Viva reported a lift in group fuel volumes, better gross margins in its convenience stores and higher refining margin in 4Q25. While all these signs are encouraging, the refining margin increase was smaller than Ampol’s given maintenance and power outages. Moreover, the improvement in convenience gross margin was made on a lower sales base. Viva’s cost savings seem to be flowing through but the company will need to show a more meaningful lift in sales from the OTR conversions in order to see any re-rating.

Ampol’s 3Q25 trading update showed weak volumes across all divisions, but the improvement in margins more than offsets the volume decline. Refining margins have lifted by 22% from 2Q25 to 3Q25 and is above the long-term average. In Convenience, shop gross margins increased by 295bp while fuel volumes dropped. We are mindful that the dynamic of falling volumes and rising margins will at some point be difficult to sustain. The approval of the EG acquisition remains a key share price catalyst.

Ampol’s 1H25 earnings showed a small improvement in Convenience earnings, cost savings and a good exit run-rate for refining margins. We expect Ampol’s Convenience EBIT to rise in 2H25e despite another drop in fuel and tobacco volumes. The company’s 1H25 gearing was 2.8x, but gearing should reduce with lower capex and better margins over the next two years. The recently announced EG acquisition needs ACCC approval, which will be long-dated and there may be some contention around the number of sites to be divested given the geographic overlap.

Ampol has announced the proposed acquisition of the 500-store EG petrol station network. The acquisition price of $1,050 million is at an EV/EBIT of 24.8x pre synergies, or 9.1x post synergies (pre AASB-16), which highlights the importance of the synergies in this deal. Given Ampol’s existing supply to EG and ability to accelerate the rollout of U-Go un-manned stations, the synergies look plausible. We lift our target price from $28.50 to $30.00 to reflect the EG deal noting that it could be 5%-6% EPS accretive by FY29e. The key unknown is ACCC approval.