In today’s briefing:
- S&P/ASX Index Rebalance (Dec 2024): CAR, Clarity Pharma Added; Dexus, Spark Deleted
- Paradigm Biopharmaceuticals (PAR AU): Fund Raising Amidst Pipeline Progress Raises Conviction
- Fenix Resources (FEX AU): Positive Developments At Iron Ridge And Other Catalysts
- Iron Ore Tracker (9-Dec-2024): Stuck In A 95-110 USD/Ton Band, Restock On The Cards?
- Verbrec Ltd – AGM Update pointing to a strong year
S&P/ASX Index Rebalance (Dec 2024): CAR, Clarity Pharma Added; Dexus, Spark Deleted
- 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): Fund Raising Amidst Pipeline Progress Raises Conviction
- 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.
Fenix Resources (FEX AU): Positive Developments At Iron Ridge And Other Catalysts
- 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.
Iron Ore Tracker (9-Dec-2024): Stuck In A 95-110 USD/Ton Band, Restock On The Cards?
- 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.
Verbrec Ltd – AGM Update pointing to a strong year
- 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.
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