Australia

• On the 8th April, Azure Minerals (AZS AU) shareholders overwhelmingly approved the Sociedad Quimica y Minera (SQM US)/Gina Rhinehart’s Hancock transaction. Shares promptly closed down 7% on regulatory approval fears.
• Those fears are unwarranted. China’s Tianqi Lithium would indirectly own just ~11% in Azure post-deal.  China has recently lifted anti-dumping tariffs on a range of Aussie products. FIRB won’t block.
• An expected approval may have spurred Gina to buy more shares in Lynas (LYC AU). Why buy now if FIRB dings Azure; that outcome would push the whole sector lower.

• Telix Pharmaceuticals (TLX AU) reported 18% QoQ revenue growth in 1Q24. The U.S. revenue growth accelerated to 18% QoQ in 1Q24, compared to 11% in 4Q23 and 13% in 3Q23.
• Telix reaffirmed guidance and expects 2024 revenue of $445–465M, representing 35–40% YoY increase. The current quarterly U.S. revenue run-rate of Illuccix matches the lower end of the guidance.
• Telix is on track to launch three products in U.S. this year. Two of them have an estimated initial market opportunity of $600–640M, with upside potential from indication expansions.

• Lynas Corp Ltd (LYC AU) is the proverbial Aussie battler. Post the 2018 general elections, the new Malaysian government put Lynas on notice it may halt it rare-earth operations. 
• Since then, Lynas’ Malaysian facility, which cuts into China’s near-monopoly on processing elements for defense/aerospace/EV/electronics industries, has (mostly) operated without substantial disruptions. Profit peaked in FY22; but has since rolled-over.
• Gina Rhinehart’s Hancock has now disclosed a 5.82% stake in Lynas; having disclosed a 5.3% stake in MP Materials (MP US) earlier this month. Lynas confirmed discussions with MPM in February.

• In this insight, we take a look at the potential index changes for ASX 200, 100, 50, and 20 in the run-up to the June 2024 index rebal event.
• There are up to two intra-review changes possible between now and the June 2024 review which could triggered by the Silver Lake (SLR AU) and Boral (BLD AU) deals.
• Separately, I see one ASX 20 change and two ASX 100 changes for the regular rebalance in June 2024.

• Kinatico Ltd (ASX:KYP) is a ‘Know Your People’ regtech company providing workforce compliance monitoring and management technology and services.
• KYP has reported Q3 FY24 EBITDA of $0.8m and NPAT of $0.1m, the first time the company has reported these metrics on a quarterly basis.
• Revenue was $7.0m for the quarter, flat year-on-year but the composition continued to demonstrate the conversion of one-off transactional revenue to recurring software-as-a-service (SaaS) revenue.

• With completion, commissioning and a contract secured, first gas is just around the bend.
• Critically, with the company on the cusp of first gas, it holds first mover advantage over peer group projects where first gas may well be 2026 or later.
• We assign a NAV of $198m or $0.72/share (down from $0.74/share due to spot gas price adjustment) to GAS against a reference share price of $0.15/share.

Actinogen Medical announced that the first randomised patient in its Phase IIb XanaMIA trial of lead candidate Xanamem received their first treatment on Friday 12 April. This study is designed to enrol c 220 patients with cognitive impairment (CI) associated with biomarker-positive mild-to-moderate Alzheimer’s disease (AD), as confirmed through an elevated level of phosphorylated Tau-181 (pTau-181) protein in their blood at baseline. The study has commenced at 13 Australian sites and will concentrate on domestic sites for the first c 100 patients, and initial efficacy and safety results will be analysed when these patients reach 24 weeks of treatment. These results are now expected in mid-CY25 (vs prior guidance of H1 CY25) and Actinogen expects to expand the trial to US study sites following this interim readout. In the near term, the next material milestone for the company will be results, now expected in early Q3 CY24 (vs Q2 CY24 previously), from its Phase IIa XanaCIDD study in patients with CI and major depressive disorder (MDD).

• Tietto Minerals Ltd (TIE AU) has disclosed a revised conditional proposal from Zhaojin Mining Industry H (1818 HK) at A$0.68 per share, a 17.2% premium to the previous offer of A$0.58.
• The offer is conditional on a 50.1% minimum acceptance condition (which can be waived). The offer is declared best and final. 
• Despite the bump, the offer is below the IE’s valuation range of A$0.79 to A$0.93 per share. The IE’s valuation range would be around 25% higher at current gold prices. 

