Research notes

CUV recently held its AGM. Commentary remains upbeat but underwhelmed in positively steering investors to several upcoming catalysts. It also recorded a 3rd consecutive remuneration strike. We view the risk/reward profile is more attractive at these levels with just under half the market cap cash backed and steady operating cashflow generation. It’s a polarising company, which can present sound trading opportunities when sentiment is low. This would be now, with sentiment sitting bottom-of-the-barrel as ongoing strategy, competitive threats, and management’s approach to capital deployment continues to limit investor demand. Cheap, but various factors continue to limit enthusiasm to a short-term value trade at this stage. We upgrade our recommendation in CUV to a SPECULATIVE BUY (from Hold) recommendation following the recent share price decline.

DNL’ s FY25 result came in at the higher end of its guidance range. Strong earnings growth was reported from Fertilisers which DNL is divesting. With confidence in delivering its Transformation Program, DNL provided FY26 EBIT guidance for Explosives. We have upgraded our Explosives forecasts and revised our Phosphate Hill forecasts. In its first year with no Fertilisers, DNL is trading on a fair FY27F PE of 18x and EV/EBITDA of 8.8x. We prefer ORI for exposure to the Explosives industry.

Ex $1.1bn of significant items, 2H25 profit declined 7% vs 1H25, with a -3% decline in pre-provision profit (revenue +2%, costs +6%) and a doubling of credit impairment charges. Earnings were materially below market expectations, albeit consensus may not have fully adjusted for the significant items. We have downgraded our FY26-28F cash earnings by 1-2%. However, 12 month target price lifts 29 cps to $33.09/sh due to CET1 capital outperformance in 2H25. We recommend clients TRIM into share price strength, with the share price and implied valuation multiples trading at or around all-time highs.

Today’s update was exceptionally strong, and our view is that the good times are poised to continue. Though 1H revenue is expected to grow +40% YoY, management has tempered expectations for the full year by providing early guidance (FY26 revenue +20-25%). This leaves capacity for further beats if demand surprises. Our view is that demand in E&C will accelerate due to Rio’s multi-year Pilbara replacement cycle (which gathers pace in CY26 and CY27), and a resurgence in rare earths projects (MND was heavily involved in ARU’s US$1.2bn Nolans project previously). Additionally, volume strength in Maintenance should continue as project scheduling indicates further oil & gas turnarounds into FY27, although FY26 contains a few one-offs so we fade growth expectations into FY27. Target price moves to $29.00 (from $24.40). BUY maintained.

IRE reconfirmed and tightened FY25 guidance, in line with previous expectations. The group now intends to undertake an accelerated cost-out program, targeting an implied further ~A$25m annualised cost reduction through FY26. The FY26 Cash EBITDA margin (exit run-rate) of >25% is 300-500bps above previous targets. We assume the formal data-room process has highlighted additional opportunity, supportive of an accelerated program. IRE confirmed that multiple parties remained engaged in the process. We expect CY25 would be set as a bid deadline. A bid not materialising is a key short-term risk for the share price. However, on a fundamental basis, the incoming CEO has a strong track record of execution which provides some additional comfort to the efficiency targets now in place. IRE is set up for reasonable growth whilst investing in top-line initiatives (FY26/27) and will now accelerate core business efficiency plans. We consider the live corporate appeal as providing some extra risk/reward to the investment case. We have an ACCUMULATE rating based on our fundamental valuation. Under a takeover scenario we see >A$10.50ps as more appropriate.

MQG’s 1H26 NPAT (A$1.65bn) was +3% on the pcp, but -9% below company-compiled consensus ($1.81bn).     Whilst acknowledging there were some explainable items driving this miss, e.g. increased investment spend in CGM, factors like green asset impairments and non-repeated prior year gains also came into play. Purely on face value, it was another headline result miss for MQG, albeit full year guidance commentary appears relatively unchanged. We make mild downgrades to our MQG FY26 earnings of -2%, with future year earnings slightly lifted (+2% to 4%) on a broad review of our earnings assumptions. Our PT is reduced to ~A$215 (previously ~A$223). We maintain our HOLD recommendation on MQG, believing the stock is currently fair value trading on 19x PE.

REA’s 1Q26 trading update benefited from a strong yield outcome (+13%), which helped to offset a softer new listings environment in the period (volumes down -8% vs the pcp). Group revenue was A$429m (+4% on pcp), with EBITDA (ex assoc.) up 5% on pcp to A$254m. We make minor changes (-1%) to our FY26-FY28 EPS estimates. Our DCF-derived price target is lowered to A$247 (from A$254). Given REA is trading on ~42x FY26F PE (MorgansE), broadly in line with its 10-year historical average, and now with >10% TSR upside to our valuation we upgrade REA to ACCUMULATE.

AQZ has released a disappointing trading update with FY26 NPBT expected to be ~40% below our previous forecast and consensus. The stock is now in a very tough spot – ex-growth and earnings going backwards, management changes, accounting issues, highly levered balance sheet, poor cashflow generation and deteriorating returns on capital. With AQZ’s strategic review ongoing, we are hopeful of possible corporate activity (but not guaranteed). Despite the poor earnings performance, the stock continues to trade well below NTA of ~A$2.90 and aviation assets are liquid and remain in strong demand. We downgrade our rating to HOLD.

3Q met expectations, but FY25 revenue guidance walked back again. While US reimbursement for RECELL is now largely restored and a positive for future sales momentum, the impact is yet to show in results. Execution and capital risks sit front of mind. Capital constraints and slowness to sales recovery hamper our near-term expectations but ultimately expect the clinical benefits to continue to win market share and increased adoption. Still cautiously optimistic but would like to see the balance sheet addressed first. Likely needs a material raise to get more confident in outlook and ability to reinvigorate the sales pipeline. Our target price reduces to A$1.35 p/s.

Light & Wonder's (NDAQ/ASX: LNW) strong 3Q25 result was met with a well-deserved positive reaction, alleviating market concerns around FY25 guidance delivery with a much more achievable 4Q25 implied outlook. Given the imminent NASDAQ delisting, the timing of this beat positions the company exceptionally well heading into FY26. LNW delivered record margin expansion across all three segments, with iGaming operating leverage the standout performer, while land-based margins surprised on favourable product mix as Grover scales and premium installed base momentum continues. Our FY25-26F estimates remain largely unchanged. We rate LNW a BUY recommendation, A$175 12-month target price.