Australia

• There could be two or three Aussie names that are deleted from global passive portfolios in November. In each of the cases, there is a lot to sell from passives.
• One name is very high probability while the deletion of the others depends on the day of the week chosen.
• Shorts have been built up on the stocks and there are strong indications of positioning. But the extent of the positioning varies, and the stocks could have differently.

• Neil Chenoweth wrote a detailed investigative piece on Min Res founder Chris Allison and former top executives, alleging a tax evasion scheme using shareholder funds.
• The scheme involved buying machinery with inflated prices from a company named Far East Equipment Holdings in the British Virgin Islands.
• Min Res stock dropped 13% in response to the article, with implications on leadership and governance of the company.

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• On the 19th August, MyState Ltd (MYS AU), Tassie’s largest bank, entered into a merger agreement by way of a Scheme with Queensland-based Auswide Bank (ABA AU).
• MyState will issue 1.112 new shares for every share held by Auswide shareholders, with MyState/Auswide investors holding 65.9%/34.1% ownership in the MergeCo.  
• The Scheme Booklet is now out, with a Scheme Meeting to be held on the 2nd December Expected implementation on the 18th December. The IE (Kroll) says fair & reasonable.

• In this insight, we take a look at the potential index changes for ASX200, 100, 50, and 20 in the run-up to the December 2024 index rebal event.
• We currently do not see any index changes for ASX 20 and ASX 100.
• We continue to expect one change for ASX 50. However, our expectations for ASX 200 have changed since our last insight (link).

• RaaS Research Group has published an update report on advanced materials manufacturing group Amaero International (ASX:3DA) following its Q1 result in which it reported first commercial revenues of $1.0m, marking its first quarter of material commercial revenue from its Tennessee operation.
• The revenue includes approximately $0.6m from powder sales and $0.45m from PM HIP manufacturing.
• The powder sales made during the quarter included test material to ADDMAN Group, with which the company has a five-year preferred supplier agreement, as well as custom atomisation of C103 for a NYSE-listed materials company, custom atomisation of C103 for a US government-funded laboratory and custom atomisation of a development refractory alloy for another US government-funded laboratory.

• After a brief spell of iron ore prices rising to 108 USD/ton, prices have retraced to 102 USD/ton (-3% WoW) but remain broadly in the 95-130 USD/ton band.
• Investors were disappointed with China’s announced stimulus measures, citing their vagueness and lack of a specific timetable, resulting in the positive sentiment waning over the last two weeks.
• We update investors on Vale’s (VALE US) recent proposal to the government to settle the Mariana Dam disaster.

• This week the S&P/ASX 200 INDEX entered WEEKLY OVERBOUGHT status intra-week, peaking at 8384.50, then pulling back to 8283.20 at Close.
• In this insight we will examine resistance levels the index will have a hard time to clear, without pulling back first at least 1 week.
• According to our quantitative models, a pullback is highly likely to happen this week, or the next.

• Unisuper is looking to raise A$500m (US$333m) via trimming a portion of its stake in APA Group (APA AU).
• The deal will be a large one to digest at 24 days of the stock’s three month ADV. 
• In this note, we’ll run the deal through our ECM framework and comment on deal dynamics.

• Back on the 9th September, pub play Hotel Property Investments (HPI AU) announced – and summarily rejected – a A$3.65/share cash Offer from Charter Hall Retail Reit (CQR AU).
• Charter Hall has now increased terms to A$3.85/share (best & final), a 17.7% premium to undisturbed. The Offer remains conditional on an 50.1% minimum acceptance condition. Charter Hall holds 14.7%. 
• HPI’s reported response? “While Charter Hall’s improved offer provides an attractive exit for shareholders, we remain committed to evaluating all options that deliver the best long-term value.“

• Pilbara Minerals announced the establishment of a $1 billion debt facility with a banking syndicate.
• The company plans to use the facility to repay existing concessional debt and potentially make acquisitions.
• The new facility offers more flexibility in terms of leverage ratios compared to existing debt agreements.

