Smart Group Ltd (ASX: SIQ) and Emeco Holdings Ltd (ASX: EHL)

Hi Debbie,

Smart Group Ltd (ASX: SIQ) – delivered a very goood 1H result, with revenue up 13% to $179.5m, EBITDA up 16% to $73.8m and NPAT increasing 11% to $42.4m, while the fully franked interim dividend rose 10% to 21.5c. Momentum was also healthy, with salary packages up 7%, novated leases under management up 15% and vehicle orders up 34%, while management remains on track for its mid-40% EBITDA margin target by 2027.

Despite the strong numbers, SIQ has fallen ~20% over the past two sessions, with several brokers downgrading the stock. The issue is twofold;

1.  The stock had rallied ~60% to a 52-week high earlier in August, with its forward P/E expanding from ~11x to ~19x over the past year; the result was solid, but simply not strong enough to justify the elevated expectations embedded in the share price.
2.  On the earnings call, management said we should not expect the same level of growth in the 2H as we saw in the 1H. Consensus has the 2H running at the same run rate in terms of earnings as the 1H, which implies the market had gotten ahead of itself.

Further, there was commentary around demand being pulled forward, weaker PHEV orders following the end of government incentives and continued investment ahead of the FY27 margin target, and that was enough to trigger profit-taking from an elevated valuation.

• We like the risk/reward in SIQ nearer $10, with the stock certainly back on our radar.

Emeco Holdings Ltd (EHL) – delivered a flattish FY26 result, with revenue rising 1% to $792.8m, operating EBIT up 2% to $148m and operating NPAT increasing 5% to $89m. Growth in maintenance services, particularly on-site maintenance, which grew 44%, helped offset weaker equipment utilisation caused by wet weather and fleet mobilisation delays, while adjusted operating free cash flow of $114.5m reduced net leverage to just 0.43x.

• The stronger balance sheet has given EHL capacity to pursue growth and potential industry consolidation, while the board also announced an on-market buyback of up to 10% of shares, helping drive an ~9% rally on result day.

We feel the near-term outlook is solid rather than spectacular, with management expecting FY27 earnings broadly in line with FY26 and weighted toward the second half as equipment is redeployed and utilisation improves. However, the medium-term story is becoming increasingly attractive.

EHL is evolving from a predominantly equipment-rental business toward a broader, less capital-intensive mining services and maintenance platform, with utilisation targeted at ~90% for surface and ~80% for underground by the end of FY27 and management targeting a 20% return on capital in FY28.

• We like the risk/reward towards EHL around $1.15, despite recent strength.

chart

Smart Group Ltd (SIQ)

LAST UPDATED 28/08/2026 13:38

Close

chart

Smart Group Ltd (SIQ)

LAST UPDATED 28/08/2026 13:38