Australia

• On the 23 January, Aspen (APZ AU) improved its scrip terms to 0.26 Aspen shares per Eureka (EGH AU) share, up from 0.225 Aspen shares on the 2 March 2023.
• Two weeks later, Eureka said they still had not received a formal Offer. Aspen has now released its Bidder’s Statement. Its Offer has a 50.1% acceptance condition.
• Complicating the Offer was the recent disclosures from FDC Group that it held a 12.89% stake, preventing Aspen compulsory acquiring shares.

• Back on the 19th Dec, Sociedad Quimica y Minera (SQM/B CI)/Hancock offered Azure Minerals (AZS AU) shareholders A$3.70/share by way of a Scheme, a ~52% premium to the undisturbed price.
• Creasy Group (12.64%) and Delphi Group (10.15%) gave irrevocables. Mineral Resources (MIN AU)‘s 14.5% stake was unclear; but they exited on the 21 Feb. “Arbitrageurs should arb. Corporations should Corp“.
• The Transaction Booklet is now out with a Scheme Meeting on the 8th April. The IE says fair. Expected implementation on the 18 April.

• The Azure Minerals (AZS AU) IE considers Sociedad Quimica y Minera de Chile (SQM US)/Hancock’s scheme and takeover offer fair and reasonable as it is above its A$2.03-2.93 valuation range. 
• The scheme is conditional on FIRB approval, which should be forthcoming as Azure’s key asset (Andover) will be majority-owned by Australian entities.
• The scheme vote will get up due to irrevocables and retail support. At the last close and for the 18 April payment, the gross/annualised spread was 3.1%/29.2%.

• Redbubble was a bubble. On the wings of pandemic mania, the stock price increased 13 times from March 2020 to January 2021.
• Reaching a 1.9B market cap. Today, the situation looks quite different.
• The stock is down 93% from its highs of 7 AUD and currently sits at 0.

• With the review period for the March rebalance complete, Abacus Storage King (ASK AU) could be deleted from the index and there will be capping changes.
• The index changes will lead to a one-way turnover of 3.6% resulting in a one-way trade of A$21m. There are three stocks with over A$4m to trade.
• Goodman Group (GMG AU) is an inclusion to a global index in March and that buying will far outweigh the selling from the Vaneck Vectors Australian Property ETF (MVA AU). 

• I have received several questions from readers on Alcoa (AA US)’s non-binding proposal for Alumina Ltd (AWC AU) in the context of the current gross spread of 9.2%. 
• The questions primarily concerned Citic Resources Holdings (1205 HK) voting intentions, the probability of a bump and the likelihood of Aloca shareholders supporting the transaction. 
• CITIC Resources’ lack of public endorsement of the transaction is due to HKEx listing requirements and not an indication of a NO vote risk.  

• With the review period complete, there are 3 stocks that are close to the deletion zone and could be removed from the index at the March rebalance.
• Even if there are no constituent changes, capping changes will lead to one-way turnover of 4.4% and a one-way trade of A$97m.
• There are 9 stocks with over A$5m to trade from passive trackers but the impact on the stocks is not very high.

• Wrkr Ltd (ASX:WRK) offers compliance solutions for Australian superannuation contributions and payroll including member onboarding, super payments, messaging and employee validation.
• WRK has reported a H1 FY24 adjusted EBITDA loss of $0.53m, half that of H1 FY23 and in line with RaaS estimates.
• The result benefitted from both operating leverage (43% revenue growth against a 6% increase in operating costs) and some reallocation of employee costs to capitalised product development.

EML Payments reported good growth in revenue and underlying EBITDA in H124, mainly due to the benefit of higher interest income. Management’s focus has been on the underperforming PCSIL General Purpose Reloadable (GPR) business, now in liquidation, resulting in the cost cutting programme shifting to H224. With that obstacle removed, management can now shift its sights to growing the remaining Gifting and GPR businesses and rightsizing the cost base.

