Research notes

WJL’s FY26 result was weak but in line with guidance. FY26 was impacted by subdued trading conditions and material investment in the business. FY27 is going to be a particularly challenging year for WJL given the Middle East conflict, cost of living pressures, Virgin Australia materially reducing its commission and overrides and the RBA surcharging regulation changes. We have made significant revisions to our already well below consensus forecasts. In the absence of corporate activity, shareholders will need to be patient given the current challenges WJL needs to overcome while investing in its business for longer term success. We retain a Hold rating with a new price target of A$0.40.

FY26 result was in line with Consensus (and a slight beat vs prior guidance), while Consensus for FY27 was at the top end of guidance. To this end, the company is forecasting FY27 pro forma growth of 4-8%, with siding back to organic growth. Market conditions remain subdued, citing lower builder activity and affordability pressures - looking forward management assumes no market recovery in FY27. As such, FY26 can be chalked up as a transformational but financially dilutive year, while FY27 is about margin and cash-recovery driven by synergies rather than any improvement in the housing market. Buy retained, with a A$39.00/sh price target.

Starbucks Corporation is the largest retailer of specialty coffee in the world. Starbucks was founded in 1971 as a retailer of coffee beans and ground coffee, operating from a single store in Seattle’s Pike Place Market. After it was acquired by Howard Schultz in 1987, the business grew exponentially. Its global footprint now comprises over 38,000 stores in more than 80 markets, with Starbucks Reserve ® Roastery locations in Chicago, Milan, New York, Seattle, Shanghai and Tokyo.

Rheinmetall AG is a leading German defence contractor best known for designing and manufacturing tanks, cannons, and advanced combat systems. Its crown jewel is the 120mm smoothbore cannon used on the Leopard 2 main battle tank, widely regarded as one of the most precise and powerful tank guns in service. Rheinmetall is also a core industrial partner in the Franco-German MGCS (Main Ground Combat System) programme, aimed at developing Europe’s next-generation main battle tank.

Named one of Time Magazine’s Best Companies of 2024, KLA Corporation makes high-tech equipment used in the production of semiconductors, which are essential components in electronic devices like smartphones and computers. It helps manufacturers improve the quality and efficiency of their production processes by providing tools that detect and analyse defects in the manufacturing process.

TNE’s 1H26 result came in largely as expected, albeit with some FX headwinds, which otherwise would have seen its underlying result land ahead of consensus. The group enters 2H26, with a strong pipeline of ‘Plus’ leads, which sees TNE well positioned to achieve the top end of its re-affirmed FY26 ARR/PBT Guidance. The pullback in TNE’s share price sees our TSR lift to 18% and we therefore move to an Accumulate rating with a $32.30 price target.

Constellation Software (CSU) acquires, manages and builds industry specific software businesses aka Vertical Market Software (VMS) companies. Uniquely they are perpetual owners of all their businesses. CSU has six operating groups: Volaris, Harris, Jonas, Vela Software, Perseus Group and Topicus, which service customers in over 100 markets worldwide. Each operating group serves as a holding company for dozens of underlying software companies. The company is headquartered in Toronto, Canada, and has offices in North America, Europe, Australia, South America and Africa.

General Motors Company (GM-US), headquartered in Detroit, is a global automotive company known for brands like Chevrolet and Cadillac, offering a diverse portfolio of vehicles. A market leader with considerable scale, GM has global operations and employs over 165,000 staff worldwide.

While ELD’s 1H26 result was up strongly on the pcp, it missed consensus estimates due to materially higher Corporate Services costs associated with Systems Modernisation. Outlook comments were relatively optimistic despite the BOM’s dry outlook. We have revised our forecasts for higher costs and the divestment of Killara. After material weakness, we maintain a BUY recommendation. A significant rerating requires delivering consensus estimates and deleveraging.

ALQ delivered a strong FY26 with EBIT +18% and NPAT +26% YoY. Commodities was the standout, as 2H revenue growth of +23% was accompanied by +170bps of HoH margin expansion. Commodities guidance (FY27 +12-14% revenue growth) is conservative and would require a material deceleration from 2H26 (+23%). Indeed, 1H27 minerals guidance is predicated on flat (absolute) sample volumes vs 2H26, despite seasonal tailwinds (Sept-half > Mar-half) and accelerating junior activity. Our forecast changes are negligible, and we still view risk to our forecasts as skewed firmly to the upside, absent a material supply disruption scenario. We forecast Commodities revenue growth of +25%, while our raisings data points to geochemistry volumes up +35-45% during 1H, corroborated by the sample flows chart which already shows volumes tracking +25-30% in April. The stock is now trading on just 23x FY27 PE as it enters a bullish commodities cycle with a gold-plated balance sheet (leverage 1.5x). Reiterate BUY.