Research notes

SMR delivered a result broadly in line with market expectations. Operationally, 2025 was a record year, with Run-of-Mine (ROM) production reaching 20.5Mt and saleable coal output of 14.0Mt. This strong performance did not translate into higher Revenue/EBITDA/NPAT, with coal prices dropping to their cyclical lows during the year. Revenue and EBITDA declined ~21% and ~45% YoY respectively, and SMR reported a US$47m net loss for 2025 compared with a US$192m net profit in 2024. Despite the reported net loss, SMR has surprisingly rewarded its investors, declaring a US8.9c dividend. Dividend payments are forecast to cost ~US$80m. We upgrade our recommendation of SMR to HOLD (previously TRIM) with a target price of A$2.95ps. Our target price for SMR is set at a discount to NPV to reflect opacity in the short-term coal price outlook.

IFN delivered 1H26 pro forma EBITDA of A$10.5m (+18.7% pcp), with Energybuild the key driver (EBITDA +92% hoh) and FCF of A$2.9m (A$1.1m pcp) a highlight. Margin pressure within Minemet (~300bps vs pcp), a softer Pure result (EBITDA -4% hoh) and a meaningful 2H skew embedded in FY26PF EBITDA (2H implied A$14.5m) have weighed on the share price as delivery against prospectus forecasts (A$25m) appears at risk. While we expect the group may fall slightly short of FY26 expectations, we view the 2H composition as pointing to a broadly improving outlook, underpinned by a recovering Pure, stabilising Minemet margins, steady Merredin performance and accelerating Energybuild momentum. Acquisitions remain upside to forecasts. We view recent share price weakness as more than pricing in near-term earnings uncertainty, with the current valuation undemanding. BUY maintained.

DTL’s 1H26 result was in line with the midpoint of guidance provided at DTL’s October 2025 AGM. Guidance was for PBT of $32-34m (vs $33.5m just reported). This was up 2% YoY despite the full impact of rebate changes announced ~18 months ago. As expected, no formal full year guidance was provided. Overall the result was in line. We make immaterial forecast changes and our target price reduces slightly to $8.20 on a peer compco de-rate. Hold retained.

A meaningful step up in EBITDA (+33% on pcp) was offset by higher D&A (+43%) delivering A$3.1m of NPAT (vs MorgansF A$4.2m). LGI is well positioned for a stronger 2H26 (electricity price recovery + Mugga Lane online) and continues to excel operationally, delivering strength in biogas flows (+37%), generation (GWh +41%), ACCU volumes (+19%) and new site wins (+2). Steady progress across strategic growth projects (Mugga Lane, Belrose & Nowra) underpins a robust medium-term outlook as earnings step structurally higher. We view recent share price weakness from softer commodity prices as a compelling buying opportunity. FY26 EBITDA guidance (25-30% growth) has been reiterated and the long-term growth runway remains intact. Move to BUY.

Adairs reported a softer than expected result, with group EBIT down 10% yoy. This was driven by ongoing weakness in Focus, excessive clearance activity in Adairs in the 1Q, which offset strong performance in Mocka. We forecast significant improvement in 2H gross margins for Adairs, which should drive earnings in 2H and into FY27 if sales can be sustained at current levels. We have lowered our EBIT by 8% respectively in FY26/27 driven by Focus and Adairs, offsetting higher earnings in Mocka. Our valuation lowers to $2.40 (from $2.60). BUY maintained.

The SYL share price fell 24% following the release of their 1H26 results, a reflection of margin decline across the P&L, as lower EBITDA margins were compounded by higher D&A and interest expenses. The share price response largely runs counter to management’s narrative, whereby FY26 has seen the business investing for growth (expanding into QLD and SA), as SYL doubles down on the target EBITDA range of 10-12%. We fully acknowledge the slightly lower margins and higher D&A/interest, but believe the share price response is excessive. Given this we have lowered our assumed EBITDA to 10% through FY26/27, increasing to 11% in FY28, while factoring in higher D&A/ interest charges. Despite this conservatism, we continue to see ample valuation support, and potential to outperform as earnings (and margin) benefit from the FY26 investment. On this basis, we reiterate our Buy recommendation, with a $3.35/sh price target.

REH’s 1H26 result was better than expected. The outperformance was driven by the ANZ division, while the US was softer than anticipated. Management noted early signs of a gradual recovery in ANZ, albeit uneven. Importantly, competitive pressures in the US waterworks segment have eased, with operations now stabilising. We increase FY26/27/28F group EBIT by 5%/6%/7%. Our target price rises to $17.70 (from $11.25), reflecting changes to earnings forecasts and a roll-forward of our valuation to FY27 estimates. We are also increasingly confident that the housing cycle in ANZ and the US is at or near its trough, with REH well-placed to benefit when conditions improve. We therefore upgrade our rating to ACCUMULATE (from HOLD). The on-market buyback should also provide share price support in the near-term.

IMD delivered a strong result. 2Q revenue, which would typically reflect seasonal softness, was in line with 1Q and increased +23% YoY despite a challenging fluids comparison, with comps set to ease from 2H. More importantly, the result reinforces our confidence in the base business’s ability to deliver meaningful operating leverage. EBITDA margins expanded to 31.6% (+142bps YoY). While margins are likely to moderate as broadly earnings-neutral acquisitions are consolidated, we are now comfortable that core margins will continue to expand alongside volume growth. We lift our EBITDA forecasts by +7-8% across our forecast period and NPATA by +10-12% in each year. Our target price rises to $4.70 (from $3.70), and we upgrade to Buy (from Accumulate).

1H26 EBITDA and underlying NPAT beat consensus with Onslow, Mining Services and lithium delivering a clear step change in profitability. MIN is firmly on track to achieve <2x ND/EBITDA within 6 months supported by strong earnings and POSCO proceeds. Move to a BUY recommendation (previously HOLD) with embedded growth from Onslow moving to 38Mtpa and additional lithium capacity underpinning medium-term upside.

AQZ closed 1H26 with ~$433m in net debt, materially above the previously guided FY26 year end level of $392m. With debt facilities now fully drawn, 2H26 cash generation becomes critical. Liquidity has tightened, with available cash falling to ~$58m from ~$96m at FY25 year end. AQZ delivered a weak result, following $164.8m impairment charge, that delivered a statutory loss of $105.8m for 1H26. Underlying Revenue (~$369m) up ~8% on pcp, however operating cost inflation running ahead of CPI is having a detrimental impact on AQZ's earnings outlook. We maintain our HOLD rating and lower our target price to A$0.75 (previously A$1.50). We have made material changes to our earnings estimates.