Research notes

TCG has secured an option to acquire JV partner Sodim’s 20% interest in the 4.65Moz Afema Gold Project for ~US$79m (A$112m), taking it to 100% ownership (subject to the State’s 10% free-carried interest). The deal is being funded through an A$120m placement, leaving ~A$130m pro-forma cash ahead of a mid-CY27 FID. >We view the deal is clearly accretive: our ~A$555m valuation of the interest is ~5x the price paid, while the price itself sits broadly in line with our ~A$122m value for Sodim’s 1.5% NSR conversion right. Importantly, consolidated ownership gives TCG full control over project financing and early works ahead of FID. >We maintain our SPECULATIVE BUY rating and lift our target price to A$1.45ps (previously A$1.18).

Hermès International, a French high-fashion luxury goods manufacturer, was founded in 1837 by Thierry Hermès. Hermès is known for its high-end craftsmanship. It specialises in leather goods, lifestyle accessories, home furnishings, fragrances, jewellery, watches, and ready-to-wear apparel. Many of its products have an equestrian theme, reflecting Hermès’ heritage in saddle making. Some of Hermès products, notably the Birkin and Kelly handbags, as well as its silk scarves, have attained iconic status in consumer culture.

Kering is a French multinational luxury goods group and one of the world's foremost luxury conglomerates, alongside LVMH and Richemont. Founded in 1963 by François Pinault, its portfolio is concentrated on personal luxury goods. Core houses include Gucci, Saint Laurent, Bottega Veneta, Balenciaga, Alexander McQueen, and Brioni, alongside jewellery brands Boucheron, Pomellato, DoDo, and Qeelin.

Nestlé SA is the world’s largest food and beverage company. It engages in the manufacture, supply and production of prepared dishes and cooking aids, milk-based products, pharmaceuticals and ophthalmic goods, baby foods and cereals.

1Q27 was stronger than expected, supported by GM expansion and healthy underlying demand, but contained multiple non-recurring gains. >Underlying product growth remains encouraging, with devices 9% and masks 10%, although ROW device growth benefited from France fleet renewals and US sales from strong demand ahead of price increases and volume-based rebates. >Despite the strong start, FY27 guidance was reiterated, with management pointing to ongoing inflation, higher 2Q costs and moderating ROW device growth. >We make modest adjustments to FY27-29 forecasts, with our target moving to A$40. Given the strong stock recovery and TSR <20%, we move to ACCUMULATE.

DYL has deferred a Final Investment Decision (FID) on Tumas beyond the previously targeted 1Q27, citing uranium equity market conditions that remain disconnected from strengthening uranium fundamentals. >Despite delaying FID, project advancement continues with detailed engineering now 85% complete, civil and concrete works underway and key procurement packages increasingly locked in ahead of full construction. >Cash of A$144.7m at quarter-end provides funding flexibility while DYL continues optimisation work and advances construction readiness activities. >We maintain a SPECULATIVE BUY rating with an unchanged target price of A$1.50ps.

CVL delivered a record 1Q with revenue and NPAT each up ~+70% YoY. The Commonwealth’s acceptance of the OPV baseline schedule is a key milestone, reinforcing our view that weaker cash conversion is a timing issue. With the order book for FY27 already full, a strong and diversified pipeline – across resources and public infrastructure projects – positions CVL for further growth in FY28. We lift NPAT by +11% across our forecast period. Our target price rises to $2.50 (from $2.40). The stock is trading on just 13x PE (FY27), which is far too cheap for a contracting business of CVL’s quality.

Wide-spaced drilling at Muntanga North and Namakande continues to identify uranium mineralisation outside the existing resource base, while Muntanga East metallurgical testwork delivered uranium recoveries above 80% and exceptionally low acid consumption. >With the Mining Convention now executed, AEU has commenced resource verification and optimisation work at Madaouela, targeting both a JORC-compliant resource and Scoping Study in Q1 CY27. >Following quarter-end, major shareholder Menel exercised 35.1m options, providing A$10.9m of funding and further strengthening the balance sheet ahead of ongoing drilling and study work. >We maintain our SPECULATIVE BUY rating with an unchanged target price of A$0.80ps.

EDV’s 1Q27 sales trading update was largely in line with expectations. >Retail sales rose 3.0%, while Hotels increased 1.9%. >Management noted that promotional intensity in the Retail segment remains elevated, particularly in the online channel, while Hotels sales moderated during the quarter due to growing cost of living pressures impacting discretionary spending. >We make marginal changes to earnings forecasts with FY27-29F underlying EBIT decreasing by 1%. >Our target price remains unchanged at $2.95 and we maintain our TRIM rating. We continue to expect FY27 to be a disruptive year as EDV implements its transformation initiatives. Liquor demand also remains under pressure from higher interest rates, ongoing cost of living pressures and deteriorating consumer sentiment. Given these headwinds and the execution risk associated with the transformation program, we believe the balance of risks remains skewed to the downside.

REH’s 1Q27 trading update was ahead of expectations. >ANZ delivered a strong 1Q27 performance with revenue up 12.8%, while US revenue increased 5.6%. >Looking ahead, management expects positive momentum in ANZ to continue, while trading conditions in the US are expected to remain soft. >We increase FY27-29F underlying EBIT by 2%. >Our target price rises to $17.40 (from $17.00) and we maintain our HOLD rating. While we continue to see REH as a good business with a strong culture and long track record of growth, trading on 31.7x FY27F PE with a 1.2% yield we view the stock as fully valued.