In today’s briefing:
- Fenix Resources (FEX AU): Thoughts On The 3 Year Plan Conference Call And 34% OCF Yield FY26e
- Rio Tinto: Reorg Detail, New Guidance
- Long ARB Corp (ARB AU) Vs. Short Amotiv (AOV AU): Statistical Arbitrage Targeting a 6% Return
- Humm Group (HUM AU): Credit Corp’s NBIO Belatedly Disclosed to Distract from a Potential Board Spill
- Long Woodside (WDS AU) Vs. Short Ampol (ALD AU): Repeat Pair Trade Opens with 8% Target Return
- Long Yancoal (YAL AU) Vs. Short Woodside (WDS AU): Proven Pair Trade Back in Play, Targeting 6%
Fenix Resources (FEX AU): Thoughts On The 3 Year Plan Conference Call And 34% OCF Yield FY26e
- Fenix Resources (FEX AU) provided more color during its three-year production plan call on its journey from 4 million to 6 million tons by FY28, and beyond 10 million tons post-FY29.
- The company requires a minimum capex of AUD 35-45 million (excluding fleet expansion capex of AUD 20 million) to ramp up to 6 million tons.
- Stock trades at 5.4x/4.7x FY26/27PE, based on 4.5/5 million ton shipments at 100 USD/ton. Risks to estimates lie in iron ore prices moving below 100 USD/ton or cost inflation.
Rio Tinto: Reorg Detail, New Guidance
- The reorg will see H1/25 Minerals revenue decline to zero as items are reclassified to Iron Ore and Aluminum/Lithium and Iron/Titanium and Borates are under review
- Guidance for 2026 indicates a 4.3% and 2.6% yoy increase in iron ore and alumina output, respectively, but a -2.5% and -3.7% decline in bauxite and copper production
- Rio appears near fully valued, with -3.9% downside to our DCF and 4.5% upside to the consensus target, and we still see downside risk for iron ore and copper prices
Long ARB Corp (ARB AU) Vs. Short Amotiv (AOV AU): Statistical Arbitrage Targeting a 6% Return
- Context: The ARB Corp (ARB AU) vs. Amotiv (AOV AU) price ratio has deviated more than two standard deviations from its one-year average, presenting a potential relative value opportunity.
- Highlights: Going long ARB Corp (ARB AU) and short Amotiv (AOV AU) targets a 6% return.
- Why Read: Essential for quantitative traders seeking mean-reversion opportunities, with detailed execution framework, risk management protocols, and historical simulation showing the statistical basis for this relative value play.
Humm Group (HUM AU): Credit Corp’s NBIO Belatedly Disclosed to Distract from a Potential Board Spill
- Humm Group (HUM AU) disclosed that on 19 November, it received an indicative proposal from Credit Corp (CCP AU) consisting of a scheme (A$0.77) and an off-market takeover offer (A$0.72).
- The scheme has a low chance of success, and the takeover offer’s 50.1% minimum acceptance condition will prove problematic. The lack of due diligence signals the Board’s reluctance to engage.
- The tardy disclosure is primarily intended to distract from Jeremy Raper’s attempt to mount a Board spill. This is essentially a long-dated backend play on Raper successfully spilling the Board.
Long Woodside (WDS AU) Vs. Short Ampol (ALD AU): Repeat Pair Trade Opens with 8% Target Return
- Context: The Woodside Energy Group (WDS AU) vs. Ampol (ALD AU) price ratio has deviated more than two standard deviations from its one-year average, presenting a potential relative value opportunity.
- Highlights: Going long Woodside Energy Group (WDS AU) and short Ampol (ALD AU) targets a 8% return.
- Why Read: Essential for quantitative traders seeking mean-reversion opportunities, with detailed execution framework, risk management protocols, and historical simulation showing the statistical basis for this relative value play.
Long Yancoal (YAL AU) Vs. Short Woodside (WDS AU): Proven Pair Trade Back in Play, Targeting 6%
- Context: The Yancoal Australia (YAL AU) vs. Woodside Energy (WDS AU) price ratio has deviated more than two standard deviations from its one-year average, presenting a potential relative value opportunity.
- Highlights: Going long Yancoal Australia (YAL AU) and short Woodside Energy (WDS AU) targets a 6% return.
- Why Read: Essential for quantitative traders seeking mean-reversion opportunities, with detailed execution framework, risk management protocols, and historical simulation showing the statistical basis for this relative value play.
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