OUR QUEST IS NOT TO BE BULLISH OR BEARISH, BUT TO CORRECTLY ASSESS FUTURE TRENDS

Morgans rates LOV as Buy

Following a review of retail sector post-AGM updates, Morgans notes discretionary retail sales growth has eased, but demand and household spending remain solid.

The broker observes consumer outlook has softened after the RBA held rates and near-term cut hopes faded, but notes Morgans' economist expects two 25bp cuts ahead.

Retailer optimism has cooled since August, yet confidence is rising and positive for the first time in 4 years, supporting a stronger Black Friday/Christmas period, with sales expected to grow 4% vs last year. Best opportunities lie in retailers with clear competitive advantages, expanding store footprints, and strong, resilient margins.

Lovisa Holdings is among the top picks. Buy with unchanged target of $40.

FNArena believes, contrary to what is stated in this report, that Morgans' house view has now shifted towards two rate hikes expected from the RBA.

Bell Potter rates MCE as Speculative Hold

At the AGM update, Matrix Composites & Engineering pointed to $70m of FY26 secured revenue to date, including $65m of contracted subsea work. Bell Potter estimates other segments are tracking around $5-6m in 1H FY26.

The broker notes 1H26 project phasing has hurt profits more than expected, leading to guidance for a 1H EBITDA loss vs its estimate for $1.8m profit. EBITDA is weighted to 2H and expected to turn positive for FY26 overall.

The company highlighted its drilling and SURF quotation pipeline is strong and could add to the FY26 orderbook if converted.

In other updates, a $7.5m note was refinanced, and the size increased on favourable interest rate terms. FY26 EBITDA forecast downgraded by -19% on lower margins and higher opex, with FY27-28 unchanged.

Speculative Hold. Target trimmed to 26c from 28c.

Citi rates SGP as Buy

Citi notes APRA’s announcement introducing new restrictions on banks to cap lending with net debt-to-income ratios above 6x to 20% of total lending.

APRA indicated the measure is pre-emptive, noting only a modest increase in high-debt to income ratio (DTI) lending in recent months but signaling a desire to contain risk earlier rather than later.

The broker remain comfortable with its Buy ratings on Stockland and Mirvac Group ((MGR)) and land lease developers Ingenia Communities ((INA)) and Lifestyle Communities ((LIC)).

Buy retained for Stockland. Target unchanged at $6.90.