• 5GN sold hosting business and 2/3 of domains business, resulting in over $100 million net gain
• Company left with $84 million in cash after full debt repayment and transaction costs
• Expected to generate $5 million in net income post-sale, plans to use cash for acquisitions, share buyback, and dividend, stock expected to rerate positively if targets met.

This content is sourced through publicly available sources and has been machine generated. Information displayed is for general informational purposes only. This article was originally published 3 months ago on Value Investors Club.

• Findi is an illiquid Australian microcap company that controls TSI India, one of the largest owners and operators of ATMs in India
• TSI India has shown signs of improvement and is expected to perform well in the future
• Findi plans to list its operating business in India on the Indian stock market and issued convertible bonds in preparation for its IPO at a valuation of A$190.6 million

This content is sourced through publicly available sources and has been machine generated. Information displayed is for general informational purposes only. This article was originally published 3 months ago on Value Investors Club.

• We summarise the latest spreads and newsflow of merger arb situations we cover across Hong Kong, Australia, New Zealand, Singapore, Japan, Indonesia, Malaysia, Philippines, Thailand and Chinese ADRs.
• Highest spreads: Qantm Intellectual Property (QIP AU), Southern Cross Media (SXL AU), QV Equities Ltd (QVE AU), Silver Lake Resources (SLR AU), Azure Minerals (AZS AU), China TCM. 
• Lowest spreads: Tietto Minerals Ltd (TIE AU), Chilled & Frozen Logistics Holdings (9099 JP), Roland DG Corp (6789 JP), Mma Offshore (MRM AU), Pact Group Holdings (PGH AU). 

• On the 30 October 2023, Chinese gold producer Zhaojin Mining Industry (1818 HK) pitched a non-binding off-market Offer for Aussie-listed West African gold miner Tietto Minerals (TIE AU).
• Zhaojin held 7.02% of shares out, and sought 50.1%. Tietto subsequently rejected the A$0.58/share cash proposal. The IE backed out a fair value range of A$0.793-A$0.927/share.
• Zhaojin has now announced it has secured all Chinese regulatory approvals; and that Côte d’Ivoire government approval is not required. Plus Zhaojin bumped terms to A$0.68/share – best and final. 

• We provide a comprehensive introduction to the iron ore sector, covering the drivers and a view of the commodity in the short run. 
• We look at eleven listed names in the space ( from large-cap miners to the juniors deriving a vast majority of their revenues from ore) and list our favorite miners.
• We like Vale (VALE US) for its capital return in large caps, Kumba Iron Ore (KIO SJ)  in midcaps, and Mount Gibson Iron (MGX AU)  in junior miners. 

• Genex Power Ltd (GNX AU) has entered a transaction implementation deed with Electric Power Development C (9513 JP) for a scheme (A$0.275) and an off-market takeover offer (A$0.270). 
• Skip could vote against the scheme due to the low 10% premium to its 2022 offer and Genex’s operational capacity rising by 2.7x by the end of 2024.
• The likely scenario is that J-POWER succeeds with its takeover offer. At the last close, the gross spread of the scheme and takeover offer was 3.8% and 1.9%, respectively.   

• The Ansarada Group Ltd (AND AU) IE considers Datasite’s A$2.50 scheme offer fair and reasonable. However, the inter-conditional carve-out transaction is NOT fair but reasonable. 
• ACCC clearance (findings on 6 June) is a prerequisite for FIRB approval (scheme condition). As Datasite has a limited Australian presence, ACCC approval should be forthcoming. 
• The offer is attractive, with no vocal shareholder opposition. At the last close and for the 1 July payment, the gross/annualised spread was 2.5%/12.2%.

• On the 4 March, Genex Power (GNX AU) announced an A$0.275/share NBIO from Electric Power (9513 JP) (J-Power), by way of a Scheme, in tandem with an off-market A$0.27/share Offer.
• Due diligence was afforded. Exclusivity was extended twice, before a firm offer was inked at the same terms on the 12th April.  The Scheme meeting is expected mid-July; implementation late-July.
• And Scott Farquhar’s Skip Enterprises, which holds 19.9% in Genex, and who had previously pitched a A$0.25/share NBIO in 2022? No word. And no irrevocable. 

