Research notes

SUL's Investor Day contained limited surprises, with the group setting out FY31 network targets as it looks to organically grow share (via network growth ~3% pa, and category/service expansion) and optimise the business (ERP/supply chains). We left SUL's Investor Day encouraged by the clarity of the long-term organic growth strategy and the renewed management team tasked to execute. However, with valuation near our revised A$12.30ps price target, a softer consumer backdrop and lingering competitive pressures, we retain our Hold recommendation.

The trading environment for DMP has become more challenging than previously assumed, and we have updated our forecasts to reflect a weaker SSS (same-store-sales) outlook across all three regions, compounding cost pressures on ANZ franchisee economics, and a more adverse FX environment in Japan. The earnings recovery, albeit modest, remains on track but it is entirely cost-driven; there is no volume improvement embedded in our numbers until outer years. We move to a HOLD rating until there is evidence of further cost management and SSS recovery. We reduce our price target to A$17.60 from A$25.00.

In this note, we update our forecasts to better reflect the timing of recent acquisition settlements, along with an anticipated increase in D&A and interest expenses. While incrementally positive for FY27/28 EBITDA, the higher D&A sees our underlying NPAT decline by mid-single digits. From a valuation perspective, the roll-forward of the valuation date offsets the impact of lower earnings. More broadly, our investment theme remains intact, with SYL forecast to capture an increasing share of the total addressable market across the key verticals of infrastructure, digital, energy and defence. Supported by additional M&A, the business could deliver early on its FY30 aspirational EBITDA target of $200m. On this basis, we reiterate our BUY recommendation, with a $3.35/sh price target.

MVF provided a weaker than expected trading update, with underlying NPAT guidance for FY26 revised down 12.5% at the midpoint. This was driven by soft industry cycles, down ~4.7% on a rolling 3-month basis (up to April), with weakness continuing into May and June. While this is a disappointing update, we still see longer-term value in the business through the short-term volatility. The business remains the second largest player in the Australian IVF market, underpinned by strong structural tailwinds (advanced maternal age, increased focus on families, growing service offering), with cost-out initiatives likely to support earnings growth in FY27. We have lowered our price target to $0.80 (from $0.90) and retained our SPECULATIVE BUY recommendation.

We initiate with a BUY and $17.84 PT on Nick Scali. We use an FY28 PER and DCF when setting our price target as we opt to look through near-term consumer weakness, with the current price providing an attractive entry point. High-quality retailer with a long track record. Nick Scali has delivered long-term EPS growth through disciplined store rollout, LFL growth, best-in-class margins, and operating leverage. Strong cash generation and balance sheet. Structural negative working capital supports high cash conversion, while the low capital intensity of new store rollouts leaves ample cash flow for dividends and property purchases and/or growth ventures. Store rollout optionality. Further Plush and Nick Scali rollout in ANZ and the Nick Scali rollout opportunity in the UK provide an attractive growth leg.

Diageo is a global leader in premium alcoholic beverages and the number one player in the international spirits category. The company owns nine of the world’s top 30 spirits brands and operates across multiple categories including Scotch whisky, vodka, rum, gin, tequila, beer, ready-to-drink (RTD) products and liqueurs. Its portfolio features iconic names such as Johnnie Walker, Crown Royal, Buchanan’s, Windsor and Bushmills whiskies, Smirnoff, Cîroc and Ketel One vodkas, Captain Morgan rum, Baileys liqueur, Don Julio tequila, Tanqueray gin and Guinness stout.

GQG has provided a May FUM update. Overall, monthly outflows appear to be stabilising in the -A$1.5bn to -A$2.0bn range, although investment performance remains highly volatile. While FUM is effectively flat calendar year-to-date, with outflows offset by positive market movements, we acknowledge it will be difficult for GQG to re-rate until the current outflow cycle ends. We lower our GQG FY26F/FY27F EPS forecasts by 1%-5% and reduce our price target to A$1.64 (from A$1.92). While the near-term operating environment remains difficult, we continue to see long-term value in the GQG franchise, trading at ~9x FY1 PE with a ~10% dividend yield. ACCUMULATE.

TTX successfully completes a placement to fund the expansion of its production facility and build on its customer success team. We have updated our model to reflect the new capital and take a more optimistic stance on FDA approval for its dental/orthopedic products. Independent research shows TTX’s drug delivery platform can safely carry and protect fragile drugs when delivered through the nose. Future licensing opportunities are likely. Our valuation has increased to A$7.15 (was A$6.84). SPECULATIVE BUY.

Given recent profit downgrades from other travel industry peers due to the conflict in the Middle East, HLO’s downgrade wasn’t a surprise. It has revised its FY26 EBITDA guidance by 11-14%. We have downgraded our forecasts. We assume that the conflict and a subdued consumer environment continue to impact the 1H27, followed by a strong recovery in the 2H27. This could prove conservative given HLO’s strong 1Q27 bookings. We are buyers of HLO during this period of short-term uncertainty and share price weakness because when operating conditions ultimately improve, both its earnings and share price leverage to the upside will be material.

After a challenging 1H26, VEE has seen an improvement in 2H26 driven by higher Defence revenue from the fulfilment of ASC orders in hand alongside a recovery in propulsion sales. VEE has also completed construction of its ~1,000m2 factory extension, with the additional space to accommodate anticipated future growth in propulsion, defence, and engineering. Management expects FY26 revenue of $50-52m and EBITDA of $3.25-3.75m. Reflecting this guidance, we decrease FY26F revenue by 2% to $51.3m but increase EBITDA by 140% to $3.6m. Our target price rises to $0.85 (from $0.80) and we maintain our SPECULATIVE BUY rating. We believe VEE’s outlook remains positive with multiple growth opportunities across defence (eg, HII, Northrop Grumman, Hunter Class Frigate Program), propulsion (VEEM Extreme, Sharrow), and gyros (Mark III). While the timing of order flow can be uncertain and may drive near-term earnings volatility, the long-term earnings potential from these opportunities remains significant.