Research notes

An unsurprisingly solid underlying earnings result. The surprise that excited the share price was the material increase in DPS guidance. Target price lifts 25 cps to $5.35/sh as a result of forecast changes and valuation roll-forward. We move to a HOLD on share price strength. Potential TSR at current prices is c.4% (including 5.2% cash yield over CY26F).

1H26 was modestly below our expectations. Strong performances in Civil (EBIT +92% YoY) and Electrical (+29% YoY) were encouraging, though these gains were more than offset by softer earnings in the seemingly lumpy Mechanical segment (-24% YoY). Positively, cash generation was a highlight, with net debt of just $68m reported at period end. Management reaffirmed FY26 guidance of $117m EBIT and $72.5m NPAT, which implies an acceleration of organic growth from +11% in the first half to +15% in 2H, despite a more demanding comp ahead. Encouragingly, management expressed confidence in achieving this, supported by the rollout of new MSAs with core clients (amongst other things). We have made modest reductions of 1-2% to our EBITDA forecasts in each year, translating into 3–5% NPAT downgrades. Our target price is revised to $5.25 (from $5.40).

The result was a slight beat to our forecasts at most key metrics. Positively, late awards of projects and first works in Technology mitigated the anticipated skew to deliver a record first half PBT of $10.0m. The target for $20.0m PBT was reiterated (MorgansF $21m PBT), though we would view this as conservative given Technology is still expected to deliver a 2H skew. Our forecast changes are de minimis, but we increase our target price to 90cps on a multiple re-rate and given balance sheet optionality (net cash $13m). We estimate that VYS could add another ~$10m of EBIT without any dilution, using a combination of its acquisition facility, cash and deferred scrip. We value the core business at 75cps and VAM at 15cps using a ~$4/kL price (which may turn out to be conservative). In our view, an update on the Water Corp’s process for acquiring 10GL of water for Port Hedland is the next key catalyst.

SKS delivered a solid 1H26 result, delivering NPAT of $8.8m (up 51.7% on the pcp), a ~22% beat vs MorgansF $7.2m. Whilst 1H26 saw the group phase between large Data centre jobs, PBT margins were ahead of our expansions. 1H26 Net cash generation of $19.3m, was ahead of MorgF, supporting an interim dividend of 3.5cps (MorgF 1.5cps). FY26 guidance for Revenue of $340m / PBT of $34m was reaffirmed, which remains supported by robust work in hand into 2H26 and FY27. We upgrade our FY26-28F EPS forecasts by +19%/+15%/+14% based on SKS’ recent FY26 revenue & improved margin guidance. Our blended DCF/P/E-based price target lifts to $5.10/sh (from $4.25). This sees SKS now trading with a TSR of ~15%, we therefore move to an ACCUMULATE rating.

MGH delivered a strong set of results for 1H26, reflecting solid EPS growth of 16% (pcp), in line with the CAGR since listing (1H21-1H26) of 15.7%. Importantly, the CC&H division, the bulk of what will remain post the sale of Construction Materials (CM), delivered a ROCE of 20%, double that achieved in 1H25. The sale of CM will see MGH with $1.3bn of cash, or net cash of $700m, with interest income alone ensuring EPS remains relatively flat as the business deploys the capital. With guidance for the business (excl CM) at $120m-$140m and an EV post-transaction of c.$800m, MGH is trading on c.5-6x EV/EBITDA – an undemanding multiple if management can redeploy capital at its target 20% ROCE. On this basis, we maintain our Buy rating and $5.20/sh price target.

ARB's 1H26 result was pre-released (sales -1%; PBT -16%) and we saw limited incremental information today that justified the sharp share price fall. Exports remain the highlight, as the US delivered +26% growth with ARB product sales through the ORW/4WP network up +100% LFL, the UK returned to growth (+5%), and management expressed confidence EMEA headwinds are behind them with the orderbook tracking well ahead of pcp. Within Aftermarket, network expansion, the new e-commerce platform, new product cycles and the Ford partnership provide levers to help offset a slower start to industry volumes. FY26 reflects a base year for ARB and we remain positive on a resumption of sustainable growth in FY27. We view ~18x FY27F PE as undemanding relative to ARB’s market leadership, strong balance sheet and ongoing US execution. BUY.

TYR’s 1H26 result was a beat at operating EBITDA by +11% and was comfortably above consensus NPAT (+27%).  The result profit beat was driven by growing operating leverage with TYR’s 1H26 EBITDA margin (33.6%) improving +4% on the pcp.   The negative area of the result was softer top line growth than expected. Indeed, whilst revenue grew +6% on the pcp, it was -11% below consensus (A$266m).  In summary, we saw this as a broadly solid performance, which continued TYR’s multi-year trend of improving EBITDA margins, and with FY26 guidance parameters re-affirmed (albeit with higher costs expected in 2H26). We lower our TYR FY26F/FY27F EPS by -1%/-4% on slightly more conservative top-line growth assumptions. Our PT is reduced to A$1.55 (previously A$1.70). With >20% upside to our PT, we maintain our BUY call.

This result likely represents peak growth for MND. EBITDA increased +58% YoY and NPAT +70% (excluding the one-off insurance proceeds in the pcp). Industry tailwinds across metals, energy and wind continue to be supportive, and we would not rule out the potential for a full-year guidance beat. However, attention should shift to FY27, where growth should moderate materially. In FY26, Maintenance benefited from two meaningful one-off hook up and commissioning projects (Scarborough and Krux) that will be difficult to replace. While the E&C order book remains healthy at $630m, we believe material upside from here is increasingly dependent on securing a major contract such as ARU’s Nolans project, introducing a more binary outlook. We upgrade our EBITDA forecasts by +16-17% across our forecast period and NPAT by +19-23% in each year. Our target price rises to $33.85 which no longer supports enough upside for a buy (or accumulate).

NAN delivered a mixed but passable result with softer-than-expected revenue offset by stronger-than-anticipated cost control, resulting in stable earnings despite ongoing margin pressure. Reaffirmed guidance points to a cleaner 2H with better growth, margins and operating leverage on a constant currency basis. However, we expect FX headwinds to persist and crimp an otherwise solid underlying performance. Macro factors (interest rates, FX) continue to weigh on NAN. As a result, our target price reduces to A$4 p/s (from A$5 p/s) but we retain a Buy recommendation.

We have refreshed our assumptions ahead of Tabcorp Holdings’ (TAH) 1H26 result on 25 February. We have lowered our earnings estimates, primarily in FY26, following an understatement of segment operating costs, bringing us closer to consensus (albeit still modestly above). FY27 estimates remain broadly unchanged (<1% NPAT movement). Our target price remains $1.07 and our recommendation remains Accumulate.