*J.P. Morgan Asia FTM 19 May 26 AUS Supermarkets: u/g WOW to OW; KR Defense: Upside risk from April data; CH Strategy: AI driving capex boom; GLOH: Growth phase, u/g to OW; CH Regional Banks: NII recovery

Research evidence excerpt

*J.P. Morgan Asia FTM 19 May 26 AUS Supermarkets: u/g WOW to OW; KR Defense: Upside risk from April data; CH Strategy: AI driving capex boom; GLOH: Growth phase, u/g to OW; CH Regional Banks: NII recovery

Asia Pacific Equity Research

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Asia First to Market 19 May 2026

Top Stories

| Australian Supermarkets, Australia (Bryan Raymond)

History doesn’t repeat itself, but it often rhymes; upgrade Woolworths to Overweight

With another geopolitically-induced inflation cycle ahead, the focus will shift from sales growth to margin

differentials. Woolworths is under-earning vs. Coles on EBIT margins, below Coles for the first time in 10

years. We expect Woolworths to once again leverage its strong position with suppliers to generate gross

margin expansion as it rolls out its Customer Offer Reset program across a broader range of categories.

Supplier appetite for Woolworths taking further margin in FY27e/FY28e is limited after a large profit transfer

in FY22, however COR will directionally drive gross margins higher, the extent to which this occurs is

unclear, as is the sales impact. We upgrade Woolworths earnings by 1.2% in FY27e and 7.6% in FY28e and

stand 3% and 8% above Bloomberg consensus respectively. Coles’ revisions are more modest (+1.2% in

FY27e and +1.5% in FY28e) and stand ~3% ahead of consensus in both FY27e and FY28e. Our

Woolworths price target is lifted to $37.00 as we upgrade from Neutral to Overweight, and we retain our

Overweight on Coles, with a $24.10 price target.