• Wrkr Ltd (ASX:WRK) offers compliance solutions for Australian superannuation contributions and payroll including member onboarding, super payments, messaging and employee validation.
• WRK has reported a H1 FY24 adjusted EBITDA loss of $0.53m, half that of H1 FY23 and in line with RaaS estimates. The result benefitted from both operating leverage (43% revenue growth against a 6% increase in operating costs) and some reallocation of employee costs to capitalised product development.
• We forecast positive H2 FY24 EBITDA on the back of continued operating leverage, and in particular significant Hong Kong implementation fees (estimated at $1.4m), higher float interest and continued cost control.

• Back in July 2022, Aussie renewable energy player Genex (GNX AU) announced an A$0.23/share NBIO from Skip Enterprises and Stonepeak, subsequently bumped to A$0.25/share, and confirmatory due diligence provided.
• Negotiations ceased in December that year.  As of today, Scott Farquhar’s Skip Enterprises continues to hold a 19.9% stake in Genex. 
• This morning, Genex announced an A$0.275/share NBIO from Electric Power Development (9513 JP) (J-Power), by way of a Scheme. A concurrent off-market A$0.27/share is in place.

• Genex Power Ltd (GNX AU) has disclosed a non-binding scheme proposal from Electric Power Development C (9513 JP) at A$0.275, a 48.6% premium to the undisturbed price of A$0.185.
• If the scheme fails, J-Power will launch an off-market takeover offer with a 50.1% minimum acceptance condition at A$0.270 per share. The dual-track bid is meant to counter Skip’s stake.
• The Board has granted exclusive due diligence until 31 March. The offer is attractive, but the scheme’s completion hinges on Skip Capital’s acceptance.  

• There is 1 change for the S&P/ASX20 Index, 2 changes for the S&P/ASX100 Index, 4 changes for the S&P/ASX200 INDEX and 14 adds/10 deletes for the S&P/ASX300 Index in March.
• The largest impact is expected on the changes to the S&P/ASX 200 (AS51 INDEX) while flows are large among changes to the S&P/ASX 20 Index and S&P/ASX 100 Index too.
• There has been a steady increase in cumulative excess volume for most stocks but there are a few where there has been a spike recently.

• Cash Converters International (ASX:CCV) is a consumer finance company operating as a service provider, owner and franchisor of second-hand goods and financial services stores in Australia and internationally.
• CCV has delivered a solid H1 FY24 with revenue growth of 34% to $191.5m (in line with RaaS $192.5) and EBITDA growth of 13% to $32.6m (15% ahead of RaaS $28.4) and NPAT of $9.8m (7% ahead of RaaS $9.2m).
• The gross loan book has grown 15% to $294m, which is all the more impressive as the business transitions away from SACC products due to regulatory change, more than offset by growth in all other products, domestically and internationally. 

• Cash Converters International (ASX:CCV) is a consumer finance company operating as a service provider, owner and franchisor of second-hand goods and financial services stores in Australia and internationally.
• CCV has delivered a solid H1 FY24 with revenue growth of 34% to $191.5m (in line with RaaS $192.5) and EBITDA growth of 13% to $32.6m (15% ahead of RaaS $28.4) and NPAT of $9.8m (7% ahead of RaaS $9.2m).
• The gross loan book has grown 15% to $294m, which is all the more impressive as the business transitions away from SACC products due to regulatory change, more than offset by growth in all other products, domestically and internationally.

• The results for the March 2024 index rebal event for ASX indices were announced after the close on Friday 1st March 2024.
• There is one change for ASX 20, two changes for ASX 100, and four changes for ASX 200.
• There are 14 ADDs and 10 DELs for ASX 300 and while most of these are small-size flow names some of them have more than 15x ADV to trade.

Nickel Industries Limited has released sound FY 2023 numbers, driven by a series of capital-raising initiatives that have strengthened the company’s balance sheet. The operating results were satisfactory, with capacity growth and competitive first-quartile cash costs more than offsetting lower nickel prices (down c. 50% in the past year). NIC is also making good progress in the transition away from nickel pig iron (NPI) production to Class 1 nickel production.

