Research notes

We initiate coverage on Sky Metals (ASX.SKY) with a SPECULATIVE BUY rating, price target A$0.32ps. SKY wholly owns the Tallebung Tin Project in New South Wales - a historic tin field underpinned by a JORC Mineral Resource of 15.6Mt at 0.15% Sn (23.2kt contained tin) and an Exploration Target of up to 32Mt at 0.17% Sn at the upper end of the range. Tallebung mineralisation has demonstrated strong amenability to ore sorting, with test work indicating order-of-magnitude head grade uplift, which is a key driver of project economics. We model an initial 8-year operation producing a 3.5ktpa contained Sn operation producing at an AISC of A$28,494/t, supported by early-stage upgrading and a capital-efficient processing flowsheet.

PME has been sold off heavily as investors increasingly worry that AI could structurally erode the economics an commoditise premium imaging SaaS platforms. For PME, that feels misunderstood. Bravery required with volatility high and trend weak, but this has proven to be a good time to pick up PME shares. Upgrade to BUY on weakness. 1H26 results due 12th of February.

REA’s 1H26 result was broadly in line with expectations (being only ~1% under Visible Alpha consensus across most line items). Whilst the negative share price reaction on result day was arguably due to a variety of factors (e.g. cost outcomes in the first half, volume guidance being lowered for the full year), the result itself highlighted the resilience of the franchise in a tougher volume environment, with strong yield growth (+14%) offsetting a 6% decline in listings.

WOR flagged a larger than usual 2H skew in November, which means a softer result should come as no surprise. Analysis of capex data from a basket of ~20 of the largest companies within each of WOR’s key verticals indicates a flattish CY26 for Energy and a weak year ahead for Chemicals. Conversely, Resources capex is expected to rise materially. A softening cycle has seen the key lead indicators turn negative which means outperformance will hinge upon WOR’s ability to execute its EPC strategy to capture more of the value chain. As a result of the softer 1H and a relatively subdued capex outlook for CY26, we trim our FY26 EBITA forecast by 2%. We reduce our price target to $16.40 (from $16.80). Analyst coverage transfers with this report.

MGH is to sell its Construction Materials (CM) division, pivoting the business to focus on digital, AI and electrification infrastructure. The pivot is cornerstoned by a $100m investment in Firmus, further aligning and supporting the recent JLE contract win. The sale of the quarries will deliver MGH a c.$550m net cash balance (post-Firmus investment), which management believe they can reinvest to deliver a 20% Return On Capital (ROC). To this end, we see lower EPS across FY27/28 as we model a more conservative deployment of capital. At the current share price ($4.11/sh), investors are attributing negative value to the Civil business. At a peer multiple of c.10x FY27 EBIT for the Civil business, plus Corp costs, the valuation offers ample margin of safety. It is on this basis we upgrade to a Buy with a $5.10/sh price target.

PNI’s 1H26 NPAT (~A$67m, -11% on the pcp) came in -4% below consensus, but it was more in line excluding one-offs (e.g. mark-to-market investment impacts). Overall, we saw the 1H26 result as compositionally stronger than the headline numbers suggested, and positively accompanied with a move-the-dial acquisition. We reduce FY26F EPS by -7% on a softer-than-expected 1H26 “reported” result, and dilution from the PAM equity issue. Conversely, FY27F EPS rises +8% on PAM earnings benefits and a broader review of our assumptions. Our price target falls to A$23.21 (from A$26.30). We move to a BUY recommendation (previously Accumulate) with >20% upside existing to our PT. With this note coverage transfers to Richard Coles.

With elevated gearing (42.5% Proforma D/A) and distributions arguably too high for a portfolio where new incentives average 35%, the prospect for distribution growth looks a challenge, especially when combined with the prospect for higher rates. Management rhetoric largely remains unchanged, with an expectation that FY26 will prove the trough in earnings, albeit FY27 will need to navigate the impact of the 9 Help Street (NSW) disposal. Portfolio vacancy remains dominated by Dockland (VIC) and St Leonards (NSW), two markets where leasing is particularly challenging – elevated vacancy, negative net absorption and nominal face rental growth. Despite the weak outlook, COF is trading at a 38% discount to NAV and a 63% discount replacement value, hence we retain our Hold rating with a $1.05/sh price target.

FND has come out of a trading halt post announcing a strategic investment in the company, and subsequently addressing some ASX queries. On face value, the strategic investment, which is needed to address a balance sheet crunch, appears more dilutive than hoped. Add to this negative perceptions from the trading halt and the company has some work to do to win back investor trust. We place our rating, target price, and forecasts under review pending finalisation of due diligence on the strategic investment. Our previous recommendation, target price and estimates should not be relied upon for investment decisions.

We have updated our estimates following JIN’s preliminary release of headline numbers ahead of the 1H26 result. Group revenue increased 29% yoy to $85.3m, modestly below our expectations due to weaker Lottery Retailing TTV. Underlying group EBITDA of $37.5m rose 22% on the pcp and was in line with our forecasts. Overall, our topline and earnings assumptions remain broadly unchanged. Our FY26-27F NPAT and EPS forecasts increase by 4% and 2% respectively, driven primarily by lower amortisation of acquired intangibles. At its AGM, JIN revised its dividend payout ratio to 30-50% of statutory Group NPAT to support balance sheet deleveraging following recent acquisitions. The interim dividend will be determined at the 1H26 result (MorgansF: 28cps). We view the 5% share price decline today as an opportunity to build a position in a company capable of delivering >15% EPS CAGR over the next three years. JIN is trading on an undemanding forward EV/EBITDA multiple of ~6x. We maintain a Buy recommendation with a $14.90 price target (previously $15.60).

AMC’s 1H26 operating performance was slightly softer than expected. However, underlying EPS was largely in line with forecasts and fell within management’s guidance range. EPS benefited from a more favourable tax rate, which offset weaker results from the non-core portfolio. A key positive was the delivery of Berry synergy benefits of US$55m in 2Q26, which was at the top end of management’s guidance range of US$50-55m. Synergy targets for FY26-28 were reiterated. A key negative was the performance of the non-core businesses, with volumes down high-single digit percentages during 2Q26. However, following the renegotiation of several customer contracts on better terms, segment performance should improve in 2H26. AMC also noted that discussions around portfolio optimisation are progressing well, and we view any future announcement in this area as a potential positive catalyst for the stock. We adjust FY26/27/28F underlying EPS by -1%/-3%/-4%. Our target price declines to $75.80 (from $76.00) and we maintain our BUY rating.