In Brief: Supply Network, AUB Group & Pantoro

Array
(
    [0] => Array
        (
            [0] => ((SNL))
            [1] => ((AUB))
            [2] => ((PNR))
            [3] => ((ALK))
            [4] => ((BC8))
        )

    [1] => Array
        (
            [0] => SNL
            [1] => AUB
            [2] => PNR
            [3] => ALK
            [4] => BC8
        )

)

This story features SUPPLY NETWORK LIMITED, and other companies.
For more info SHARE ANALYSIS: SNL
The company is included in ASX300 and ALL-ORDS

Two sold off stocks come onto brokers' radar with positive structural tailwinds, while Pantoro is unhedged and reaping the gains of higher gold prices.

• Supply Network's first half guidance triggers broker upgrade
• AUB Group goes back to its strategic growth targets with a major UK acquisition 
• Pantoro misses production estimates, but prints cash from higher gold prices 

By Danielle Ecuyer

This week’s quote comes from Rabobank Australia:

RaboResearch expects the Reserve Bank of Australia to raise the cash rate by 25bp in February 2026 as a precautionary move in response to higher-than-expected inflation and a labour market operating beyond estimates of full employment.

Despite strong demand, some indicators —such as a strong AUD, high household savings, and elevated mortgage burdens— suggest financial conditions remain somewhat restrictive, supporting the view this hike will be a one-off insurance move rather than the start of an extended tightening cycle.

Are investors reading too much into perceived Chinese competitors?

Moelis cast an eye over Supply Network ((SNL)) this week and walked away with a favourable view.

Noting the share price has declined by around -15% over the last six months, it was time to brush off the Hold rating and move to a Buy, even though the stock continues to trade at a relative premium.

Management served up a 1H26 trading update with revenue for the period rising 17% y/y and net profit after tax up 19% y/y. Revenue beat by 2% and net profit after tax by 3.3% on the analyst’s forecasts.

An acceleration in revenue growth from the prior half, which rose 13%, infers the rollout and integration of an enterprise resource planning system (ERP) has had limited to nil impact on business operations.

Net profit after tax margins rose to 11.5% from 11.3% in 1H25, with second half margins typically stronger from supplier rebates.

The first half received a full contribution from the Wangara and Karratha stores in WA and an expansion to the existing branch footprint, alongside circa five months of trading from the larger Truganina distribution centre.

The analyst sees a positive ongoing growth outlook via a gain in market share, which stands at 11% currently.

Further investment is occurring in network capacity including expansion across Brisbane, Toowoomba and Perth, alongside Rosedale in New Zealand.

A fully franked dividend of 36c per share was announced. For Moelis, the result was “solid” and sufficient for a lift in EPS estimates by 3.2% for FY26 and 1.9% for FY27, while achieving historic return on invested capital of 26.2% and return on equity of 25% in FY25.

Equally noteworthy: the broker highlights new Chinese entrants into the Australian market are not focused on parts and service, suggesting limited competitive threat.

The target price moves up to $42.90. Last time we checked, the shares were changing hands below $38.

One doors closes (private equity), then another door opens (Prestige)

After failed negotiations with private equity in 2025, AUB Group ((AUB)) has been off to a quick start in 2026, announcing the proposed acquisition to purchase a 95.8% stake in UK broker Prestige for -$432m.

As detailed by Jarden, the Prestige investment expands the group’s UK footprint and allows for offshore diversification and a pathway to replicate its insurance broker success overseas.

Management also noted two step up agency deals to raise ownership of Pacific Indemnity by 30% and for AUB 360 by a further 6% for $96m, as part of around 30 transactions in 1H26 with total M&A investment of $200m.

The Prestige deal is being supported by a $400m institutional equity raising at $29.40 per share and a $40m share purchase plan, which will lift shares on issue by around 12.7%.

While some investors might be fretting over EPS dilution and an earnings downgrade, the analyst is quick to emphasise the expected uplift in net profit after tax of an estimated 14.6% for FY26 and 14.5% for FY27 from recent step up agency deals, Prestige and cost outs.

An estimated circa $10m positive impact is forecast from the step ups via a lower controlling interest, with around $38m from international earnings (EBIT) synergies on the incorporation of Prestige and around a 150bps lift in margin in FY26.

Management reconfirmed FY26 underlying net profit after tax guidance of $215-$227m, excluding Prestige and step ups. A better 1H26 performance was indicated at $90-$91m despite forex headwinds of around -$2m.

International agencies and BizCover are trading well, but Australian broking is more “mixed”, with New Zealand highlighted as “disappointing”.

The Australian division generated around 45% of FY25 earnings (EBIT) with premium rates of 5-7%, inferring to the analyst premium rates have been stable to flat against the 1Q26 trading update.

The loss of a large broking client and a team exit from Tysers wholesale is anticipated to generate a non cash impairment of -$39m in FY26.

Jarden sees structural growth, including M&A activity as an important earnings driver against a backdrop of an easing global premium rate cycle, with the ability to raise margins to medium term targets, lift UK market share and improve revenue synergies between broking and managing general agent (MGA).

An Overweight rating is re-iterated with a rise in target by 0.8% to $38.20. The shares are trading around the $30 mark.

Can investors look past Pantoro’s 2Q26 production and cost misses?

Post Pantoro Gold’s ((PNR)) December quarter result, Canaccord Genuity continues to like the stock.

Production came in at 220koz, a rise of 13% on the prior quarter, albeit it missed the brokers’ and consensus forecasts of 26koz.

All in sustaining cost of $2,571/oz fell -18% on 1Q26 but was still above the analyst’s forecast of $2,326/oz and consensus at $2,306/oz.

The gold miner finished the quarter with cash and bullion of $216.5m, another ‘miss’ on Canaccord’s forecast ($248m) but up $35m on 1Q26; the result from lower sales.

The OK underground mine lifted production 16.5% q/q, while Scotia underground production was steady at 9.9koz on the prior quarter.

Moelis also noted a softer than anticipated update, with a significant rise in production needed to meet management’s lower end of FY26 guidance.

This analyst considers it is unlikely Pantoro will achieve guidance despite upbeat enthusiasm for the high grade geology across the tenements.

Notably, both brokers highlight Pantoro is one of few domestic gold producers that remain unhedged, debt free and generating “excellent” margins due to record gold prices.

This reason alone could continue to support the share price, Moelis emphasises, even though a more fundamental methodology across peers suggests Pantoro’s shares might have less upside.

Interestingly, producers with Pantoro’s scale discount spot prices more than lesser known, smaller miners which have not benefitted from the same enthusiasm from small cap investors.

Moelis flags the likes of Alkane Resources ((ALK)) and Black Cat Syndicate ((BC8)), which are positioned where Pantoro was some 12-24 months ago.

Moelis makes little changes to forecasts and retains 2H26 production at 97.5koz, below the bottom end of production guidance at 100koz.

A Hold rating is retained with a slightly higher target of $6.05 from $6.

Canaccord points to management’s expectations of better production for the balance of FY26 to the lower end of guidance and all in sustaining costs of $1,950-$2,250/oz versus year to date of 41.6koz at $2,838/oz.

Growth capex guidance is unchanged at -$67m, with a March quarter forecast production of 29koz and costs of $2,158/oz, generating free cash of $95m or $114m at a spot gold price (as at January 22).

The stock remains Speculative Buy rated with a slightly lower target of $7.45 from $7.50.

Find out why FNArena subscribers like the service so much: “Your Feedback (Thank You)” – Warning this story contains unashamedly positive feedback on the service provided.

FNArena is proud about its track record and past achievements: Ten Years On

Click to view our Glossary of Financial Terms