Research notes

RHC has proposed an in-specie distribution of its 52.79% stake in Ramsay Santé via a scheme of arrangement. Subject to approvals, RHC shareholders would receive Ramsay Santé exposure through ASX-listed CDIs, with implementation targeting 4QCY26. We view the proposed separation as strategically sound and incrementally positive for sentiment, addressing a long-standing structural discount related to EU exposure and capital complexity. However, the proposed transaction has no immediate earnings impact, with the pathway toward margin expansion and potential multiple re-rating remaining uncertain. We make no changes to FY26-28 forecasts or our A$35.22 price target. Hold.

VNT reported an in-line FY25 with NPATA +13% YoY as revenue growth faded to just +1%. We find it noteworthy that VNT, a headcount business, was able to deliver earnings growth almost entirely through margin expansion. Indeed, FY25 was the first period when revenue costs growth and operating costs growth decoupled materially. While the company sounded a confident tone around continued margin expansion, this may be difficult to replicate following a heavy re-contracting cycle, which would ordinarily see margin pressure. The bright spot was a record order book of $22.1bn (+14% YoY). The extra ~$100m of buyback capacity should provide a helpful share price support mechanism but weak cash flow (capex 2.5% sales) and anemic forecast revenue growth leaves us on the sidelines. Target price rises to $5.85.

Solid earnings result, albeit flat earnings despite Copper EBITDA doubling. An investment heavy phase, FCF will rise on Simandou/OT ramp. Underlying NPAT US$10.9bn (in line with cons). Final dividend was 254 USc (+1% vs cons). Whether RIO prove sceptics wrong and unlock value from mega deals at the top of the cycle is a key question and risk. We lean towards ‘no’, as in our experience M&A action in bull markets pushes listed targets beyond fair value. RIO is keeping pace with the upgrade cycle, which supports gains but undermines our view on further value, although it remains one of the highest quality sector exposures. We maintain a TRIM rating on RIO with a valuation-based A$146 target price (previously A$142).

EBITDA margins expanded to ~21% from ~13% in 1H25, showing MSV delivered a step-change in business performance in 1H26. By driving greater productivity from its operating rigs and maintaining disciplined financial management, MSV has demonstrated its ability to do more with less, strengthening the business and returning that success to shareholders with a material 4cps dividend. FY26 continues to look like a strong year for earnings, higher EBITDA margins, robust free cash flow and a resumption of dividends. Although we have made numerous modelling adjustments, our full-year EBITDA estimates are largely unchanged. We lower our rating to HOLD (previously SPECULATIVE BUY) after a strong share price performance. Our target price is unchanged at A$0.50ps.

Inflation-linked revenues, a cost-out program and contributions from new assets underpin short-term earnings growth. Potential return on and of the enlarged growth capex pipeline in a rising interest rate environment will be a key investor focus, as will the headwind of approaching expiry of the WGP earnings in FY35. Underlying EBITDA upgraded 1-2% across FY26-28F (Vic+NSW), Free Cash Flow +/-4-5% (tax and interest paid), and DPS growth unchanged at +1 cps/yr. Target price $7.96/sh. The mid-6% cash yield doesn’t compensate for ongoing decline in purchasing power of the DPS and flat equity value outlook. TRIM.

LOV reported a strong underlying 1H26 result with EBIT up 20.4%, ~6% ahead of our expectations, driven by store network growth and strong gross margins. During the period, the pace of store rollout continued with a net of 64 new stores in the period, bringing the total count to 1,095. We have increased our EBIT by 3%/1% respectively in FY26/27, driven by higher sales and gross margin offset by higher costs and D&A. We see the pull back in share price as a buying opportunity at ~23x FY27 PE. Our valuation lowers to $36.80 (from $40) and we retain our BUY recommendation.

HUB’ 1H26 result was ahead of expectations, following a record half of flows/FUA. Group underlying EBITDA of $104.9m, up +35 on pcp (+9% vs MorgF $96.4m). Underlying NPAT was $68.3m up +60% on pcp (+14% vs MorgF $59.8). This was driven by stronger than expected Platform revenue growth (+29.5% YoY), which saw Platform EBITDA Margins +163bps vs. 2H26 to 46.7%. FY27 FUA targets were upgraded by ~6.5% at the mid-point to A$160bn-$170bn, more closely aligning HUB’s outlook with Consensus expectations for ~$169bn, reaffirming flows expectations of ~$18-20bn through to FY27. This update sees our EPS forecasts lift by: +6%/ +3%/+3% in FY26-28F, which sees us lift our price target to $112.40/sh and move to an ACCUMULATE rating.

1H26 Operating EBITDA (+6% on pcp) missed Visible Alpha consensus by 3% while Free Cash (+2% on pcp) was in-line (both were below our forecasts). Changes to FY26-28F EBITDA are immaterial. Free Cash downgraded 1-3% mainly due to higher debt service outlook. DPS forecast remains in line with DPS guidance for FY26 and for 5% pa growth across FY27-29F (within the 4-6% pa Free Cash growth range of the 2025 management long-term incentive plan). 12 month target price declines -1% to $13.19ps, with forecast changes offset by valuation roll-forward. HOLD retained at current prices (but only just).

Pleasingly, BGA’s 1H26 result materially beat expectations given a stronger than expected performance from its Bulk business. However, the result from its much larger Branded business was solid and would have been even stronger if BGA had more yoghurt capacity to take advantage of the strong demand for protein given health and wellness trends. Importantly, expansion plans in this area are underway. FY26 earnings guidance was upgraded. Given its restructuring activity, expansion plans and new product pipeline, we continue to believe that BGA will beat its FY28 EBITDA target of +A$250m. We think A$265m is more likely. This underpins a strong growth profile across the forecast period. We have upgraded our forecasts. We have an Accumulate rating on BGA and A$7.10 price target. The next catalyst for the stock is the company’s Investor Day on 29 April where we think it will upgrade its FY28 targets and release an updated strategic plan to 2031.

WES’s 1H26 result was better than expected with productivity and efficiency improvements a key highlight. Earnings for all divisions except Industrial & Safety were either in line or above our forecasts. WES noted that despite a modest improvement in consumer demand, higher costs continued to weigh on many households and businesses, while residential construction activity remains subdued. We adjust FY26/27/28F group EBIT by +2%/+1%/+1%. Our target price rises slightly to $80.50 (from $79.30) and we maintain our TRIM rating with a 12-month forecast TSR of -2%. While we continue to view WES as a core long-term portfolio holding with a diversified group of well-known retail and industrial brands, a healthy balance sheet, and an experienced leadership team, trading on 30.7x FY27F PE we continue to see the stock as overvalued in the short term.