Research notes

ELD’s FY25 result was in line with its guidance. As was well guided too, the 2H25 was weak due to drought. Outlook comments were optimistic, the 1Q26 is off to a strong start and FY26 should benefit from a positive rainfall outlook, higher selling prices, acquisitions and the transformation projects. We retain a BUY recommendation with a new price target of A$8.65 (A$8.50 previously).

NHC started strong with QoQ increases in produced coal, coal sales, and prime waste movement. ROM coal output declined due to the focus on prime waste, but this will allow for more ROM coal to come in 2H. Thermal coal prices have improved recently, and we think that price risk is more weighted to the upside than the downside and NHC offers a resilient, high-quality exposure to the next coal price cycle. NHC still offers growth potential, but does suit patient/ value investors, particularly as catalysts for thermal coal look limited in the short term. We rate NHC an ACCUMULATE with a target price of A$4.55ps.

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’.

SVR’s 1Q26 trading update, provided at its AGM, continues to highlight the group’s ongoing transition as it increasingly focuses on higher quality lending and commercial growth efforts. Recent initiatives, such as the sale of SVR’s NZ arrears book and refinancing of its M3 warehouse, will see it recognise cost savings and improved debt diversification, which should be supportive of the group’s outlook and Normalised NPAT guidance for FY26, which is expected to be ~$36.0m (+5.9% yoy - including a $2.0m one-off benefit from the sale of its NZ arrears book. Loan book growth should also return in FY26 with SVR’s guidance flagging Australian loan receivables growth to ~$900m (+8% yoy), offsetting the NZ book roll off. Our FY26-28F Underlying NPAT forecasts lift by ~0%/+6%/+6% based on the group’s update 1Q26 trading update, FY26 guidance and interest cost savings from the M3 warehousing deal. We maintain our A$1.85/sh TP, with a BUY rating.

While it can be argued that the FY25 P&L result was lower quality due to one-offs, operating cashflow was materially stronger than expected, underpinning GNC’s strong core cash position. This allowed the company to reward shareholders with an attractive final dividend. In line with the recent outlook commentary from its international peers, GNC said that the margin environment will likely remain subdued in FY26. Consensus estimates were therefore too high. Importantly, payments to the insurer will no longer occur in big crop years, allowing GNC’s strong fixed cost leverage to return when crop production issues around the world ultimately eventuate. We think that GNC has been oversold and maintain an ACCUMULATE recommendation with a new A$9.05 price target.

A buoyant construction sector across South-East Queensland has seen demand for WGN’s construction materials (and composite poles) continue unabated. As a result, WGN is forecasting FY26 EBIT of $52m to $56m, growth of 30% (vs pcp) and a beat of c.25% vs both MorgansF and consensus. The company has however flagged a c.60/40 1H/2H earnings skew, reflecting fewer working days in 2H26 (vs 1H) and the dryer conditions experienced through 1H26 (to date). Given the significant upgrade to FY26 earnings and our expectation the business can keep growing earnings through a period of consistent and increasing state based demand, we increase our target price to $3.75/sh, retaining an Accumulate rating.

PME's share price has continued to decline since our last update, despite stable fundamentals and a consistent outlook. This decrease appears to be due to a broader market shift away from high-growth stocks, as there have been no major new contracts or company-specific changes for PME since our previous report. Business quality remains solid with high margins, long-term contracted revenues, and a growing contract book which underpins the demand and safety in the financial profile over the coming years. No change to valuation (A$290 p/s) and longstanding positive outlook, just a better entry point. Upgrade to an ACCUMULATE recommendation, with the view that current prices represent a reasonable opportunity for partial positions, noting ongoing volatility in the name could still yet present further downside.

ACF noted continued softness in its general formwork business during 1H26, particularly in QLD. However, management remains confident of a pickup in activity in 2H26 (especially in 4Q26) with momentum building in FY27 as projects linked to the Brisbane Olympics ramp up. Guidance for 1H26 reflects this weakness with EBITDA below our expectations. As a result, we adjust FY26/27/28 EBITDA by -6%/-3%/-2%. While short-term softness in formwork activity (particularly in QLD) is not new and will weigh on near-term earnings, we expect a strong recovery from FY27 driven by Brisbane Olympics-related activity and a ramp-up in other projects. The Industrial Access segment (~50% of FY25 revenue) continues to perform well and provides a stable, recurring revenue base. Trading on 10.7x FY26F PE with a 4.8% yield, we believe ACF’s valuation remains attractive. We have a BUY rating with a target price of $1.29 (previously $1.32).

Nestlé SA is the world’s largest food and beverage company. It engages in the manufacture, supply and production of prepared dishes and cooking aids, milk-based products, pharmaceuticals and ophthalmic goods, baby foods and cereals.

XRO’s 1H26 result was largely in line with expectations but higher investment expenses in the 2H and the inclusion of Melio into our forecasts lowers our EBITDA and FCF forecasts. Our prior XRO research presented our first take on XRO including Melio numbers and now, following its 1H26 result and greater clarity on costs, we reduce our short-term forecasts and formally publish our combined XRO and Melio forecasts. Our target price reduces ~30% to $141 on lower peer multiples and lower FCF per share. We retain our Accumulate recommendation, noting it may take some time for management to build investor confidence in the value add of Melio and return XRO back to rule of 40 growth.