Group EBITDA increased 19% y-o-y to USD 403 mn, due to robust production volume growth. Net debt fell to USD 66 mn from USD 415 mn, thanks to material cash proceeds from the capital-raising initiatives. Gross Debt/EBITDA and Net Debt/EBITDA were 2.2x and 0.2x, respectively, at FYE 2023. EBITDA/Interest stood at 5.7x. Liquidity is adequate, with USD 779 mn cash and c. USD 200 mn available credit lines (vs. USD 845 mn total debt).

We continue to expect robust double-digit EBITDA growth of c. 20% in FY 2024 and c. 2x Gross Debt/EBITDA. This will likely be supported by capacity expansion.

In H124 SenSen delivered positive free cash flow for the first time, a key milestone. The group’s Smart Cities focus and standardised business model supported steady top-line progression, as well as strong gross margin expansion and loss reduction. As end-H1 cash was boosted by an annual Australian development grant, we believe reaching positive free cash flow from the group’s core operating assets remains a key target. Below we outline a pathway for SenSen to deliver this target in Q4, underpinned by consistent top-line growth on a lower cost base.

• Pureprofile Ltd (ASX:PPL) is a data analytics, consumer insights and media company underpinned by proprietary technology, servicing business decision makers in brands and media companies as well as market researchers.
• Pureprofile has confirmed, as previously announced on 30 January, that H1 FY24 revenue was $24.0m, with platform revenue contributing $4.4m, a 104% increase on the previous corresponding period (pcp).
• EBITDA, adjusted for significant and non-cash items, increased 9.6% to $2.37m.

• Godolphin Resources Limited (ASX:GRL) is an ASX-listed green metals and critical minerals explorer with a focus on central west New South Wales.
• The company’s projects include the Narraburra rare earths element (REE) project, the Goodrich copper prospect, the Yeoval copper-gold-molybdenum project and the Gundagai gold project.
• The projects are predominantly located on the Lachlan Fold Belt, a highly prospective province for the discovery of rare earth elements, copper, gold and base metal deposits. 

Freelancer’s FY23 results marked a key milestone as the group moved to positive operating EBITDA. Profitability was driven by lower opex than we anticipated as gross marketplace volume (GMV) and revenue declined due to a delayed recovery in the core retail platform and Escrow. Loadshift momentum following its transition to a more value-driven marketplace model, along with Enterprise growth, softened the size of the revenue decline. While Escrow volumes and revenue were down, lead indicators remain positive, with two major e-commerce platforms expected to deploy the Escrow service in H124. Loadshift, Enterprise and the retail platform also provide diverse levers to drive a return to growth, where delivery on a lower cost base will be key to a re-rating.

• Godolphin Resources Limited (ASX:GRL) is an ASX-listed green metals and critical minerals explorer with a focus on central west New South Wales.
• The company’s projects include the Narraburra rare earths element (REE) project, the Goodrich copper prospect, the Yeoval copper-gold-molybdenum project and the Gundagai gold project.
• The projects are predominantly located on the Lachlan Fold Belt, a highly prospective province for the discovery of rare earth elements, copper, gold and base metal deposits.

Lucror Analytics Morning Views comprise our fundamental credit analysis, opinions and trade recommendations on high yield issuers in the region, based on key company-specific developments in the past 24 hours. Our Morning Views include a section with a brief market commentary, key market indicators and a macroeconomic and corporate event calendar.

• Nickel Industries

Having shown cognitive activity in prior trials, Actinogen began its XanaMIA Phase IIb study of lead candidate Xanamem in patients with cognitive impairment (CI) associated with mild-to-moderate Alzheimer’s disease (AD). The study will assess c 220 biomarker-positive AD patients, with interim results expected in H1 CY25. Actinogen recently reported results from a human positron emission tomography (PET) imaging study, which affirm the drug’s mechanism of action (MoA) in healthy subjects and patients with AD, by showing that Xanamem exhibited high target enzyme occupancy designed to impede cortisol production, as well as favourable safety and tolerability. Our risk-adjusted net present value (rNPV) remains essentially unchanged at A$528m.

