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Citi rates CKF as Downgrade to Neutral from Buy

Following on from Citi's first take below, the broker downgrades the stock to Neutral from Buy.

The analyst stresses Collins Foods is a "good" business with a robust balance sheet, but the QSR operator is likely to experience "multi-year" inflationary pressures in Australia.

Management is aiming to offset the rises with menu innovation, Kwench, and expansion into breakfast and late-night trials. Capex is also rising to $80m-$100m in FY27 of which $45m is targeted for Kwench.

The analyst points out much of the anticipated growth in new stores will come from Germany, where Citi harbours concerns post a sudden weakening in sales growth.

Target $10.30.

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In an initial take, Citi notes the FY26 underlying net profit from Collins Foods was ahead of expectations although the statutory net profit of $47.1m was -19% below consensus amid class action-related costs and restaurant impairments.

A disappointing German FY27 trading update could mean investors would like to see improved performance prior to additional acquisitions, the broker adds.

The KFC Australia margin fell, amid increased lower-margin delivery sales following a reduction in delivery fees.

Australian same-store sales growth for the first eight weeks of FY27 was 4%, which the broker considers a strong result given weaker consumer sentiment.

For the same period, the measure declined in Germany and the Netherlands by -7.2% and -7.8%, respectively.

Execution in Australia continues to outperform expectations and Citi has a Buy rating with a $10.30 target price.

UBS rates HMC as Buy

With a $2bn-plus wholesale/high net worth investor base for its credit platform, HMC Capital has secured up to $1.35bn in private credit mandates from two global institutions which represents an important development, according to UBS, in terms of diversification.

EPS forecasts have been lowered by -9% to -12% arising from the accounting changes to the treatment of earnings. HMC is moving to what the analyst describes as a 'cleaner' definition of operating earnings from FY27.

Month-to-month gains will be removed as well as the Energy transition investment income and higher private credit AUM/fees. Forecasts are also lowered for a higher assumed 30% tax rate on operating profit before tax.

HMC Capital is trading on around 13x FY27 PER with an estimated 11% CAGR in EPS from FY27–FY30, the stock is Buy rated with a lower target of $3.60 from $3.70.

Morgans rates MSV as Upgrade to Speculative Buy from Accumulate

Ahead of the August results, Morgans revises forecasts for Mitchell Services to reflect a strong operating performance throughout the year.

EBITDA estimates for FY26 are increased by around 2% with greater increases for FY27 and beyond, supported by higher average operating rig assumptions.

With excess rig capacity available to deploy and a first mover advantage in Loop Decarbonisation, the broker envisages ongoing options for earnings growth.

Rating is upgraded to Speculative Buy from Accumulate and the target is lifted to $0.60 from $0.55.