Australia

• Iron ore has remained rangebound between 95 and 130 USD/ton for three years, with cost-curve support kicking in on the higher cost curve at around 100 USD/ton.
• Last week, quarterly operational updates released were for Vale, BHP, Kumba, and Mount Gibson. Except for BHP, all companies were disappointed due to provisional pricing impacts and mix changes.
• Read our recent production preview Fortescue Metals Group (FMG AU): High Dividend Yield of 9%, What to Expect From Q4 FY24, to be declared on the 25th of July. 

• Capitol Health (CAJ AU) has entered a binding merger proposal with Integral Diagnostics (IDX AU) at 0.12849 Integral shares per Capitol share.
• The transaction will require approval from the ACCC and Capitol shareholders. Due to the minimal geographic overlap, ACCC clearance should be forthcoming.
• The offer is attractive compared to historical exchange ratios, trading ranges and peer multiples. At the last close, the gross spread was 8.0%. 

• Back on the 17th June, diagnostic imaging provider Capitol Health (CAJ AU) announced it had entered into a process deed with Integral Diagnostics (IDX AU). Terms are now firmed.
• IDX will issue 0.12849 new IDX shares for each Capitol share. Scrip terms are unchanged from that announced previously. Upon completing the transaction, Integral would hold 63% in the NewCo. 
• Apart from ACCC signing off, this transaction looks priced to complete. 

• Mount Gibson Iron (MGX AU) reported a disappointing Q4 FY24 production report. Volumes were inline, but provisional pricing impacts of ~20% brought a quarterly cash outflow of one mn AUD.
• Volume guidance for FY25 was light at 2.7-3 mn tons (vs. 4.1 mn in FY24). Net Cash rose to 436 mn AUD (excluding Fenix Investment), almost equaling the market cap. 
• FY24 results are due on 21st August 2024, when the board will recommend a dividend. Net cash and future cash flows should support the share price in the long run.  

• RaaS Research Group has produced an update report on niobium-focused Globe Metals & Mining (ASX:GBE).
• GBE has continued metallurgical work for their chlorination process with results (20 March 2024) demonstrating the ability of the process to produce high purity Nb205 at a lab scale.
• The results showed an extraction and separation rate of 99% for niobium and tantalum as well as 94% for rare earth elements (REEs).

• RaaS Research Group has published an update report on ‘Know Your People’ regtech company, Kinatico (ASX:KYP) following its Q4 FY24 result which confirmed the company delivered NPAT of $0.8m for FY24, up 225% on FY23 and 60% ahead of our forecast.
• Q4 SaaS revenue jumped 40% on the pcp to $2.8m and was 12% ahead of Q3 and was ahead of our expectations.
• Transactional revenue of $4.5m for the quarter was flat on Q3 and down 12% on the pcp.

• RaaS Research Group recently interviewed Kinatico Non Executive Director Georg Chmiel on what attracted him to join the KYP board in September 2023.
• We discussed the merits of platform businesses and his experiences with technology platform companies.
• Mr Chmiel noted the merits of recurring revenues, including higher margins than one-time or transactional revenue, and lower costs as the platform becomes more scalable.

• Recent changes in Canada’s M&A rules have restricted critical metal companies from selling to Chinese investors
• Chinese investors have played a key role in funding the exploration and development of copper porphyries, which are vital for global production
• The uncertainty caused by these rules may lead companies to relocate outside of Canada, potentially harming the country’s mining industry and economy

This content is sourced through publicly available sources and has been machine generated. Information displayed is for general informational purposes only.

• With nearly 80% of the review period complete, there could be 28 adds/deletes across the S&P/ASX family of indices in September.
• There is a lot of stocks for passive trackers to trade on the index changes with the largest impacts on the potential changes to the S&P/ASX 200 (AS51 INDEX). 
• The potential adds have outperformed the potential deletions by a LOT over the last few months and continued positioning could lead to further gains.

• Following the iron ore rally at the start of the month, prices have corrected sharply lower owing to downbeat economic data and an inventory buildup.
• Option activity over the past week was notably skewed towards put options suggesting a negative sentiment. Weekly options volume was sharply lower WoW.
• Recent bearish sentiment has been accompanied by a decline in IV. Outcome from the plenary meeting is likely to reignite volatility in the coming weeks.

• Zip (ZIP AU) plans to raise around US$145m in order to repay its outstanding debt.
• The company has undertaken a number of deals in the past and has a mixed track record.
• In this note, we will talk about the placement and run the deal through our ECM framework.

• Fortescue Metals (FMG AU) trades at a steady dividend yield of 9%, assuming a 115 USD/ton iron ore price and an 80% payout. 
• The payout risk lies in incremental capex spend on green energy in future years. For FY24, the company has committed USD 500 mn  (overall capex 3.0-3.2 bn USD). 
• We expect shipments of ~54 million tons for Q4 FY24 (in its production report to be released on 25th July) and 192 million tons for FY24 (flat YoY).

