Research notes

Strong 1H26 results continue into 3Q26 which continued to deliver record sales contracts and revenue already exceeding FY25's full-year result, signaling strong near-term momentum. CNS market growth, expanding operating leverage with Medidata partnership and AI Investment underpin expectations for a multi-year growth outlook.

NEU delivered a strong first half, underpinned by continued growth in royalties to A$65m, a large cash position and continued operational momentum with record DAYBUE® patient uptake in the US and progress toward global expansion. NEU is recruiting for its Phase 3 clinical trial for Phelan-McDermid Syndrome (PMS) and expects recruitment to complete in late CY27. If there is clinical success, management expects this will be a major-value creation point. The consensus (Factset) target price is A$23.74 versus the current share price of A$12.42.

Water rights are a finite, physical store of value with little counterparty risk and supply that cannot be manufactured. Water rights also generate income through leasing the right to extract water (allocations) to agricultural producers, the underlying commodities of which are largely inflation-linked and should compound over time. The Murray-Darling Basin (MDB) represents the majority of traded water rights in Australia and best tells the supply/demand story: Sustainable Diversion Limits progressively constrain available entitlements, while Commonwealth environmental buybacks permanently retire productive allocations, meaning the pool of tradeable water is contracting. Against this, demand from permanent horticulture (e.g. almonds, citrus, winegrapes) continues to expand, with plantings that commit irrigators to water requirements for decades. To this end RIV’s diversified portfolio of long-duration, inflation-sensitive water entitlements should continue to exhibit a low correlation to listed equity markets.

FY26 result was in line with Consensus (and a slight beat vs prior guidance), while Consensus for FY27 was at the top end of guidance. To this end, the company is forecasting FY27 pro forma growth of 4-8%, with siding back to organic growth. Market conditions remain subdued, citing lower builder activity and affordability pressures - looking forward management assumes no market recovery in FY27. As such, FY26 can be chalked up as a transformational but financially dilutive year, while FY27 is about margin and cash-recovery driven by synergies rather than any improvement in the housing market. Buy retained, with a A$39.00/sh price target.

WJL’s FY26 result was weak but in line with guidance. FY26 was impacted by subdued trading conditions and material investment in the business. FY27 is going to be a particularly challenging year for WJL given the Middle East conflict, cost of living pressures, Virgin Australia materially reducing its commission and overrides and the RBA surcharging regulation changes. We have made significant revisions to our already well below consensus forecasts. In the absence of corporate activity, shareholders will need to be patient given the current challenges WJL needs to overcome while investing in its business for longer term success. We retain a Hold rating with a new price target of A$0.40.

TNE’s 1H26 result came in largely as expected, albeit with some FX headwinds, which otherwise would have seen its underlying result land ahead of consensus. The group enters 2H26, with a strong pipeline of ‘Plus’ leads, which sees TNE well positioned to achieve the top end of its re-affirmed FY26 ARR/PBT Guidance. The pullback in TNE’s share price sees our TSR lift to 18% and we therefore move to an Accumulate rating with a $32.30 price target.

While ELD’s 1H26 result was up strongly on the pcp, it missed consensus estimates due to materially higher Corporate Services costs associated with Systems Modernisation. Outlook comments were relatively optimistic despite the BOM’s dry outlook. We have revised our forecasts for higher costs and the divestment of Killara. After material weakness, we maintain a BUY recommendation. A significant rerating requires delivering consensus estimates and deleveraging.

ALQ delivered a strong FY26 with EBIT +18% and NPAT +26% YoY. Commodities was the standout, as 2H revenue growth of +23% was accompanied by +170bps of HoH margin expansion. Commodities guidance (FY27 +12-14% revenue growth) is conservative and would require a material deceleration from 2H26 (+23%). Indeed, 1H27 minerals guidance is predicated on flat (absolute) sample volumes vs 2H26, despite seasonal tailwinds (Sept-half > Mar-half) and accelerating junior activity. Our forecast changes are negligible, and we still view risk to our forecasts as skewed firmly to the upside, absent a material supply disruption scenario. We forecast Commodities revenue growth of +25%, while our raisings data points to geochemistry volumes up +35-45% during 1H, corroborated by the sample flows chart which already shows volumes tracking +25-30% in April. The stock is now trading on just 23x FY27 PE as it enters a bullish commodities cycle with a gold-plated balance sheet (leverage 1.5x). Reiterate BUY.

NHC delivered a materially stronger-than-expected 3Q26, with group coal sales of 3.2Mt beating consensus by ~20%. Saleable Production was also strong at 3.01Mt, beating consensus by ~10%. Bengalla achieved a FOB cash cost ($AUD/t) of $74, down from $84.4 in the prior quarter. Underlying EBITDA (unaudited) of ~A$130m came in ~22% ahead of the prior quarter, supported by higher volumes and a meaningful step-down in unit costs. We maintain a HOLD rating with a target price of A$5.25ps.