Research notes

Despite a number of external challenges, ORI’s FY26 result slightly beat consensus estimates. Underlying EBIT rose 6.5% (+11% in constant currency) and NPAT increased 9.0%. Digital Solutions and Specialty Mining Chemicals (both +25% EBIT) drove the growth. Pleasingly, operating cashflow was also better than expected and the balance sheet is strong. >In FY27, ORI expects earnings growth from all three segments. Plant turnarounds and materially higher interest costs (+A$25-35m) mean modest NPAT growth. Growth should accelerate in FY28. We have made minor revisions to our forecasts. >We maintain an ACCUMULATE rating with a revised price target of A$26.98.

A positive AGM update. FY27 Operating EBIT guidance of $72m to $76m (+7% to +13%) brackets Consensus ($72.8m). 1H27 guidance of $40m to $42m was the standout, with the $41.0m midpoint 12% ahead of Consensus. The implied 2H27 (~$33m, 10% below Consensus) appears to reflect the full quantified cost and seasonality headwinds, with no credit for pricing, new capacity or the potential PNG LNG project (US$50m to US$55m, FID mid-December). We see risk skewed to the upside. >We lift FY27F/FY28F Operating EBIT by 3.5%/2% to $75.4m/$85.3m, in the upper half of guidance. Our target price rises to $5.90 (from $5.25) on a higher applied multiple. Buy rating retained.

XRO’s 1H27 result was broadly in line with expectations and comes with a small upgrade to FY27 guidance (including now expecting to hit Rule of 40 in FY27). >Shares have underperformed by ~50% over the past 12 months. The guidance upgrade, improving US/Melio traction, better articulation of XRO’s positioning in the context of AI and a newly announced A$1bn on-market buy-back are all positive news and, in our view, should be well received by investors. >We lift our Target Price to A$90 and retain our ACCUMULATE recommendation.

ACF provided a positive trading update with FY27 underlying EBITDA upgraded by ~5% at the mid-point. >The upgrade reflected a strong start to the financial year in both the Industrial Access and Construction segments. Pleasingly, management said the recent acquisitions of SuperDeck and AGIS are performing to expectations. >We increase FY27-29F underlying EBITDA by 6%. >Our target price rises to $1.45 (from $1.40) and we maintain our BUY rating. We remain positive on ACF following another upgrade to FY27 earnings guidance. Momentum continues to build across both the Industrial Access and Construction segments with a strong growth outlook over the medium term supported by increasing activity in QLD (including commercial, infrastructure and Brisbane Olympics), the Sydney Harbour Bridge refurbishment, and Snowy 2.0. Trading on 9.6x FY27F PE with a yield of 3.4%, we see the stock as undervalued relative to its growth outlook (3-year underlying EPS CAGR of 20%).

We have updated our forecasts on TLC after an improvement in jackpot outcomes since our September note. Our lottery tracker has swung from c.10% behind the pcp in mid-September to c.7% ahead on a cumulative draw basis. We lift FY27/28F Lotteries revenue by 2%/2% and Lotteries EBITDA by 5%/7%, with EPS up 5%/9%. Keno remains unchanged. >We retain our ACCUMULATE recommendation, with a revised 12-month target price of $5.90 (previously $5.40). The share price has rallied c.13% since our upgrade, so much of the rebound is already priced, albeit we note short interest remains elevated (c.9% SOI). At c.18x 12-month forward EV/EBITDA and a c.3.2% fully franked yield, the implied 12-month TSR of c.11% still looks good value in our view.

Elementos delivered a Definitive Feasibility Study (DFS) on its wholly-owned Oropesa tin project, Spain, with a pre-production cost of US$156M, producing 3,400tpy of tin in concentrate over 12 years, and now with the approval for 8.1km of road infrastructure, is progressing the key permitting, financing and offtake milestones toward a Final Investment Decision (FID). >With a binding agreement to acquire up to 50% ownership of the Robledollano smelter, 220km from Oropesa, ELT has the potential to create the only primary mine-to-metal tin supply within Europe, and establish one of the few vertically integrated primary tin supply chains globally. >Using a long-term tin price of US$37,000/t (currently US$47k/t) and a discount rate of 15% for Oropesa, our ELT Valuation is A$0.65ps, and our Target Price, with the Oropesa NPV discounted by 10% ahead of the FID, is A$0.60ps.

GQG’s October update was very weak, with net outflows of US$6.7bn and negative investment performance of US$11bn taking FUM down 12% in the month to US$131.6bn. Year-to-date net outflows now total US$32.9bn, with no sign yet of stabilisation. >We downgrade FY26F/FY27F/FY28F EPS by 4%/27%/34% on lower FUM forecasts (weaker net flow and investment performance assumptions). To reflect higher risk, we cut our target PE from 8x to 5x and apply a 15% discount to our DCF. Our PT falls to A$0.82 (previously A$1.52). >The franchise retains inherent value if management can restore performance, but with momentum firmly to the downside, it is difficult to stay positive until we see signs of a turnaround. We move to HOLD.

MI6 has received credit approved commitments from ANZ, NAB and Societe Generale for A$410m in debt facilities (A$335m Project Finance Facility and A$75m Working Capital Facility), which, alongside FNV royalty funding and the recent Placement, fully fund the Bullabulling development to first production. >Terms are in line with expectations but nonetheless attractive, with a margin of less than 3% above BBSY, a 7-year PFF tenor and no mandatory hedging. Financial close is expected in 1Q CY27, in line with DFS completion and FID. >We maintain our BUY rating and A$1.57ps price target.

GLF’s share price has pulled back ~ 20% since reporting in August, as residential selling conditions in Queensland have softened considerably, creating a tougher operating environment for residential and LLC developers. Listed peer updates for 1Q FY27 and our own channel checks with private industry contacts confirm the slowdown. >We use this as an opportunity to revisit our forecasts and valuation. We touch down our FY27 earnings (EPS down 5%) and sit 6% below consensus at the NPAT level, primarily on lower settlements and our price target decreases to $4.75 (from $5.74). While we acknowledge the tougher near-term backdrop, our longer-term outlook is unchanged. We continue to forecast earnings growth and NTA accretion across our forecast period and maintain our ACCUMULATE rating.

Contrary to expectations, CTD did not provide FY27 earnings guidance at its AGM. Guidance is now more likely at its 1H27 result in February. CTD did provide its 1Q27 result, which was unsurprisingly weak, with underlying EBITDA down 37.5% on lower revenue, a lower revenue margin (6.2%), higher UK and Group costs and adverse FX. Given usual seasonal trends plus all the added distraction associated with the overcharging episode, we think 1Q27 will prove to be the low point. >Pleasingly, client retention is >97% and there have been A$258m of new wins and A$684m of re-signed TTV YTD. Remediation is progressing (A$66m paid in 1Q27) and the IATA release (~A$30m working capital) strengthens liquidity. >We have upgraded NPAT by 24%/16%/13% over FY27/28/29 due to lower interest and tax. Following the share price’s strong rerating, we move to a HOLD rating (from BUY) with an increased price target of A$3.90 (was A$3.06).