SGH: $500m Buy-Back Announced; Risk of Overpaying on BSL Appears Negated. Reiterate Outperform.

Research evidence excerpt

SGH: $500m Buy-Back Announced; Risk of Overpaying on BSL Appears Negated. Reiterate Outperform.

EQUITY RESEARCH QUICK TAKE

Royal Bank of Canada, Sydney Branch

Nicholas Daish (Analyst)

June 21, 2026

SGH Limited

$500m Buy-Back Announced; Risk of Overpaying on BSL Appears Negated. Reiterate

Outperform.

ASX: SGH | AUD 43.27 | Outperform | Price Target AUD 47.00

Sentiment: Neutral

SGH has this morning made an announcement on capital management, below are the key points:

• $500m on-market buy-back announced by SGH: SGH has announced that it has approved a $500m on-market buy-back of

ordinary shares over the next 12 months.

• Buy-back will not constrain optionality for SGH's next leg of growth: Notwithstanding the buy-back announcement, it was

outlined that it will not constrain SGH's capacity to pursue both organic and inorganic growth opportunities at scale. Rather,

justification for the buyback was that having meaningfully de-levered since the Boral acquisition, SGH is now under-geared

relative to its 2.0x net debt / EBITDA target (Dec-25 was 1.91x).

• Buy-back to be determined by prevailing market conditions: SGH outlined that the buy-back's scale and timing will be

dictated by market conditions, SGH's prevailing share price, future capital requirements and any unforeseen developments or

circumstances during the course of the buy-back.

RBC View: A Predictably Disciplined Approach. Where to next for SGH?

We have consistently held the view that SGH (published here) would not be the stakeholder to stump up the incremental

premium (beyond the existing $34/Share offer) required to get the acquisition of Bluescope Steel done, in the short term. For

a transaction to go ahead, our view has been that a successful transaction would require Steel Dynamics to contribute further - in