Research notes

ASX released FY27 total cost guidance along with FY28 capex expectations both of which were materially above consensus at the time of release. Whilst the topline shows encouraging growth (+~12.5% FYTD), we anticipate the market to remain cautious given the elevated cost profile as the technology refresh continues. We lift FY26F EPS ~4% on stronger-than-forecast cash market and Futures/OTC volumes, but lower FY27-FY28F EPS by ~5%, as the updated cost guidance more than offsets the higher revenue base in the outer years. Our DCF/PE-derived PT is lowered to A$51.50 on the above, accompanied by an increase in the house RFR to 4.6%. We maintain our Hold recommendation and note near-term elevated costs will likely remain a headwind.

Following the announcement of AUSTRAC's investigation this month, the TAH share price has fallen approximately 37%. While we expect the investigation to remain an overhang for the foreseeable future, at these levels the stock appears materially undervalued. Current trading conditions remain supportive in our view and position the company well for a strong upcoming result, despite inherent uncertainty surrounding the scope of the investigation and the quantum of potential penalties. While we are cautious about speculating on the ultimate outcome, we believe the approximately $960m erosion in market value is overly pessimistic and reflects the most bearish of scenarios (see through). In this note we discuss a range of possible outcomes, drawing on precedent fines and similar regulatory actions. While we have not assumed a direct penalty in our numbers, we have taken precautionary measures and added incremental operating costs associated with remediation in our base case; we note that for every 1% increase in associated compliance costs, EBITDA revises by 1.6%. We upgrade TAH from Accumulate to Buy given what we view as a near-term share price overreaction, and an underlying business that looks on track to outperform in the near term. Buy recommendation, $1.07 12-month target price.

SHAPE has announced that it has entered into an agreement to acquire Australian Professional Shopfitters Pty Ltd (‘APS’) a vertically integrated retail shopfitting business that serves blue chip retailers such as Adairs and BONDS. The acquisition of APS is expected to be earnings accretive in SHAPE’s first full year of ownership, delivering normalised earnings per share (EPS) accretion of approximately 5-7%. We take the opportunity to upgrade to a BUY (previously ACCUMULATE).

The H1 result was largely as expected. Guidance in GBP was reiterated with an appropriate caveat in relation to the supply chain not worsening. The highlight was the rise in order book by +32% YoY to £116m (or +50% including a new long-term EV battery protection contract), setting AIH up for strong future growth. Trading on just 8x FY26 EV/EBIT, the stock looks cheap, given the softer 1H has been cleansed and the key lead indicators (energy prices, subsea EPC backlogs and AIH order book) continue to firm. We forecast FY26 EPSA growth of +23% YoY.

EDV provided a strategic update at its Investor Day with the new management team, led by CEO Jayne Hrdlicka, outlining their plans for growth. As expected, no trading update was provided given the company provided one only a few weeks ago. Management outlined three core growth pillars: 1) grow Retail revenue through repositioning the Dan Murphy’s and BWS offers; 2) improve Hotels performance by stepping up investments in renewals; and 3) reduce costs with $300m in targeted savings by FY29. We make negligible changes to FY26-28F EBIT forecasts; however, underlying NPAT declines by 0-3% due to higher interest expense. Our target price decreases to $2.80 (from $3.30) reflecting changes to earnings forecasts and a reduction in our FY27F PE multiple to 13x (from 15x). While the Investor Day highlighted a range of revenue and cost opportunities, these require accelerated investment and are expected to keep balance sheet leverage elevated through FY27. Execution remains key, and with the liquor market still challenging, we prefer to wait for delivery before reassessing our view. HOLD retained.

There are multiple near-term catalysts approaching which when achieved will see a share price re-rating. IMR is now well funded to deliver on clinical, regulatory, and commercial objectives. We have updated our model and valuation for the capital raise. Our target price is A$2.61 (was $2.63). We maintain our SPECULATIVE BUY recommendation.

NUF’s 1H26 result was at the higher end of guidance with the company reporting strong earnings growth. Seed Technologies reported a particularly strong result. NUF is on track to deliver strong underlying EBITDA growth in FY26. Pleasingly, the company upgraded its Seed Technology guidance. NUF is our key pick of the ag and chemical sector. The company is materially undervalued and we reiterate our BUY rating with a new price target of A$4.15.

Given the Middle East conflict affected trading in March, WEB’s FY26 result came in at the lower end of guidance, albeit better than consensus, proving its resilience. Unsurprisingly, WEB’s FY27 update showed that trading has slowed materially given the conflict. Adverse FX has been another headwind. Given the uncertainty, WEB did not provide any formal FY27 earnings guidance. We have made significant downgrades to our forecasts. We assume that the conflict and a subdued consumer environment impacts WEB’s 1H27 (seasonally stronger half), followed by a recovery in the 2H27. After material share price weakness, we upgrade WEB to a BUY rating. The company is worth materially more than the current share price. We know from past economic and geopolitical events, that after a downturn, travel demand rebounds and so will its earnings and share price.

APE delivered a mixed AGM update. Key OEM supply constraints tempered 1H26 expectations, with ANZ 1H26 PBT guided flat/slightly ahead yoy (7-11% below cons), while record order intake (>29% ahead of deliveries YTD) and ANZ/CAD acquisition contributions support a robust 2H outlook. We expect guidance may prove conservative, with the group yet to work through the peak May/June trading period (~50% of 1H profit) and supply conditions remaining constrained across key OEMs. Despite some near-term earnings uncertainty, we continue to view a meaningful structural opportunity across consolidation (AUS/CAD), strategic alliances (Mitsubishi Corporation), used vehicles (EA123) and ongoing NEV leadership. We see recent share price pressure (~18x FY27F PE) as an attractive entry point given the earnings trajectory ahead (CY27F EPS growth ~19%).

Industry consolidation may spark additional interest in TLX. However, recent news flow around convertible note refinancing, a solid 1Q26 sales (up 11%) and the Regeneron collaboration shows there is plenty happening inside TLX. TLX points to several milestones expected in 2026 including a FDA clearance for the brain cancer diagnostic and resubmission of the kidney cancer diagnostic. Consensus has a target price of A$24.33 which provides significant upside to the current share price.