Research notes

CHL’s 1Q26 trading update was released concurrently with the announcement of a strategic investment and commercial agreement with JB Group (RV manufacturer with a large retail and media network). JB Group will take a ~12.7% stake in CHL. The commercial agreement will see JB Group integrate CHL’s platform across its large network of RV dealerships and media channels. Whilst the 1Q26 trading update saw GTV and revenue decline ~6% vs the pcp, management noted business momentum is beginning to build coming into the key summer/holiday season in ANZ. We make no changes to our GTV, revenue or margin forecasts at this juncture, however our FY27-FY28 EPS reduces 11%-12% factoring in the strategic placement. Our price target reduces to A$1.00 (from $1.05). Buy maintained.

BETR Entertainment (BBT) reported a solid first quarter, delivering results modestly ahead of expectations across key metrics despite unfavourable sporting outcomes in September. Turnover, gross win, and net win margins all exceeded forecasts, supported by improved customer engagement and product mix. Encouragingly, management noted that momentum has continued into the Spring Racing Carnival. We take encouragement that the recent lift in brand and product investment is now translating into operating momentum. The balance sheet remains in a strong position, providing flexibility to pursue both organic and inorganic growth opportunities. Our BUY recommendation and $0.43 target price remain unchanged.

WES provided a trading update at its AGM with sales momentum for Bunnings, Kmart Group and Officeworks continuing since the FY25 result in August. However, 1H26 earnings for Officeworks will be impacted by lower operating margins as well as restructuring and ERP replacement costs. Management noted that while demand remains positive, consumers continue to be cautious. WES is also experiencing pressure across its divisions in relation to supply chain, labour, energy, and regulatory costs. On the back of the trading update, we decrease FY26-28F group EBIT by 1%, largely due to downgrades to Officeworks earnings forecasts. Our target price declines to $79.30 (from $83.20) and we maintain our TRIM rating with a 12-month forecast TSR of -4%. While we continue to view WES as a core long-term portfolio holding with a diversified group of well-known retail and industrial brands, a healthy balance sheet, and an experienced leadership team with a strong track record of growth, trading on 35x FY26F PE we see the stock as overvalued in the short term.

COL reported a solid 1Q26 sales trading update driven by growth in its Supermarkets division. However, Liquor sales were softer than expected as consumers remain focused on value. Management indicated that Supermarkets sales growth in early 2Q26 has remained broadly in line with 1Q26, at ~4.8%. With Woolworths’ (WOW) Australian Food sales up ~3.2%, COL continues to outperform, although the gap is narrowing. The liquor market remains challenging. We decrease FY26-28F underlying EBIT by 1%, mainly on the back of lower Liquor forecasts due to the ongoing softness in the market. Our target price declines to $22.90 (from $23.45) and we maintain our HOLD rating. While Supermarkets momentum remains positive heading into the key Christmas trading period and execution continues to be strong, trading on 23x FY26F PE with a 3.6% yield, we view COL as fully valued. We would look to reassess our view should the share price weaken further.

Strong 1Q26 execution across Onslow, Mt Marion and Wodgina. Growth in mining services may be more muted going forward. Stronger lithium and iron ore prices are accelerating balance sheet repair. We see much of the near-term upside priced in and maintain our TRIM rating with a A$40.70ps Target Price (previously A$34ps).

WOW’s 1Q26 sales growth overall was broadly in line with our expectations but weaker than consensus estimates. Management acknowledged the performance fell short of their aspirations. Australian Food sales increased 2.1%. The quarter began with challenges, but following increased investment in the customer value proposition, management noted signs of modest improvement in item and transaction volumes in the early part of 2Q26, with sales up ~3.2%. We make minimal changes to earnings forecasts and maintain our $28.25 target price and HOLD rating. While the modest pick-up in operating performance in early 2Q26 and indications from customer surveys that cost-of-living pressures may be easing are encouraging, the group’s performance during the key upcoming festive period will be critical. The impact on margins from the increased investment will also be important to monitor. Trading on 21.5x FY26F PE with a 3.5% yield, we think the stock remains fully valued and prefer to wait for further evidence of improvement before reassessing our view.

DroneShield (DRO) specialises in counter-drone technology, offering a range of portable and fixed products that allow its customers worldwide to detect and defeat drones. Technology and drones are playing an increasingly critical role in modern warfare, as governments worldwide boost defence spending in response to escalating geopolitical threats. DRO has delivered strong growth so far in FY25 (Dec Y/E), with 3Q25 YTD secured revenue of $193.1m - more than triple its total FY24 revenue of $57.5m. The company delivered record 1H25 PBT of $5.2m. By 2027/28, DRO is targeting a doubling of its sales pipeline to $5bn. To support this growth, the company is expanding its Sydney manufacturing facility from $500m pa to $2.4bn pa by the end of 2026. DRO is also investing in a new R&D facility in Adelaide and scaling up its manufacturing operations in Europe and the US.

Building on its track record for consistent solid operating results, Amplitude delivered a largely in-line 1Q26 production and sales result. Net debt reduces materially to ~A$84m post-equity raise (-63%). FY26 production and cost guidance was maintained. Successful delivery of the ESCP+ drill program and development would support medium-term value upside beyond our A$0.31 target price. We maintain our BUY rating, with an updated A$0.31 target price (was A$0.34).

Despite the majority of the business “tracking to plan”, FY26 cc guidance had been downgraded (2-3% at revenue and NPATA mid-points), mainly reflecting continued declines in US influenza vaccination rates, although Chinese government cost containment affecting albumin demand was also flagged. While management is confident it can limit the impact of the latter to 1HFY26 via mitigation measures, ongoing uncertainty in the US influenza vaccine market has seen FY27-28 NPATA growth expectations moderate (to HSD from DD) and delay the demerger of Seqirus (prior FY26). Although it remains challenging to know when US influenza vaccination rates will stabilise, we believe the risk of a permanently lower base is being over-priced, with Seqirus and Vifor marked down, with even Behring trading below peers and well under its long-term average, which we see as unjustified. We lower FY26-28 net profit forecasts by up to 14.3%, with our PT decreasing to A$249.51 (from A$293.83). BUY.

SIG provided positive commentary at its recent AGM around continued domestic and international store expansion, solid like-for-like sales and reconfirmation of synergy benefits. At this stage we remain comfortable with our FY26 forecasts, which show sales and EBIT growth of 11.4% and 23.6% respectively. We forecast EBIT growth to continue (~18%) for FY27/28. Our valuation remains unchanged at A$3.39 and we maintain our ACCUMULATE recommendation.