Research notes

RIO's 1H26 was a strong result and a clean one, but we expect it was management’s talk of targeted US$5bn in H2 asset divestments (and resulting possible capital management) that drove RIO’s outperformance on the day. Earnings were broadly close to estimates (EBITDA below / NPAT above), while operating cash flow of US$9,173m was 5.0% ahead of consensus, free cash flow rose 75% to US$3,834m, and net debt of US$14,061m came in below any market estimates. The interim dividend of US211cps (+43%) held the 50% payout. RIO is executing well, the balance sheet is in better shape than we forecast, and the productivity gains are real. The problem is that none of this is a secret. RIO trades on 6.9x CY26 EV/EBITDA against BHP's 7.2x. We maintain HOLD with a slight trim to our target price to A$159.00 from A$163.00.

MIN delivered a strong 4Q26 result, with production and cost beats across mining services, iron ore and lithium. FY26 guidance was achieved or exceeded across every segment. Net debt reduced to A$4.3bn (-8% below expectations) and is now below 2x ND/EBITDA on our FY26 EBITDA forecasts. Move to a BUY (from ACCUMULATE) with an unchanged A$68ps target price.

4Q26 revenue, unit costs and AISC all missed expectations, while production held broadly in line with consensus despite weaker recoveries. FY27 guidance disappointed on cost and capex, reflecting higher sustaining and development capex following a year of underinvestment for cash conservation, alongside front-loaded spend to fund the 2.8Mtpa ramp-up and proposed Kathleen Valley expansion. Maintain ACCUMULATE with A$1.40ps target price (previously A$1.70ps).

ALX released its 2Q26 traffic and toll revenue data, as well as details on a new corporate debt facility to fund ALX’s put option termination payment to Ontario Teachers’ Pension Plan. Downgrade to FY27-29 DPS outlook, as our modelling assumes cashflow is dedicated to repaying the new corporate debt. $4.70/sh target price unchanged, based on IFM’s maximum consideration over the next 12 months of $5.10 less distributions paid by ALX (we assume 40 cps).

M7T's 4Q26 cashflow report reaffirmed FY26 guidance and delivered a third consecutive quarter of positive operating cashflow, with the first Flamingo production deployment marking a genuine milestone rather than a numbers-driven beat. Recent performance shifts the focus from cost discipline (largely proven now) to commercial execution, with new logo momentum the swing factor for whether FY27 ARR growth accelerates or stalls. Investors will likely need to see some new contracts drop before getting more positive on the name. No change to forecasts at this stage and look to the FY26 result for further outlook commentary.

LVMH Moët Hennessy Louis Vuitton SE is a multinational luxury group conglomerate based in Paris, France. It operates five business segments: Wines and Spirits; Fashion and Leather Goods; Perfume and Cosmetics; Watches & Jewelry; and Selective Retailing. Its 75 brands include Dom Pérignon, Moët & Chandon, Veuve Clicquot, Hennessy, Louis Vuitton, Christian Dior, Givenchy, Acqua di Parma, Tiffany & Co, TAG Heuer, Bulgari, DFS, and Sephora. LVMH operates around 6,300 stores worldwide. LVMH was formed by Bernard Arnault, Alain Chevalier and Henry Racamier in 1987 from the merger of Louis Vuitton and Moët Hennessy. Louis Vuitton itself was founded as a manufacturer of luggage in 1854. Moët Hennessy was formed in 1971 through the merger of the champagne house Moët & Chandon (founded 1743) and the cognac producer Hennessy (founded 1765). Some of LVMH’s more recent major acquisitions include Tiffany & Co. in 2020, Rimowa in 2016 and Loro Piana in 2013.

PNV has provided a trading update noting sales in 2H have slowed, disappointing the market. On the positive side cash generation has been strong. PNV is well positioned to deliver material EBITDA growth in FY27 and FY28 through manufacturing expansion, larger sales force and new product growth (MTX). We have adjusted our FY26 forecasts down in line with the trading update and maintain our view that PNV can deliver 20% revenue growth across the forecast period, while demonstrating cost control. We have our revised valuation to A$1.48 (was A$1.56). BUY maintained.

STO's 2Q26 came with a FY26 production guidance cut to 99-105mmboe from 101-111mmboe and delivered sales revenue 10% below consensus. However, we believe a solid 2H uplift is likely, driven by Barossa and Pikka both ramping up. At A$7.68, STO is already close to fair value on our numbers. Behind that sits the Federal east coast gas reservation process, on which STO is the most exposed gas producer in our coverage, a risk that is difficult to quantify and could easily escalate further in terms of implications for the gas industry. Maintain HOLD with A$7.90 target price (was A$8.30).

KAR's June quarter delivered what we argued for when we upgraded a month ago. Bauna is repaired and running at ~22,000 bopd, the heavy intervention spend is sunk, and we have 2H26 swinging to ~US$100m of free cash flow, a ~US$220m turnaround on the first half. The problem is the share price got there first. KAR has added 20% since we wrote on 29 June, closing almost all of the gap to our valuation, while the portfolio risk has migrated from Brazil to the Gulf of Mexico. At a price of A$1.71, vs a A$1.75 target, we see the value opportunity as having largely closed. We downgrade to HOLD (from Buy) with a A$1.75 target price.

Guidance delivered – WHC delivered in FY26 with ROM Coal production and Coal Sales coming in at the top end of guidance, while unit costs and capex tracked towards the lower end of their respective ranges. Refinanced for added flexibility – Recent refinancing has lowered funding costs and extended debt maturities, leaving WHC better placed to navigate commodity market volatility and focus on FY27 operational delivery. Queensland was firing – A strong rebound from Blackwater and Daunia drove an inline ROM Coal production result, highlighting the production leverage power of the Queensland portfolio and more than offsetting ongoing operational challenges at Narrabri. We upgrade our rating to BUY (previously ACCUMULATE) following recent share price weakness, but with a reduced price target of A$8.50ps (previously A$9.20ps).