Research notes

1HFY26 underlying net profit exceeded expectations, assisted by lower finance charges and favourable non-controlling interest movements. Operationally, performance was solid, led by improving Australian activity and earnings, while UK acute held its own, Elysium remained soft, but continues its gradual turnaround, and EU is stable on better cost control. While progress is being made across the portfolio, the sustainability of profitable remains in question, with ongoing cost headwinds, the early stage of a multi-year transformation program in Australia and a largely qualitative FY26 outlook. We adjust FY26-28 earnings, with our price target increasing to A$40.77. Hold.

NXT sold more MWs in the month of December 2025 than in the preceding 36 months combined. It was a record sales period for enterprise and hyperscale. The 416MW now contracted underpins FY29 underlying EBITDA of >$700m (without new contract wins) and sees NXT trading on an undemanding ~22x EV/Contracted EBITDA, with upside potential. BUY retained and target price lifted to $20.50 from $19.00 following our upgrades.

WOR reported a softer-than-expected 1H26 segment result, with performance across each vertical below expectations. While we continue to view WOR as a high-quality global services business, the near-to-medium term outlook is shaped by both cyclical and structural challenges. Cyclically, upstream capital spend in both energy and chemicals is in decline. Structurally, within WOR’s key energy segment, capital is increasingly concentrated towards subsea, which is dominated by specialist EPC contractors. Against a backdrop of softer leading indicators, FY27 consensus forecasts may be too ambitious (EBITA $973m and +16% YoY). Delivery will therefore depend on WOR’s ability to execute its EPC strategy and broaden its participation across the value chain as it seeks to offset cyclical and structural headwinds. Target price to $12.20 (was $16.40) and downgrade to Hold.

IPD posted its 1H26 result which was below our forecasts. Although the opportunity is evident for the SOZO device across several indications (BCRL, heart failure and body composition) the slow rate of sales has created concerns around liquidity for investors. Delays in sales orders due to tight hospital budgets have been called out by management as an issue. Management expects this to moderate in 2H. We have downgraded forecasts and TP to A$0.05 (was A$0.10). SPECULATIVE BUY recommendation maintained.

1H26 sales +21% (+5% LFL); Gross margins +60bps yoy; and strong NPAT growth of 29% to A$12m. The result was a small beat (+2%) versus our expectations. Vehicle sales growth was a highlight, with strong growth in New MCs (+23%) and Used (+18%) – both on improved margins (New GP +34%; Used GP +25%). The integration of Peter Stevens Motorcycles and Harley Heaven (PSM) continues to progress ahead of expectations. PSM remains in ramp-up of operations post-administration, with gross margins ahead of legacy Retail MTO operations and poised for further improvements in 2H26 as it progresses towards BAU. We view the earnings outlook as broadly positive and expect margin expansion to continue in the 2H (PSM and Mojo-led). We expect a resilient top-line outcome despite a slightly slower seasonal period as PSM continues to recover and further operational initiatives take shape. We continue to view the valuation as undemanding (~8x FY27F PE) relative to MTO’s commanding market position, strong balance sheet, and improving operational outlook.

1H26 showed solid revenue momentum, improving margins, and continued expansion of the US sales force, supporting confidence in a stronger 2H. Reiteration of FY26 revenue guidance (US$85m) added further comfort and now expects to exceed IPO metrics for gross margin, adjusted EBITDA and cash burn. No change at this stage to our FY26 forecasts, with our DCF-based TP unchanged at A$3.07. SPECULATIVE BUY maintained.

Management fee revenue grew 34% to $84.5m as AUM expanded 4% to $19.5bn, with headline EPS of 10.1c pre-tax softer yoy and well below consensus expectations, as energy transition gains are to fall in 2H26. The KKR Energy Transition partnership, closing mid-26, de-risks the balance sheet and unlocks a 5.7GW development pipeline, with full-year guidance reaffirmed at 40+c pre-tax EPS. We still see value in HMC, with our market-to-market NTA at c.$2.30 per share, or c.$3.00 when we factor in our valuation for the listed co-investments (HDN, HCW, DGT), while the c.$60m of recurring funds management EBITDA adds additional value. We retain a Buy with a $4.45 price target (down from $4.85).

SIG posted a solid 1H26, which was in line with consensus. The highlights included solid CW LFL sales growth (up 15%), revenue growth higher than cost growth by 4.5%, and synergy targets on track. We have made modest downgrades to forecasts (D&A and interest charges) resulting in a slight reduction to our target price of A$3.36 (was A$3.39). We move to an ACCUMULATE (was Buy) due to YTD share price strength.

MVF’s 1H26 result was in line with guidance provided in November, with underlying NPAT down 34% yoy to $10.4m (guidance $10-10.5m). FY26 guidance was re-iterated for underlying NPAT of $20m. During the period, MVF lost significant market share (down 2.5% to 19%), but remains the second largest player in Australia. We have lowered our NPAT forecasts by 4%/7% respectively in FY26/27. Our valuation lowers to $0.87 (from $0.90) driven by earnings revisions. We maintain our SPECULATIVE BUY recommendation.

VEE’s 1H26 revenue was below management’s guidance range provided in November, but underlying EBITDA was in line. Performance was affected by weaker propulsion and gyro revenue, as well as a decline in defence revenue with ASC orders not received until late in the half. Management said FY26 will be a transition year with costs spent on US defence qualification, the new gyro Mark III and the recently launched VEEM Extreme range expected to yield stronger results in FY27. We adjust FY26/27/28F underlying EBITDA by -68%/-39%/-33%. Our target price declines to $0.80 (from $1.10) and we maintain our SPECULATIVE BUY rating. While the 1H26 performance was weak, we believe VEE’s outlook remains positive with multiple growth opportunities across defence (eg, HII, Northrop Grumman, Hunter Class Frigate Program), propulsion (VEEM Extreme, Sharrow), and gyros (Mark III). Timing of order flow remains uncertain, which is likely to cause earnings volatility in the near term. However, the long-term earnings potential of these opportunities remains significant.