Research notes

DGT continues to trade at a c.50% discount to NAV of A$4.62/security, yet that NAV does not yet reflect the full value of the 88MW SYD1 expansion, which management estimates will deliver a further c.A$1.50/security of NAV uplift at a targeted 15% yield on cost. The core thesis rests on three pillars. First, SYD1 is a genuinely scarce asset, a Tier 1 CBD carrier hotel with secured power and full planning approval operating in a structurally undersupplied market with a 200MW+ qualified demand pipeline. Second, the business has demonstrated operating momentum, yet cash earnings are yet to materialise. Third, Australian capital partnering at or above book value would be a significant valuation catalyst. Acknowledging the share price weakness, we continue to see the opportunity in DGT, retaining our Buy rating with a $4.15/sh price target.

1H26 result was solid with no material surprises, FY26 continues to focus on the integration of Dalgaranga (acquired via ASX SPR) into the RMS asset portfolio. Key positive: Introduction of new capital management framework and the spartan deal; A$84.9m (net) tax losses remain. Key negative: Operating cash flow (-3% pcp), free cash flow (-15% pcp) and cash/bullion on hand (-14% pcp) reflect the anticipated grade decline across the RMS Magnet Hub assets. This was well flagged and should begin to reverse as Dalgaranga ore is introduced into the Magnet operations and ramps through the system, marking the transition to the next phase of higher-grade feed – we forecast Dalgaranga alone to contribute +A$700m per annum from FY28 onwards. We maintain our BUY rating, price target A$5.75ps (previously A$5.76).

1H26 underlying PBT of A$12.5m (+A$5.4m vs 1H25; and +A$0.8m vs MorgansF). The result comprised minor revenue growth (+3.2%), with broadly stable gross margins (+10bps) and solid underlying overhead control (opex/sales -10bps). Industry margins appear to have passed the trough, however, the outlook for expansion across new/used remains relatively limited in the near-term as supply/demand environment appears to be operating at a more normalised level. In light of a subdued margin outlook, we expect PWR to continue to closely manage its cost base and execute on its M&A strategy (A$500m pa acquired turnover to settle in 2H FY26). While the stock remains cheap with strong asset backing, (NTA of ~A$1.44ps), we view the stock as more cyclically exposed than peers and see limited structural earnings drivers to bring margins ahead of industry levels. HOLD.

MME’s 1H26 was broadly per expectations, achieving gross revenue of ~A$117m, on a gross loan book of ~A$1.75bn. Momentum seen in originations growth (+18% to A$536m) continues to augur well for 2H26, and we expect MME to maintain a balance between profitability and growth as it seeks to benefit from scale. Our price target remains unchanged at A$0.21 and we maintain our Speculative Buy recommendation.

ING’s 1H26 result was weak however it was in line with guidance. As expected, gearing was above the Board’s target range. FY26 guidance was revised by 13-16%. Importantly, ING has now dealt with its excess inventory levels, core poultry volumes are back in growth, selling prices are higher than the pcp and normal production settings and improved network efficiency should result in a much stronger 2H26 vs 1H26. The annualised benefit from these more normalised operating conditions should eventuate in FY27, resulting in a strong earnings recovery. After the severe share price weakness, we upgrade to a BUY rating.

MFG’s 1H26 operating profit after tax (A$83m) was flat on the pcp, but appeared comfortably above (+20%) Factset consensus (A$68m). Overall, whilst this result showed MFG’s investment in Barrenjoey is shaping as a winner (with upside), there is still significant work to do turning around MFG’s core Investment management franchise. Following a change of analyst, we update our numbers and price target with this note. Our PT is set at $9.80 (previously (A$10.74) and stock coverage is transferred to Richard Coles. We maintain a HOLD rating on MFG, with the stock trading at only a 5% discount to our Blended valuation. Growth in the core business is still challenged (with downside risk), however we acknowledge optionality from current and future strategic investments.

If it was just about Australia, GYG would be doing just fine right now. In its home market, it continues to outperform the broader QSR industry both in terms of comp sales and network expansion. Australian earnings were up strongly in 1H26, much as we had expected. But it’s not just about Australia. GYG came to market with a strategy for global expansion that was breathtakingly ambitious. The first big opportunity was the US. Unfortunately, the pace of network expansion in the US so far has been pedestrian and the restaurants it has opened have lost more money than expected. It was a further step-up in US losses that disappointed investors most today and caused group EBITDA to fall 7% short of our forecast. We do believe global growth will click into gear at some point to complement a very healthy Australian business. We maintain a BUY rating, though our revised 12-month target sees the share price recovering to $24.00 rather than the $32.30 we had before. GYG has a bit to prove, but we can be certain it is going to give it all it’s got to ultimately realise its growth ambitions.

BXB’s 1H26 earnings were better than expected, driven by supply chain and productivity improvements. This maintained management’s strong track record of margin expansion over the past few years despite a subdued consumer demand environment, particularly in the US and Europe. Management has adjusted FY26 revenue growth guidance to between 3-4% (vs 3-5% previously) with underlying EBIT growth guidance maintained at between 8-11%. Free cash flow (before dividends) is now expected to be between US$950-1,100m (vs US$850-950m previously) due mainly to lower pallet purchases. We adjust FY26/27/28F underlying EBIT by +2%/+1%/+0%. Our target price rises to $27.00 (from $25.70) and we move our rating to ACCUMULATE (from HOLD). Following another solid result, we believe BXB is well positioned to deliver earnings growth through continued conversion of white-wood pallets to pooling and further margin improvement driven by ongoing operational efficiencies, including enhanced use of its digital and data capabilities.

MP1’s 1H26 result was a beat relative to our and consensus EBITDA expectations. Revenue was inline, with gross profit higher and OPEX lower than expected. FY26 guidance is broadly inline with our expectations. However, the 1H/2H skew and composition are meaningfully different. This necessitates a huge increase in OPEX from 1H26 into 2H26 which leaves us thinking guidance looks conservative. Cycling 2H26 OPEX into FY27 and beyond causes us to reduce our FY27 and FY28 EBITDA forecasts by ~20%, while concurrently lifting our revenue forecasts by ~6%. Our valuation declines to $15.50 and we retain our Buy recommendation.

PWH’s 1H26 result was above expectations, driven by strong growth in Motorsports (new Formula 1 regulations) and Aerospace & Defence (delivery of most of a US government contract). 1H26 NPAT margin improved 60bp to 7.1% due to operating leverage despite one-off factory costs related to generator power and relocation expenses as well as the transition to a new CEO. Management continues to expect modest NPAT margin improvement in FY26, with margins anticipated to trend back toward FY24 levels (17.8%) over the next 3-5 years. We adjust FY26/27/28F NPAT by +1%/-3%/-2%. Our target price increases to $11.15 (from $8.50) due to a roll-forward of our model to FY27 forecasts. We continue to view PWH as a high-quality business, supported by a strong balance sheet, an experienced management team, and access to large addressable markets that offer significant growth potential. With the disruption from relocating to the new Australian manufacturing facility now behind it, we believe PWH is well positioned to embark on its next phase of growth. ACCUMULATE rating maintained.