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• Odyssey is looking to raise A$277m (US$186m) from selling its entire stake in AUB Group Limited (AUB AU).
• The PE has been invested since May 2022 with its stake subjected to a two-year escrow period. There have been media reports surrounding the selldown over the past few months.
• In this note, we’ll run the deal through our ECM framework and comment on deal dynamics.

On 14 October, Alkane released its Q125 quarterly activities report, showing almost all of its operating parameters in line with both guidance and our expectations for the full year. The exceptions were its head grade, which exceeded the upper end of the guidance range by 6.1%, and AISC, which improved upon the lower end of the guidance range by 9.1%. Most significant however was confirmation that AISC guidance reflects a one-off cost for decline development that is accounted as sustaining capital (rather than as an operating expense) and as a result we have increased our earnings estimates for FY25 by A$21.2m, or 85.8x (8,479%).

• SGX IO Futures declined by $1.94/ton over the week, closing at $106.21/ton on October 11th, with prices ranging between $103.05 and $115/ton.
• DCE premium over SGX surged to 10% on 8/Oct as DCE reopened after Golden Week, but the spread narrowed to 4.8% by 11/Oct. SGX underperformed DCE early in the week.
• Weekly options volume surged 188%, dominated by puts with a 1.04 put/call ratio, concentrated on November expiries and key strikes at 100 and 105.

Actinogen Medical announced the successful completion of its A$3.0m share purchase plan (SPP), which closed 1.3x oversubscribed. With its previously disclosed A$8.1m share placement, total funds from the combined capital raising reached the targeted A$11.1m in gross proceeds. The company expects that the total proceeds will enable its operating runway to reach the release of top-line results for its XanaMIA Phase IIb/III trial in patients with mild-to-moderate Alzheimer’s disease (AD), expected in mid-CY26. The next major catalyst for Actinogen is the interim results on the first c 100 patients of this study, expected in mid-CY25, which could lead to licensing and/or value realisation opportunities. Our risk-adjusted net present value is A$619.8m (vs A$616.8m previously).

• Iron ore prices dropped below $105/ton on 8 Oct after China’s NDRC failed to announce new stimulus measures, tempering bullish sentiment from earlier liquidity injections.
• Chinese portside inventories grew by 590k tons, reaching 147.84 million tons by 11 Oct, driven by higher arrivals and slower post-holiday consumption.
• While RSI signals bullish momentum, MACD shows a fading rally. Prices approach the critical 200-day moving average at $110/ton, posing a potential resistance point.

• With three quarters of the review period complete, there could be one change for the S&P/ASX 50 Index and two changes for the S&P/ASX 200 (AS51 INDEX) in December. 
• There are two stocks that could be deleted from global indexes in November and that could keep those names under pressure for the next few weeks.
• Passive trackers will need to buy between 4-5x ADV in the forecast adds and sell between 2-8x ADV in the forecast deletes. Shorts have been building up in some names.

• RaaS has published an update report on diversified financials company Bell Financial Group (ASX:BFG) on the back of supportive September 2024 metrics including ECM league tables, ASX volumes and equity markets performance.
• BFG is sitting fourth on the LSEG ECM league tables for the nine months to September 2024, raising $1.2b and on-track with RaaS forecasts (positive for Retail and Institutional).
• The ASX200 closed 6.3% higher at the end of September 2024 relative to June 2024, above implied RaaS assumptions for the full-year and positive for the Portfolio Administration Services (PAS) business and overall investor confidence.ASX transaction volumes continue to recover from a weak CY23, up 32% for the September quarter and positive for the Retail and Technology & Platforms divisions.

• Rio Tinto recommended a price of $5.85 on the US stock and $8.60 on the CDIs, totaling about AU$10 billion or US$6.7 billion, with a 90% premium to the undisturbed price
• The deal is all cash and is expected to close in mid-2025, pending various approvals including shareholder and board approval
• Rio Tinto’s acquisition of Arcadium is seen as a countercyclical move, paying for optionality and long-term potential rather than immediate returns, reflecting a shift in their M&A strategy.

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