• Pureprofile Ltd (ASX:PPL) is a data analytics, consumer insights and media company underpinned by proprietary technology, servicing business decision makers in brands and media companies as well as market researchers.
• Pureprofile has confirmed, as previously announced on 30 January, that H1 FY24 revenue was $24.0m, with platform revenue contributing $4.4m, a 104% increase on the previous corresponding period (pcp).
• EBITDA, adjusted for significant and non-cash items, increased 9.6% to $2.37m. Reported NPAT for the half was $3,888, a $509k turnaround on the pcp. 

• Alkane Resources Limited (ASX:ALK) is an ASX-listed gold producer and explorer with a focus on central west New South Wales.
• The Perth-headquartered company owns and operates the Tomingley gold mine and processing facilities, south-west of Dubbo and the Northern Molong porphyry project in central west NSW which includes the highly prospective Boda and Kaiser deposits.
• ALK recently announced high-grade results from the Kaiser resource upgrade drilling programme and upgraded the Boda resource to 6.6mn ounces of gold equivalent (AuEq), with 4.4Moz AuEq inferred. 

• Back on the 19th Feb, employment and disability services play APM Human Services Internation (APM AU) rejected PE-outfit CVC Asia Pacific’s A$1.60 proposal, a 93% premium to undisturbed.
• Undeterred, CVC has returned with A$2.00/share indicative Offer, by way of a Scheme, a 141% premium to undisturbed; yet a 44% discount to APM’s November 2021 IPO price of A$3.55/share.
• APM has determined it will engage and provide CVC with a four-week period of exclusivity. 

• Goodman Group (GMG AU) has been moving higher recently and the stock has outperformed its peers handily over the last year.
• The stock trades marginally expensive compared to its peers and that could be partially attributed to the stock being a part of large indices.
• There is another index inclusion to come and that could lead to further outperformance in the short term.

• APM Human Services Internation (APM AU)’s revised non-binding proposal from CVC is A$2.00 per share, a 141.0% premium to the undisturbed price of A$0.83 per share (16 February).
• CVC has been granted a four-week exclusivity period to 27 March. The proposal allows shareholders to receive scrip in an unlisted HoldCo. The Board will recommend a binding proposal.
• While not a knockout offer, a concentrated and seemingly supportive shareholder register facilitates a binding proposal. At the last close, the gross spread was 25.0%.  

• Yesterday morning, Qantm Intellectual Property (QIP AU) announced it had received a non-binding indicative proposal from UK-based Rouse International Holdings Limited.
• In what only can be described as a (s)crappy announcement, no price was disclosed, nor the due diligence period. Not even if this was a cash/scrip Offer.
• In any event, QANTM considers Rouse’s ops to be highly complementary in both geographic and service lines to QANTM. QANTM shares gained 17% yesterday to close at A$1.34.

• Alkane Resources Limited (ASX:ALK) is an ASX-listed gold producer and explorer with a focus on central west New South Wales.
• The Perth-headquartered company owns and operates the Tomingley gold mine and processing facilities, south-west of Dubbo and the Northern Molong porphyry project in central west NSW which includes the highly prospective Boda and Kaiser deposits.
• ALK recently announced high-grade results from the Kaiser resource upgrade drilling programme and upgraded the Boda resource to 6.6mn ounces of gold equivalent (AuEq), with 4.4Moz AuEq inferred.

• Sky Metals Limited (ASX:SKY) is an ASX-listed base metals explorer focused on a portfolio of assets in New South Wales with the most advanced being the Tallebung tin project in central NSW. The company recently made material progress on the expansion of the mineral resource estimate (MRE) at Tallebung which positions it to be scoped for a bulk-mining operation.
• SKY says it is now planning a further drilling programme on a defined exploration target of approximately 23Mt-32Mt at a grade of between 0.14%-0.17% tin to build out the indicated resource for the mine scoping studies.
• The cash balance of $1.12m at the end of December 2023 suggests to us that the company may need to raise capital to complete its programme.