Australia

• Vulcan Energy Resources (VUL AU) will be added to the VanEck Rare Earth/Strategic Me (REMX US) while Tianqi Lithium (9696 HK) will be deleted from the index.
• Constituent changes, float changes and capping changes result in an estimated one-way turnover of 2.5% and in a round-trip trade of US$37m.
• The largest inflows will be in Vulcan Energy Resources (VUL AU), Lynas Corp Ltd (LYC AU), Ganfeng Lithium (1772 HK) and Tronox Holdings (TROX US). 

• Reportedly, Blackstone is running a ruler over Dexus Property (DXS AU), one of Australia’s leading fully integrated real estate groups. 
• The Australian article flips flops: “Blackstone is understood to have been back on the scene“; but “cooled on the opportunity for now“. 
• Almost exactly four year ago, Blackstone paid A$2.1bn for a 49% stake in the Dexus Australian Logistics Trust, a prime logistics portfolio managed and jointly owned by Dexus.

• IOOF Holdings (IFL AU) shares rose 11% in the final minutes of trade, fueled by media reports suggesting that Bain was in the advanced stages of making a buyout offer.
• The presence of several substantial shareholders necessitates an attractive takeover premium. Takeover interest is unsurprising as Insignia trades at a material discount to peers.
• We use several methods to triangulate the likely offer, which suggests a price range of A$3.44-5.50 per share, with an average of A$4.67, a 37.4% premium to the last close.

• IOOF Holdings (IFL AU) has received an indicative proposal from Bain Capital to acquire all of its shares at A$4/share in cash.
• The offer takes advantage of IOOF Holdings (IFL AU)‘s underperformance over the last couple of years and there could be competing offers from other investment managers. 
• Short interest in IOOF Holdings (IFL AU) is around 2% of shares out and 2.5% of float. There could be short covering in the next few days.

• Insignia Financial (IFL AU), a wealth manager and previously known as IOOF, has announced a A$4.00/share non-binding and indicative proposal from PE outfit Bain Capital.
• The Offer, should it proceed, will be by way of a Scheme.  Apart from IFL’s shareholder approval, a firm bid requires FIRB signing off. 
• IFL’s board is weighing up the Offer’s pros and cons. This probably requires a small bump.

• Each of NVX’s 3 operating units is expected to play an important role in its development & growth, as NVX leverages proprietary R&D & patented technology to develop critical materials for the battery sector.
• The Anode unit is moving towards commercial production at the Riverside facility.
• NVX’s goal as it advances its cathode unit – the cathode active material (CAM) market is expected to reach >$100B globally by 2030 – is to maximize sustainability & cost efficiency around its processes.

• DigiCo REIT (DIGICO AU) raised around US$1.3bn in its Australian IPO.
• DigiCo REIT (DREIT) aims to be a diversified owner, operator and developer of data centres, with a global portfolio and broad investment mandate across stabilised, value-add and development opportunities
• We have looked at the company’s past performance in our previous notes. In this note, we will talk about the trading dynamics.

• RaaS is initiating coverage of media group GTN (ASX:GTN) with a base peer EV/EBITDA-derived valuation of $0.81/share, representing potential capital upside of 40% from the current share price, although we suggest premiums of 10% and 20% to the peer average are justified based on GTN’s superior metrics.
• • GTN has seen improved adjusted EBITDA across FY23 (+13.5%) and FY24 (+15%) but the utilisation rate of advertising spots is still below pre-pandemic levels.
• We believe further improvements in utilisation together with some stock-specific cost reductions will drive EBITDA 31% higher in FY25, placing the group on very attractive multiples relative to peers.

• SGX IO Futures January 2025 contract fell $1.85/ton, closing at $102.55/ton on 6/Dec, with prices trading in a $3.45/ton range.
• Prices traded above the weekly pivot point of $103.20/ton until 6/Dec but failed to breach the R1 resistance at $106.05/ton, reflecting constrained upward momentum.
• Volume Put/Call ratio rose to 1.47; March 2025 expiry saw the highest put volume. Implied volatility increased modestly for December expiry but declined for January and February.

• The funding package between Iluka Resources and the government was finalized, leading to a 10% market decline
• Iluka Resources planned to build a Rare Earths refinery in Enneba with the assistance of a $1.05 billion non recourse loan from the Australian government
• Iluka also had plans to process their Wimmera deposit through the refinery, despite challenges with separation and impurities causing delays in development.

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• We summarize the sensitivity of high-yield stocks Vale (VALE US) and Fortescue Metals (FMG AU) to the iron ore price. We try to answer what’s priced in at 100 USD/ton.
• We provide sensitivity tables for both stocks based on a range of 90-130 USD/ton. At 100 USD/ton, Vale (VALE US)/Fortescue Metals (FMG AU)  trade at 7.4/6.4% dividend yields.
• Bullish iron ore participants subscribing to the 130 USD/ton forecast can see yields of 16.3%/11.4%. This forecast will be achievable if the China stimulus provides the expected impetus.