EML Payments has entered into an agreement to settle all the outstanding deferred consideration payments relating to the acquisition of Prepaid Financial Services Group (PFS) for £15.0m/A$28.8m, which represents a £7.9m/A$15.2m discount to the originally agreed amount. This agreement concludes all outstanding actual and potential liabilities relating to the PFS acquisition in 2020. Combined with the agreed sale of Sentenial for A$54m, this substantially strengthens EML’s balance sheet and simplifies the group’s structure.

• After Boral (BLD AU) rejected Seven Group (SVW AU)‘s cash/scrip Offer, Seven slammed the Independent Expert’s report, calling the Target Statement “unbalanced, selective and risks fundamentally misleading Boral minority shareholders“.
• Seven has now waived certain tendering thresholds, increasing the cash terms to A$1.70/share from A$1.50/share. Boral will also pay a fully-franked dividend of A$0.26/share, providing A$0.11/share of franking credits. 
• The IE now considers the Offer to be reasonable. Boral’s board recommends shareholders to accept. This is done.

• With three-quarters of the review period complete, there could be a bunch of changes across the S&P/ASX family of indices in June.
• The Red 5 Ltd (RED AU) / Silver Lake Resources (SLR AU) merger could lead to an ad hoc change prior to the implementation of the June rebalance.
• There will be 1.6-25 days of ADV to buy from passives in the inclusions while the impact on the deletions will range between 0.8-11 days of ADV.

• Investics Research will initiate coverage of the materials sector in April 2024, starting with iron ore and then gold, coal, and steel in subsequent months (in that order).
• The areas of coverage on asset classes will encompass the underlying commodity and the associated equities. 
• Areas of differentiation would include in-depth coverage of all equities (small/mid and large cap) and actionable tactical ideas on the commodity.

• Azure Minerals (AZS AU) shareholders have overwhelmingly approved the dual-track bid from Sociedad Quimica y Minera de Chile (SQM US) and Hancock. The scheme offer is A$3.70 per share.
• The shares fell 7%, seemingly due to concerns about FIRB approval sparked by FIRB’s request for an extension on 3 April and today’s AFR article on China’s Australian lithium holdings. 
• FIRB approval should be forthcoming due to Tianqi Lithium (9696 HK) small indirect interest in Andover, Lithium Power International (LPI AU) precedent, and SQM and Tianqi’s strained relationship. 

• Ansell Ltd (ANN AU) is looking to raise US$262m in its primary follow-on to partially fund its acquisition of KCPPE.
• Despite the firm having been on an acquisition spree, it remains uncertain to us if the market has been factoring in such a large one. 
• The deal would be a large one to digest, representing 52.5 days of the stock’s three month ADV.

• Interview discusses the offtake agreement and opportunity to expand beyond the current arrangement, the $20m capital raised and outlook for future funding needs, update on strategic equity/debt in the US and milestones to expect over the next six months.

• The Permanent Production Facility (PPF), with a capacity of 3,000 bbl/d of liquids, has been commissioned and the Anshof-3 well has recommenced production at a rate of 134 bbl/d with no water.
• The operation has been undertaken in line with expectations and within budget.
• The oil production rate at Anshof-3 is 16% above the rate prior to shut-in.

• Amaero International Ltd (ASX:3DA) is a global specialist in advanced materials manufacturing for the defence, aerospace, and other industrial sectors, developing a critical metals alloy powder manufacturing facility in Tennessee, USA. The company has secured a binding offtake agreement for the supply of C103 additive manufacturing powder, a key milestone in the development of its critical metals powder manufacturing presence in the US. Concurrently, Amaero has raised $20m by way of a placement to institutional investors, which the company anticipates will be the last equity capital raise in the Australian market.
• Going forward, Amaero says it intends to seek equity capital from strategic US investors.
• We continue to incorporate Amaero’s guidance that it expects to report an EBITDA loss of $14m in CY2024 and to break-even in CY2025.

• Fluence Corporation (ASX:FLC) provides water and wastewater treatment, and reuse solutions, for the municipal, commercial, and industrial markets worldwide.
• The company has a proven suite of products and expertise, both proprietary and otherwise, which it has used to deliver more than 850 projects globally.
• After some historical missteps, FLC has now been completely rejuvenated through the appointment of a highly regarded and proven US-based management team and reinvigorated board.