Research notes

MEK has released its 1Q27 quarterly report, restating pre-reported production of 7.2koz at an AISC of A$4,147/oz, with quarter-end cash of A$51m (including Tranche One placement proceeds). >The plant reached nameplate capacity (149kt; ~600ktpa annualised), but processing unit costs rose ~24% QoQ. Reported AISC is flattered by ore inventory adjustments, with closing stockpile tonnes up QoQ despite ore processed exceeding ore mined. We forecast a material lift in unit AISC in 2Q27. >We maintain our BUY rating with a price target of A$0.16ps (previously A$0.17ps).

PNI has released its 1Q27 update alongside its AGM. >FUM rose A$8.7bn (+4%) to A$238.1bn (+3% excluding FUM acquired by Antipodes), with market movements broadly neutral. Net inflows of A$5.9bn were solid but slightly below the run-rate implied by 1H27 consensus (A$6.45bn per Visible Alpha), and FUM (A$238bn) was just shy of the implied ~A$240bn. In our view, 1H27 consensus looks achievable but needs a stronger second quarter. Metrics remains the key watch point. >We trim our net flow and FUM forecasts and modestly lift our group cost assumptions, lowering FY27F/FY28F EPS by 2%-4%. Our target price falls to A$22.62 (from A$23.41). >Maintain BUY call with >20% upside to our price target.

COL’s 1Q27 trading update was weaker than expected. >While Supermarkets sales growth was in line with 4Q26, management noted increased competitive and promotional activity with customers remaining value-conscious. >Guidance for flat Supermarkets EBIT in 1H27 was also softer than our forecast for 6% growth (Visible Alpha consensus +6%). >We adjust FY27/28/29F group underlying EBIT by -3%/-2%/-2%. >Our target price decreases to $24.30 (from $25.40) and we maintain our ACCUMULATE rating. Despite the softer trading update and management acknowledging that sales growth has fallen short of expectations, COL has a plan to improve momentum through targeted investment in value, stronger communication of its value proposition and a continued focus on execution. Guidance for flat Supermarkets EBIT in 1H27 also follows a strong 15% increase in the pcp. In this context and against a backdrop of elevated fuel costs, we believe the performance remains reasonable, with Supermarkets 1H EBIT growth averaging 7% pa over the past three years.

CSC delivered another record EBITDA quarter, underpinned by a higher realised copper price and record low costs at Mantoverde, which more than offset lower group volumes during a heavy planned maintenance period. >MV-O is ramping up ahead of expectations. Throughput has averaged ~47ktpd in recent weeks, above the 45ktpd target, and a record 53.4ktpd day was set in October. That supports a strong 4Q26. Pinto Valley will start the quarter slowly, with crusher repairs pushing the full restart into November, but CSC expects the repairs to improve plant reliability. >Maintain BUY with an unchanged A$17ps target price.

VFY’s 1Q27 4C was a busy quarter for partnering. Versiti makes it three US civilian blood partners and Charter Medical opens a first door into cell and gene therapy (CGT). The partner network now covers ~17% of US civilian collection sites. >Attention now shifts to FDA device listing, still flagged for December. Mandatory blood product validation studies were only about to start at quarter end, so the timeline looks tight to us. This is the key near-term catalyst and risk. >Cash of A$38.3m, with spend at A$5.7m/quarter and guided higher, but broadly on track versus our expectations. No change to our Speculative Buy rating or target price of A$5.06.

In August we said the engine had been rebuilt but wasn’t yet in gear. The 1Q report confirms the rebuild was sound: OCF positive, costs locked in and cash steady. What’s still missing is the new contract flow needed to actually get moving. >Downside looks well covered. At ~A$40m EV (A$19.3m cash, no debt), the market is paying under 2x ARR for a business that’s self-funding with new product offerings aimed at re-engaging new contract growth. >Flamingo will make its public debut at the RSNA conference (29 Nov-3 Dec). With the cost base fixed, even modest contract success should flow quickly to earnings. The setup feels ripe for a rally on only a modicum of new contract win success. We think it’s worth taking another look at these levels. Buy retained.

We initiate on Conrad Asia Energy (CRD) with a SPECULATIVE BUY rating and A$1.10 target price. >Mako is funded, contracted and carried to first gas in late 2027, and returns US$145-360m of cash to CRD on its 2P alone against an A$126m market cap. >Batam’s data centres need gas Southeast Asia doesn’t have, and Mako’s existing pipeline already runs there. This adds meaningful upside potential to our investment case for CRD. >No equity needed to develop Mako, with its share of capex carried by its partner and repaid out of production.

SUN has hosted its investor day, which we found constructive. It confirmed SUN has moved into the third phase of its transformation, leveraging its capabilities to drive profitable growth, with four key levers identified: Vero Specialty, loss ratio improvement, New Zealand (NZ) and platform/AI. >As part of the update, SUN trimmed FY27 top-line growth guidance to 3% (from 3-5%). Flowing this through, we reduce FY27F/FY28F EPS by 1%. Our target price rises marginally to A$20.13 (previously A$20) with our earnings changes offset by a valuation roll-forward. >SUN’s transition to a pure-play general insurer has been well executed. However, with limited upside to our target price (~4%), we maintain our HOLD rating.

Stealth Group Holdings (SGI) is Australia’s leading independent distributor and retailer of hardware, industrial, safety and consumer products, and the “third force” behind Wesfarmers and Metcash with an estimated ~1.4% market share. >SGI has a positive track record (5-year ~49% EPS CAGR), strong founder alignment (CEO is the second largest shareholder), structural industry tailwinds and a clear path to consolidate a fragmented ~A$120bn market. Disciplined M&A has built material scale, with ample balance sheet capacity (~0.5x ND/EBITDA). >We see a strong near-term growth profile (~3x sales target by FY28; FY27-29 ~78% NPAT CAGR) as SGI integrates its HBT acquisition, with a strong line of sight on FY27-28 (A$100m sales secured; ~A$130m under negotiation). >We initiate coverage with a BUY recommendation and A$1.85ps target price. HBT has transformed SGI into a scalable, vertically integrated model with improved economics, which we believe the market is yet to price (~8x FY28F PE).

WES’s AGM trading update overall was slightly weaker than expected. >While sales growth for the retail divisions in FY27 YTD was largely in line with expectations, the exit run rate was marginally softer. >Management noted that despite a stronger start to the quarter at Bunnings, lower sales across seasonal categories and the commercial segment in recent weeks have weighed on overall sales performance. >We reduce FY27-29F group underlying EBIT by 1% and underlying NPAT by 2%. >Our target price declines to $82.50 (from $85.00) and we maintain our ACCUMULATE rating. While the consumer backdrop is softening amid higher interest rates, weaker housing conditions and declining consumer sentiment, we believe WES’s retail businesses (Bunnings, Kmart Group, Officeworks and Priceline) remain well positioned given their strong value propositions. Combined with ongoing productivity initiatives, this should leave the company well placed to deliver stronger earnings growth when economic conditions improve.