Daily Brief Australia: De Grey Mining, Waypoint REIT, DGL Group, Telix Pharmaceuticals, Environmental Group, Recce Ltd and more

• De Grey Mining (DEG AU) entered a binding scheme with Northern Star Resources (NST AU) at 0.119 NST shares per DEG share, implying A$2.08, a 37.1% premium to the undisturbed price. 
• The scheme is conditional on DEG shareholder approval. Gold Road Resources (GOR AU), the largest shareholder, potentially holds a blocking stake and has not provided an irrevocable. 
• The offer is susceptible to a competing offer as it is all-scrip and unremarkable vs peer multiples. Barrick Gold (GOLD US) and Agnico Eagle Mines (AEM US) are potential suitors.

• The review period for the December rebalance ended on 29 November. There could be one deletion, plus there will be capping changes.
• Waypoint REIT (WPR AU) is the lowest ranked current index constituent and is very close to the deletion threshold.
• We estimate the one deletion and capping changes could result in one-way turnover of 3.6% resulting in a one-way trade of A$23m.

• Hello, Welcome to the third edition of the Mikro Kap Wathclist, a series in which I go deeper into unique opportunities from my watchlist that, IMO, are worth monitoring closely.
• This way, you can act decisively when the moment comes, rather than spending weeks on initial research.
• These kinds of stocks would probably be a part of my portfolio if I were older, more diversified, or both.

• Telix Pharmaceuticals (TLX AU) initiated Phase 3 ZIRCON-CP trial of PET imaging candidate TLX250-CDx for clear cell renal cell carcinoma and dosed first patient in a cancer hospital in China.
• Telix is focused on expanding the near-term opportunity in precision medicine diagnostics with three new products planned for launch in 2025.
• CMS will unbundle and pay separately for specialized diagnostic radiopharmaceuticals for Medicare patients with per-day costs exceeding $630. The new payment decision is in favor of Telix.

• Core business driving increasing recurring revenue profile: Strong growth history with recent successful conversion to recurring revenue – now 50%+ of the business’ revenue – provides more visible earnings certainty.
• Recent history of solid growth is set to continue in core operating segments, while commercialising water treatment technology is option for potential upside in the stock.
• Cash generative, profitable, and capital-light business model: Energy (boilers) and Baltec (exhaust systems) in particular provide cash generative and profitable support for the business to prosecute building out its suite of environmental engineered solutions.

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Recce Pharmaceuticals has made several strides in advancing its topical gel formulation (R327G) of lead anti-infective therapeutic drug candidate RECCE® 327 (R327) as a topical treatment for acute bacterial skin and skin structure infections (ABSSSI) and diabetic foot infections (DFIs). The company received Human Research Ethics Committee (HREC) approval to start a registrational Phase III DFI study in Indonesia, which, if successful, could lead to a commercial launch in South-East Asia in CY26. With the near-term focus on advancing the ABSSSI and DFI indications providing a clearer path to future revenues, we have pushed back our timing expectations for the IV R327 formulation, resulting in an updated risk-adjusted net present value (rNPV) of A$593.6m (or A$2.60/share), versus A$688.5m (or A$3.07/share share) previously.