Research notes

DNL’s 1H26 result was materially stronger than expected. After a stronger than expected 1H26, DNL would have upgraded its FY26 Explosives guidance had it not been for a stronger AUD, cost headwinds given the conflict in the Middle East and stranded costs post the sale of Phosphate Hill. We have made material revisions to our FY26 forecasts reflecting the sale of Phosphate Hill for a poor price. Moving forward, DNL is now a pure play explosives company. We have made modest upgrades to FY27/28. In its first year with no Fertilisers, DNL is trading on a fair FY27F PE of 17.9x and EV/EBITDA of 9.3x. We maintain a Hold rating with a new price target of A$3.46.

FY26 guidance was downgraded on China Albumin price pressure, US Ig channel inventory normalisation and other impacts (paused Iran sales, lower Hemgenix and and Iron sales), combined with a further cUS$5bn in flagged impairments. Importantly, issues are framed as primarily executional rather than structural, with infrastructure overbuild, organisational complexity, and weak commercial execution cited, while underlying demand and industry structure remain healthy. Encouragingly, Seqirus is performing better than expected, Ig demand remains mid-to-high single digit, and there are early signs of plasma share stabilisation. While forward earnings visibility remains limited, we believe the current valuation increasingly discounts a structurally impaired plasma franchise, which we do not believe the current industry dynamics support. We reduce FY26-28 forecasts and lower our blended DCF, PE and EV/EBITDA-based target price to A$147.59. Given CSL’s global leadership positions, structurally growing end markets and operational initiatives, we retain a BUY rating.

SKY continues to advance Tallebung toward development, with approvals momentum building and drilling continuing to support resource growth and project confidence. Recent drilling has returned high-grade tin mineralisation alongside meaningful silver and tungsten results, with both commodities trading at or near all-time highs. We maintain our SPECULATIVE BUY rating and A$0.35ps price target, uplift a function of an increase to our bull case following sustained tin price appreciation.

MQG delivered a very strong FY26 result with NPAT (A$4.8bn) up +30% on the pcp and +8% above company-compiled consensus. Whilst acknowledging this result was aided by significant volatility in commodity markets that assisted CGM, MQG’s performance was generally strong across the board. We increase our MQG FY27F/FY28F EPS by +9%/+2%. Our price target rises to A$248 (previously A$223) on our earnings changes and a valuation roll-forward. MQG is a quality franchise, and a proven performer, but with <10% upside to our PT, we maintain our Hold call. We increase our MQG FY27F/FY28F EPS by +9%/+2%. Our price target rises to A$248 (previously A$223) on our earnings changes and a valuation roll-forward.

REA's 3Q26 result was driven by a strong yield outcome (+14%) in the resilient domestic residential business, and new listings also returning to growth (+1% on the pcp). FY26 Operating cost guidance being lowered was a key takeaway. We make minor revisions to our FY26-FY28F EPS forecasts (-0.5%) reflecting the lowered cost guidance, offset by a more conservative FY27 yield assumption. Our DCF-derived price target is lowered slightly to A$219 (from A$220). BUY.

SKS’s $22m contract win for the new Coles head office sees the group work in hand expand to $355m ($270m for FY27), with SKS’s Tenders pipeline exceeding $1.2bn (of which >$1bn relates to prospective data centre projects). SKS’s share price momentum increasingly reflects confidence in the group’s strong FY27 outlook, and ability to win a greater share of its healthy pipeline of prospective data centres. We lift our PBT forecasts by ~12-15% in FY27-28F, reflecting our expectations for further conversion of SKS’s share of this pipeline over the year ahead. We retain our ACCUMULATE rating with a revised PT of $8.95/sh.

Berkshire Hathaway, Inc. is a holding company, which engages in the provision of property and casualty insurance and reinsurance, utilities and energy, freight rail transportation, finance, manufacturing, and retailing services. It operates through the following segments: Insurance, Burlington Northern Santa Fe (BNSF), Berkshire Hathaway Energy, Pilot Travel Centers (PTC), Manufacturing, McLane, and Service and Retailing.

Flutter Entertainment plc is a global sports betting and gaming company headquartered in Dublin, Ireland. Its offerings span online and retail sports betting, online poker, casino games and daily fantasy sports. The company operates through several key brands including Betfair, Paddy Power, Sky Bet, Sportsbet and FanDuel, catering to customers across Europe, Australia and North America.

3Q26 Gold production of 6.1koz at an AISC of A$4,126/oz missed our expectations on a cost front despite pre-reporting production. Cash is in focus - MEK closed the quarter with A$50.1m with a further ~3.2koz of gold on hand (~A$20m at spot) which may provide additional liquidity, albeit with limited visibility on timing of monetisation. Head grade of 1.6g/t Au was the driver of the miss (-51.5% QoQ) and remains the critical swing factor into 4Q26. The recent Mt Holland Gold acquisition (A$20m) adds incremental pressure to deliver on grade recovery. We now model open pit operations to begin curtailing in FY26, with the second Turnberry underground reaching nameplate in FY28. This pulls back our prior assumption of an extended open pit phase. We maintain our BUY rating, but view the next two quarters as critical as MEK needs to demonstrate clear grade improvements to remain on track for the anticipated step-change in free cash flow into FY27.