Research notes

Steady operating result with in-line operating performance at Tritton slightly offset by some misses at Cracow. Importantly, growth at Tritton through the Murrawombie pit is on track and exploration continued to highlight potential for reserve/resource growth at both Tritton and Cracow. Move to an ACCUMULATE rating with a A$0.62ps TP (previously A$0.43).

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Solid start, with most assets coming in ahead of estimates, in particular Worsley, Sierra Gorda and GEMCO posting solid results. All FY26 guidance was maintained. Share price has enjoyed significant support from rising copper, silver and ali prices. Further changes to the portfolio are needed if South32 is to prevent its share price from merely following metal prices up and down through each cycle. We maintain a BUY rating with an updated A$3.75 target price (previously A$3.55).

Our sensitivity analysis indicates an asymmetrical risk profile skewed to the upside for both coal prices and SMR’s share price. Current share price appears cheap, presenting a compelling opportunity for investors with a more assertive risk profile. Increased performance in Q3 from a soaked 1H saw Run-of-Mine (ROM) coal increase by ~8% and product coal increase by ~12% against Q2. We maintain our recommendation on SMR of BUY with a target of A$2.70ps. Our target for SMR is set at a discount to NPV to reflect opacity in the short-term coal price outlook.

GDG’s 1Q26 business update saw a record Investment Bond sales performance (+A$333m) that beat market expectations. Evidentia SMA AUM growth (+A$3bn) is broadly run-rating in line with FY26 market expectations of +A$12bn growth. Overall, we saw this as a solid enough quarterly performance by GDG, displaying ongoing robust operating momentum. We lift our GDG EPS forecasts by +1%-3% on slight increases to both our Investment Bond sales and Evidentia AUM forecasts. Our price target rises to A$8.01 on our earnings changes and a valuation roll-forward. We think GDG has a great story, and management has executed well over time. With the stock trading at a >10% discount to our price target, we maintain our Accumulate recommendation.

FY26 NPAT guidance of A$51-60m was ~30% below consensus expectations (at mid-point) with a material skew to 2H26 (at mid-point 1H26 A$16m; 2H26 A$40m). BAP expects a significantly improved 2H due to operational improvements lifting the top-line; benefits of its pricing realignment strategy; realisation of cost saving initiatives (A$20m pre-tax benefit); and some qoq improvement within Trade. We had been wary of a more challenging business reset for BAP, but today's update is far weaker than envisaged and our confidence in the meaningful 2H earnings skew is muted. Recent share price weakness (down ~30% since FY25 result) may renew prior corporate appeal (last bid rejected at A$5.40ps in July-24); however, absent a takeover, the stand-alone investment case appears challenging.

A solid 3Q’FY26 result from Beach, posting single-digit beats in production, sales volume and revenue versus Visible Alpha (VA) consensus and MorgansF. Waitsia Stage 2 start-up is imminent, its ramp up performance will be a key catalyst. Undersized reserves remains the key gap in Beach’s otherwise robust fundamentals, leaving a heavy focus on possible M&A. Cooper Basin flood recovery continues in 2Q. We upgrade our rating to HOLD (from TRIM) with an upgraded A$1.25 TP.

We initiate coverage on Torque Metals (ASX.TOR) with a SPECULATIVE BUY rating and price target of A$0.80ps. Drilling beyond the existing 250koz @ 3.1 g/t Au resource has delivered some of the most impressive gram-metre (grade × interval) gold intercepts seen in Western Australia this year, with six holes exceeding 200+ gram-metres. The Paris system remains open, with simple and effective geophysical targeting delivering a high success rate in intercepting high-grade gold. This supports rapid resource growth - we see scope for +500koz Au in the near term (just at Paris main) and a broader 1.0 - 1.5 Moz Au potential across the 57 km mineralised corridor. Upside potential at Paris is supported by several potential commercial avenues: 1) near-term toll treatment and cash flow generation; 2) resource growth supporting a standalone operation; and 3) strategic interest via M&A.

COG has acquired an additional 14% stake in Fleet Network (a salary Packaging/Novated Leasing business). This deal is expected to be +5% accretive to EPSA. This transaction follows hot on the heels of COG’s recent acquisition of EasiFleet, another Novated Leasing/Salary Packaging business. This shows management’s clear intent to aggressively increase COG’s market share in the Novated Leasing space. We lift our COG FY26F/FY27F EPS by +2%/+5% reflecting the Fleet Network acquisition. Our price target rises to A$2.63 based on our earnings changes, and also a lift to our SOTP valuation multiple, to more in line with peer levels. With >10% upside to our price target, we maintain our Accumulate rating.

ARB’s 1Q26 update was slightly softer than expected (1Q26 sales +3.8%; vs 1H26 cons +5.6%), as Export strength (1Q26 +17.6%) offset slower Aftermarket (+1%). Export sales, particularly in the US, continue to strengthen (and appear sustainable), as a slower Aftermarket result was driven by 'fitter' shortages; changing mix of targeted new vehicles; and slower accessorisation rates. ARB is actively addressing these issues, which we expect will improve through FY26. We remain positive on the stock and observe meaningful tailwinds (onshore and off) carrying the group into an improved FY26 result. ACCUMULATE maintained.