Research notes

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.

Cash surprise strengthens the dividend outlook - NHC finished FY26 with A$485m of cash, materially ahead of both our forecasts and consensus expectations. The stronger cash position supports our decision to increase dividend assumptions for 2H26 and beyond. FY27 production growth remains intact - Bengalla and New Acland enter FY27 with positive momentum. Bengalla delivered a strong operational finish to FY26 and should benefit from more normal weather conditions versus the start of FY26, while New Acland continues progressing along its ramp-up trajectory towards nameplate production. We maintain a HOLD rating with an increased price target of A$5.45ps.

We attended the Australasian Gaming Expo (AGE) in Sydney last week, which serves as the key annual showcase for the region’s major slot machine manufacturers. Alongside meetings with other suppliers and operators, we attended a Q&A session with ALL management and took a guided tour of its product. Land-based momentum looks solid to us. ALL continues to push new titles onto its existing cabinets while laying the groundwork for the next wave of hardware and the content that comes with it. We made minor changes to our EPSA estimates across FY26-27F (+1%) following stronger assumed land-based gaming performance in the forecast period. Despite the stock trading on c.23x forward PER with a c.2% yield, we continue to see upside potential given the strong momentum entering peak season. However, following recent share price strength, we revise our rating to Accumulate with a 12-month target price of A$70.00 (prev. A$67.00).

Tesla designs, develops, manufactures and sells fully electric vehicles; energy generation and storage systems; and offers related services around these products. The group operates under two reportable segments: (1) Automotive; and (2) Energy generation and storage. Within Automotive, Tesla manufactures five consumer vehicles and in 2022 began early production and deliveries of a commercial electric vehicle, the Tesla Semi. Tesla has product plans to launch a lower priced point vehicle and develop an autonomous Tesla ride-hailing network. Tesla continues to leverage developments in its proprietary Full Self-Driving (FSD) capability, battery cell and other technologies (namely robotics). The energy generation and storage segment includes the design, manufacture, installation, sales and leasing of solar energy generation and energy storage products. Tesla’s stated mission is to ‘accelerate the world’s transition to sustainable energy’.

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.

We are moving our coverage on Gold Hydrogen to our ‘Keeping Stock’ format which will enable us to continue to provide regular and timely updates. We will cease providing a rating, valuation and forecasts, therefore, our previous forecasts, target price and recommendation should no longer be relied upon for investment decisions.

BBN reported FY26 pro-forma NPAT of $16.1m, which was at the lower end of revised guidance range, but represents +33.9% growth yoy. The trading update was solid, reporting +4.3% LFL sales growth in the first 6 weeks of FY27. BBN also provided FY27 pro-forma NPAT guidance of $19-21m which represents ~24% growth yoy, with earnings skewed to 2H (one-third/two-third). We have downgraded our FY27/28 NPAT by $2-3m driven by lower LFL sales growth, less stores, and higher D&A costs. Our valuation lowers driven by earnings downgrades, offset by higher peer multiples. BBN is trading on <9x FY27 PE, which we think is too cheap given the earnings growth profile over the next few years. We upgrade to a BUY (from ACCUMULATE), with a $1.62 price target.

Underlying earnings growth, delivery of cost decline and low bad debts were a feature of the trading update, with lifting momentum behind revenue growth. Forecast changes are immaterial. 12-month target price reset to $33.53/s. TRIM retained, with potential TSR at current prices of c.-9% (including 4.4% yield).

ASX’s FY26 result was in line with expectations. The overall operational performance was positive, showing solid top-line momentum at the group level (+13% on pcp) and growth across all four segments. An elevated near- and medium-term cost profile, however, remains the key drag on the bottom line, on our forecasts. Our FY27-FY29 EPS estimates increase marginally (+2%) factoring in the result and better than previously forecast trading volumes across cash markets and Futures/OTC. Price target increases to A$57.80 (from A$53.90). Hold maintained.

ORA's FY26 result was slightly softer than our forecasts but largely in line with consensus. Key positives: Cans continued to perform well with EBIT up 7% on the back of 6% volume growth. The balance sheet remains strong, supporting the resumption of the on-market buyback following the result. Key negatives: The near-term outlook for Saverglass remains challenging. ORA also recorded a non-cash impairment of $742.8m following a reassessment of the business's earnings outlook relative to expectations at the time of its acquisition in 2023. We decrease FY27-29F underlying EBIT by 5-10%. Our target price decreases to $1.45 (from $1.55) and we maintain our HOLD rating. With the outlook for the Glass business remaining challenging and group earnings expected to decline in FY27, a recovery still appears some way off. While management is implementing initiatives to restore growth, progress is likely to be constrained until consumer demand for wine and spirits improves.