognised as strategic commodities by the US given their importance across semiconductor, AI and defence related supply chains. We view the underlying gold exploration potential at Golconda to be capable of supporting meaningful resource growth over time, while the greater gallium and antimony exposure may provide optionality from both a strategic funding and permitting perspective as the US increasingly prioritises domestic critical mineral supply chains independent of China. Exposure to precious and critical metals uniquely positions G50 to deliver several pathways of value creation beyond exploration and is a key point of differentiation vs. other juniors.

JDO announced its second capital relief securitisation transaction backed by SME business loans. The transaction is significant as it shows JDO’s ability to again source and its willingness to utilise capital relief securitisations to support its CET1 capital ratio without the need for equity raisings. Target price of $2.15 per share, with strong double digit earnings growth forecast across FY26-28F. BUY retained, with potential TSR at current prices of c.38% (driven entirely by capital growth).

Unsurprisingly, given the conflict in the Middle East, THL has revised its FY26 NPAT guidance given weaker than expected RV sales. We have revised our forecasts. The conflict, higher fuel prices and cost of living pressures push out the earnings recovery despite all of THL’s internal initiatives to improve the business. Taking advantage of another crisis and a depressed share price, BGH Capital and the Trouchet shareholders have presented a revised takeover offer of NZ$3.10.

ASX released FY27 total cost guidance along with FY28 capex expectations both of which were materially above consensus at the time of release. Whilst the topline shows encouraging growth (+~12.5% FYTD), we anticipate the market to remain cautious given the elevated cost profile as the technology refresh continues. We lift FY26F EPS ~4% on stronger-than-forecast cash market and Futures/OTC volumes, but lower FY27-FY28F EPS by ~5%, as the updated cost guidance more than offsets the higher revenue base in the outer years. Our DCF/PE-derived PT is lowered to A$51.50 on the above, accompanied by an increase in the house RFR to 4.6%. We maintain our Hold recommendation and note near-term elevated costs will likely remain a headwind.

Following the announcement of AUSTRAC's investigation this month, the TAH share price has fallen approximately 37%. While we expect the investigation to remain an overhang for the foreseeable future, at these levels the stock appears materially undervalued. Current trading conditions remain supportive in our view and position the company well for a strong upcoming result, despite inherent uncertainty surrounding the scope of the investigation and the quantum of potential penalties. While we are cautious about speculating on the ultimate outcome, we believe the approximately $960m erosion in market value is overly pessimistic and reflects the most bearish of scenarios (see through). In this note we discuss a range of possible outcomes, drawing on precedent fines and similar regulatory actions. While we have not assumed a direct penalty in our numbers, we have taken precautionary measures and added incremental operating costs associated with remediation in our base case; we note that for every 1% increase in associated compliance costs, EBITDA revises by 1.6%. We upgrade TAH from Accumulate to Buy given what we view as a near-term share price overreaction, and an underlying business that looks on track to outperform in the near term. Buy recommendation, $1.07 12-month target price.

SHAPE has announced that it has entered into an agreement to acquire Australian Professional Shopfitters Pty Ltd (‘APS’) a vertically integrated retail shopfitting business that serves blue chip retailers such as Adairs and BONDS. The acquisition of APS is expected to be earnings accretive in SHAPE’s first full year of ownership, delivering normalised earnings per share (EPS) accretion of approximately 5-7%. We take the opportunity to upgrade to a BUY (previously ACCUMULATE).

The H1 result was largely as expected. Guidance in GBP was reiterated with an appropriate caveat in relation to the supply chain not worsening. The highlight was the rise in order book by +32% YoY to £116m (or +50% including a new long-term EV battery protection contract), setting AIH up for strong future growth. Trading on just 8x FY26 EV/EBIT, the stock looks cheap, given the softer 1H has been cleansed and the key lead indicators (energy prices, subsea EPC backlogs and AIH order book) continue to firm. We forecast FY26 EPSA growth of +23% YoY.

EDV provided a strategic update at its Investor Day with the new management team, led by CEO Jayne Hrdlicka, outlining their plans for growth. As expected, no trading update was provided given the company provided one only a few weeks ago. Management outlined three core growth pillars: 1) grow Retail revenue through repositioning the Dan Murphy’s and BWS offers; 2) improve Hotels performance by stepping up investments in renewals; and 3) reduce costs with $300m in targeted savings by FY29. We make negligible changes to FY26-28F EBIT forecasts; however, underlying NPAT declines by 0-3% due to higher interest expense. Our target price decreases to $2.80 (from $3.30) reflecting changes to earnings forecasts and a reduction in our FY27F PE multiple to 13x (from 15x). While the Investor Day highlighted a range of revenue and cost opportunities, these require accelerated investment and are expected to keep balance sheet leverage elevated through FY27. Execution remains key, and with the liquor market still challenging, we prefer to wait for delivery before reassessing our view. HOLD retained.