• RaaS has published a flash comment on environmental services company Fluence Corporation (ASX:FLC) following its recent announcement it has received the notice to proceed from ONEP, The Ivory Coast National Drinking Water Organisation, in respect to the €48.4m addendum to its contract to construct the 150,000 m3/day Lagube D’Aghien Water Treatment Plant.
• This is a critical step in the progress of the previously delayed IVC project.
• The project delay was the main driver behind the recent company downgrade, so its progress is a material positive.

• CAR Group (CAR AU) replaces Dexus Property (DXS AU) in the S&P/ASX50 Index and Clarity Pharmaceuticals Ltd (CU6 AU) replaces Spark New Zealand (SPK AU) in the S&P/ASX200 (AS51 INDEX).
• Dexus Property and Spark New Zealand were deleted from a global index a couple of weeks ago, so this will heap further pressure and increase the real float of the stocks.
• There has been an increase in cumulative excess volume for all changes, but positioning in some stocks may continue post the announcement.

• Paradigm Biopharmaceuticals (PAR AU) has requested a trading halt to the ASX pending an announcement in relation to a capital raising. Normal trading will resume on Monday, December 9, 2024.
• Assuming quarterly cash burn rate of A$7M, Paradigm’s cash balance should provide a runway through mid-Q3FY25. The company is in a dire need to raise fund.
• With lead drug being in late-stage trial and having huge market potential, Paradigm seems to be an attractive biotech investment opportunity. Recently, optimism is growing surrounding Paradigm’s lead drug candidate.

• This is a follow-up to our initiation, Fenix Resources (FEX AU): Small Cap Iron Ore Miner With Great Upside. The flagship mine added another 5 years to the existing 3-year mine life. 
• At a 60 AUD/ton operating margin for 1.4 million tons/Yr (assuming 100 USD/ton iron ore price), this is an additional 60-65 mn AUD of cash profit for 5 years.  
• The company has commenced production in the Shine iron ore mine (1.2 mtpa) and will shortly begin production in the Beebyn-W11 mine (1.5 mtpa) in early 2025 after obtaining permits.

• In the countdown to the China Economic Work Conference (CEWC), which will be held on December 11th/12th, the iron ore market remains range-bound, expecting further clarity on the economic stimulus.
• Stocks like Vale (VALE US) and Fortescue Metals (FMG AU) continue to trade at double-digit dividend yields (9-10%), assuming 100 USD/ton.
• With China’s PMI improving, despite high inventories, there is an expectation of a restock for iron ore in the short term. We remain skeptical and continue to see range-bound activity.

• RaaS has published an update on engineering, asset management, and infrastructure and training services group Verbrec (ASX:VBC) following its recent AGM at which the company released an updated sales pipeline for the remainder of FY25, stating strong expected win rates of at least equal to last year’s 36%.
• We retain our existing forecasts with FY25 revenue growth of 11% to $103.2m and EBITDA growth of 19% to $10.5m.
• However, the AGM commentary gives us additional comfort and confidence that VBC is well placed to deliver those forecasts.

• The ADDs/DELs for the ASX index family for the December 2024 index rebal event were announced after market close on Friday 6th December 2024.
• There will be one ADD/DEL for both ASX 50 and ASX 200. All of these are perfectly in line with our final expectations.
• In this insight, we take a final look at the flow expectations for each of these index changes.

• Back in August 2021, ESR Group (1821 HK) acquired unlisted ARA Asset Management for US$5.2bn. This was discussed in ESR Cayman (1821 HK) Takes Out ARA Asset Management. 
• Included in the transaction (completed early-2022) was ARA’s ~30.7% stake in office play Cromwell Property (CMW AU). 
• ESR has in the past said Cromwell was a non-core holding. With ESR now expected to be privatized by Warburg/Starwood, does this accelerate the narrative?

• Rio Tinto sold 30% of its Winu project to Sumitomo for $400 million, surprising many with the valuation
• Expecting a PFS in 2025 for a 10 million tonne per annum scenario for the Winu project
• The partnership with Sumitomo signifies the rise of Japan and South Korea in the mining industry and may benefit Rio Tinto in terms of capital allocation and project development.

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• • Three intervals in the Reifling formation (1324 m – 1340 m, 1346 m – 1351 m and 1358 m -1382 m MD) were perforated but only limited inflow was determined.
• No fluid could reach the surface after the well was shut in.
• • Sampling of the well indicated only completion brine (not reservoir fluid) and fine solid particles of unknown origin.

• Declaring its Offer unconditional was always a possibility as Hotel Property Investments (HPI AU) board continues to reject terms. The alternative was a likely deal fail.
• Charter Halls currently has 31.37%, including 6.66% via the acceptance facility.  That facility has now closed following this unconditional statement. 
• It will be challenging for Charter Hall to clear 50% without board support. But IF they get 50%+, expect the board to change their mind and recommend shareholders accept terms.