Softer FY27; Thesis Intact

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M

Idea

August 11, 2026 01:28 PM GMT

Morgan Stanley Australia Limited+

SGH Limited | Asia Pacific

Joseph Michael, CFA

Equity Analyst

Softer FY27; Thesis Intact

Julianna C Sick

Equity Analyst

What’s Changed

SGH Limited (SGH.AX)

From

To

Price Target

A$49.00

A$48.00

FY27 is a transition year, not a thesis break. An ~A$80m FX

headwind masks stronger underlying growth, while WesTrac

aftermarket resilience, Boral execution and balance sheet

optionality remain intact. We see any weakness as an

opportunity to add. Reiterate OW.

SGH Limited (SGH.AX, SGH AU)

Australia Industrials | Australia

However, management quantified an ~A$80m WesTrac FX-related EBIT headwind

Stock Rating

Industry View

Price target

Up/downside to price target (%)

Shr price, close (Aug 11, 2026)

52-Week Range

Sh out, dil, curr (mn)

Mkt cap, curr (mn)

EV, curr (mn)

Avg daily trading value (mn)

and said underlying customer demand remains intact (link to Pulse).

Fiscal Year Ending

06/26 06/27e 06/28e 06/29e

EPS (A$)**

Prior EPS (A$)**

EPS (A$)§

Revenue, net (A$ mn)

EBITDA (A$ mn)

ModelWare net inc (A$

mn)

P/E

P/BV

RNOA (%)

ROE (%)

EV/EBITDA

Div yld (%)

FCF yld ratio (%)**

Leverage (EOP) (%)

Div franking % (%)

2.25

2.35

2.65

2.95

2.34

2.54

2.91

3.22

2.35

2.52

2.82

3.09

10,589 10,788 11,219 11,629

2,080

2,132

2,266

2,386

920

946

1,053

1,171

FY26 result/outlook: SGH delivered FY26 EBIT of A$1.55bn, +1% YoY and in line

with guidance, while Industrial Services EBIT rose 4%. FY27 guidance is flat to lowsingle-digit EBIT growth, below the market’s pre-result ~4-5% growth expectation.

1) FY27 Guidance: FY27 looks more like a transition year than a change in trajectory.

The main headwind is WesTrac parts pricing, offset by Boral self-help, Coates pricing

recovery and operating leverage. Crux adds a new earnings stream from FY28. We

continue to see a credible path to SGH’s medium-term 10% rolling EBIT/EPS growth

ambition, supported by both organic and inorganic growth.

2) WesTrac remains resilient: EBIT rose 1% despite capital sales falling 26%, with

services +6%, parts volumes +6% and record rebuild activity. Management expects

…