Research notes

Infratil (IFT) is a high quality, concentrated structural growth investor targeting 11-15% pa post fee returns. IFT’s investors have enjoyed c.18% pa returns over the last ~30 years. Assuming delivery of target returns, post fees the Net Asset Value (NAV) should nearly double over the next five years and create substantial value for equity holders. The share price is currently trading at a 30% discount to NAV. Assuming a return to a more normalised 20% discount would lift the share price by ~10% and from there NAV needs to lift for the share price to lift. Both seem likely, in our view. We initiate coverage with an ACCUMULATE rating and $11.30 target price. This report is the first part of a series that reviews IFT’s assets in more detail.

PPE has now divested two businesses as it, refocuses on its core competencies, being Queensland infrastructure, food and agriculture, defence and professional services. Whilst the divestments have been opportunistic and at healthy earnings multiples, the impact has been dilutionary to EPS. Offsetting the lower EPS, the residual business should prove higher quality (and higher growth), as the business looks beyond what is approaching cyclically low earnings. To this end, we continue to see earnings growth driving share price appreciation through FY27/28, with any turnaround unlikely to be visible until 4QFY26. Hence, we reiterate our Speculative Buy rating with a $1.10/sh price target.

ATA have announced a contract dispute which will negatively impact its FY26 and its 1H26 result. Management commented that “Atturra does not have a history of disputes or termination of material contracts and views this as a one-off occurrence. ATA’s balance sheet remains strong, and the Company sees no ongoing impact from this purported termination.” We agree and see this as a largely one-off event. We reduce our forecasts in line with guidance which lowers our TP to 80cps (was 95cps).

GNC has announced the sale of its underperforming and loss making GrainsConnect Canada. It has also provided a weaker than expected trading update. Grain receivals have been lower than expected and the grain trading margin environment has deteriorated. We have reduced our below consensus FY26 EBITDA forecast by 7%. With payments to the insurer no longer required in big crop years, GNC’s strong fixed cost leverage should return when crop production issues around the world ultimately eventuate. While GNC is lacking near-term share price catalysts, we think the stock has been oversold and maintain an ACCUMULATE recommendation with a new price target of A$8.05.

As we feared, but even weaker than expected, TWE’s trading update meant that consensus estimates were far too high. Its US performance was particularly disappointing given of all the capital spent in recent years. Gearing is now well above TWE’s target range and will remain high for the next couple of years. While we made large downgrades to our forecasts only two weeks ago following the goodwill write-down, TWE’s new trading update has seen us make another round of material revisions. We stress that earnings uncertainty remains high. It will take time for new management to deliver more acceptable returns and for TWE to rebuild credibility with the market. We maintain a HOLD rating.

Alibaba Group is a Chinese multinational technology company specialising in e-commerce, retail, Internet and technology. The company has 7 main operating segments: China commerce retail, China commerce wholesale, International commerce, Core commerce, Digital Media and Entertainment, Cloud and Other. Across these segments are 32 companies. Alibaba’s primary business is a digital marketplace where consumers and merchants can connect to buy and sell from each other.

COI has agreed to acquire Santos’ 42.86% interest in the Mahalo Gas Project. STO is clearly simplifying its portfolio but also reducing future capex requirements under current balance sheet stretch and oil price exposure. We maintain a Speculative Buy rating and A$0.25 target price, but see a material increase in upside risk being unlocked by this transaction.

We initiate research coverage on Zeotech Limited (ZEO) with a 12-month target price of A$0.15ps and a Speculative Buy rating. ZEO’s flagship Toondoon Project is a high-purity kaolin project in Queensland, with access to Bundaberg Port. The project consists of a Direct Ship Ore (DSO) component, with a larger potential to produce high-reactivity metakaolin for use in low-carbon concrete. Key approvals have been secured, with recently updated project economics reinforcing the pathway toward a Definitive Feasibility Study (DFS) in 2026.

Sunstone Metals (ASX:STM) reports 3.6Moz gold equivalent (AuEq) in Resource to JORC Code (2012) standards at Bramaderos (STM 87.5%), southern Ecuador, a 33% increase. This contains 2.2Moz Au and 490Mlb Cu. A larger 5-13Moz AuEq Exploration Target to JORC Code (2012) standards includes the Limon epithermals, and deeper gold-copper finger porphyries including Copete-Porotillo. El Palmar, northern Ecuador, is 70km along the Toachi Fault Zone from SolGold Plc’s (LSE:SOLG) Cascabel project, containing the Alpala deposit of 2.7 billion tonnes at 0.53g/t AuEq. There are five porphyry copper-gold targets at El Palmar extending from surface with an initial resource to JORC Code (2012) standards of 1.2Moz AuEq (800koz gold, 1.3Moz silver, 176Mlb copper) in one of these. Gold is now trading above US$4,300/oz and copper above US$5.28/lb. Chinese miner Jiangxi Copper Co Ltd has increased its offer for SolGold to £0.28 per share (US$1.13 billion) to acquire the Cascabel copper-gold project. The Hancock Mining-ENAMI joint venture surrounds Cascabel and El Palmar.

IMB has acquired two businesses for just $40m from Johnson Control, which together produce $10m EBITDA ( 4x EBITDA ). Each business has sticky revenue (75% recurring) with what looks like a strong customer base. In our view, IMB is a beneficiary of the dynamic whereby conglomerates are selling non-core assets following a realisation that consolidation of HVAC, fire systems and electronic security systems has failed to yield expected synergies. While the company expects the acquisition to be +25-28% EPS accretive, we had assumed no tax was being paid in both FY26 & 27 and slightly lower interest costs. We incorporate the acquisitions and include close to full tax from FY26 onwards (as well as slightly higher interest), which sees EBIT up materially but EPS down in both FY26 and FY27. Target price rises to $1.00 through our DCF and EV/EBITDA valuation methodology.