• Friday post-close, MMG (1208 HK) released the results of its Rights Offering. 3.4654bn Rights Shares at HK$2.62 saw 98.18% take-up. New Rights Shares officially start trading on 16 July.
• The other 1.82% (63.1mm Rights Shares) saw 6.383bn excess Rights Shares applications. EAFs were allocated evenly, so applicants got 0.99% of what they bid for, but hey, free money?
• The new Rights Shares are expected to commence trading on 16 July. Even better, there was good fundamental news out late Sunday which should add to the general wellbeing.

• I tally 46 – mostly firm, mostly Asia-Pac – transactions currently being discussed and analysed on Smartkarma. Inside is a timetable of upcoming key events for each deal.
• Four new deals discussed this week on Smartkarma: Second Chance Properties (SCE SP)‘s VGO,Shinsung Tongsang (005390 KS)‘s Tender, Rex Minerals (RXM AU)‘s Scheme, and Canvest (1381 HK)‘s possible Offer.
• Key updates took place on Altium Ltd (ALU AU), Pacific Smiles (PSQ AU), Asia Cement China (743 HK), Shanghai Henlius Biotech (2696 HK), and Kfc Holdings Japan (9873 JP).

• While there may be still be some overhang once the rights shares start trading, this is a good entry point
• Applications for 6.4 Billion excess rights shares received from 11 applications
• Rights shares will start trading on Tuesday 16th of July

• After what appeared indecisiveness from Genesis Capital, Crescent Capital’s National Dental Care snuck in on the 29th April and entered into a Scheme with Pacific Smiles (PSQ AU) at A$1.90/share. 
• The Scheme Meeting is the 1st August with expected implementation on the 19th August. The IE (Deloitte) reckoned terms are fair & reasonable. All good right? Not quite.
• The Takeovers Panel has concluded Genesis Capital, with 19.9% of shares out, is free to vote. Assuming Genesis votes against the Scheme, Crescent Capital’s Offer is effectively dead.

• Duratec Ltd (DUR AU) with strong financials, a robust order pipeline and ability to leverage technologies makes it a solid small-cap infrastructure maintenance and asset protection play
• Shares are at least 30% below fair value given profitability, growth and order book profile. Historical numbers suggest solid execution of a diverse service contract portfolio. 
• Duratec is a play on growing need for more efficient, accurate and  innovative approach for proactive infrastructure inspections and maintenance. 

We highlight the opportunity of topical RECCE® 327 (R327) to address diabetic foot infections (DFIs), which is the leading cause of limb morbidity in diabetic patients and an area of unmet need as currently available topical drugs have limited effectiveness. Recce is planning to initiate a Phase III registration-enabling study in H2 CY24 in Indonesia. We anticipate that positive results from the trial could lead to Recce’s earliest R327 commercialisation opportunity, through a launch in South-East Asia in the DFI indication in H2 CY26. The company announced an A$10m equity financing that is expected to extend its runway into FY26. We now obtain an rNPV valuation of A$688.5m (or A$3.07 per share), versus A$661.3m (or A$3.27 per share) previously. The reduced value per share is due to the anticipated increase in share count post-financing.

• Rex Minerals being acquired by major shareholder, Selim Group, for $393 million
• Acquisition comes after extensive partnering process and recent investment by Mac with 16% shareholding
• Rex’s Hillside project in South Australia has historical challenges but now looks set for development with new ownership and funding capabilities

This content is sourced through publicly available sources and has been machine generated. Information displayed is for general informational purposes only.

• With all regulatory approvals received, the Scheme Meeting for Renesas Electronics (6723 JP)‘ acquisition of Altium Ltd (ALU AU) will take place on 12 July.
• If approved at the Scheme Meeting and at the Second Court Hearing, Altium Ltd (ALU AU) will stop trading from the close on 19 July.
• The replacements for Altium Ltd (ALU AU) in the ASX100/200 indices could be announced late this week with implementation at the close on 19 July.

• Copper-Gold play Rex Minerals (RXM AU) has entered into a Scheme with MACH Australia.
• MACH, wholly-owned by Indonesia’s Salim Group, is offering A$0.47/share in cash, a 71% premium to last close and a decade-high.
• Rex shareholder approval and FIRB are the key conditions. Rex’s board is unanimously supportive. This Offer will tentatively complete late October.

• Clinuvel Pharmaceuticals (CUV AU) released positive update from its CUV151 study, which was evaluating the DNA-repair capacity of afamelanotide on skin of healthy volunteers exposed to UV radiation.
• Riding on high trajectory of lead therapy, Scenesse, thanks to the prescriber network growth, treatment demand, and number of prescriptions, Clinuvel has been consistently reporting profitable revenue growth.
• Greater patient outreach to be facilitated by more specialty centers able to administer Scenesse in the U.S., expanding geographic footprint, and future label expansions are future growth engines.