Australia

• Shareholders have approved Costa Group Holdings (CGC AU)‘s acquisition by Paine Schwartz Partners and the stock is expected to stop trading after the close on 8 February.
• Costa Group Holdings (CGC AU) will be replaced by Strike Energy (STX AU) in the S&P/ASX 200 (AS51 INDEX) at the close on 8 February.
• There will be positioning in Strike Energy (STX AU) but we do not expect it to be excessively large and there could be some outperformance over the next week.

• Metals Acquisition (MTAL US) is looking to raise up to A$300m (US$197m) through its ASX secondary listing.  
• The proceeds will be used to repay Glencore’s deferred consideration facility for the MTAL’s acquisition of its CSA copper mine, amongst other uses.
• In this note, we will talk about the deal dynamics and run the deal through our ECM framework.

• WAM Leaders Ltd (WLE AU) has launched an all-scrip off-market takeover offer for QV Equities Ltd (QVE AU) at 1 WLE share per 1.4675 QVE shares.
• The offer is subject to a 50.1% minimum acceptance condition and several onerous conditions, which disproportionately shift the risk to QVE shareholders. 
• The lack of meaningful premium (5.0% to undisturbed price) and unattractive deal metrics suggest a high probability of Board rejection. The Board has started a formal strategic review. 

• WAM Leaders Ltd (WLE AU), an investment company managed by Wilson Asset Management, has made an all-scrip off-market Offer for QV Equities Ltd (QVE AU).
• Terms are one WLE for every 1.4675 shares of QVE, for an implied price of A$0.95/share, a 5% premium to undisturbed.  
• The key condition is a 50.1% acceptance condition. WLE-related entities hold a 15.8% stake. QVE should hold out for an improved Offer.

• • 4Q23 production was 218 boe/d as Anshof did not contribute to production during the quarter (in line with previous indications).
• Commercial production at Anshof is expected to restart in March after the commissioning of a permanent production facility. • Drilling at the high impact Welchau-1 well targeting between 365 bcf and 1,128 bcf gross prospective resources is expected to commence in early February.

Q2 was a pivotal quarter for SenSen, with the business making significant progress commercially, operationally and financially. Customer cash receipts grew 17% to A$3m and the company generated positive cash flows for the first time. Notable wins in Australia with the NHVR and a newly announced contract with Sourcewell in the US should support further growth while further validating SenSen’s technology. The shift to focus the business solely on smart cities is enabling a further $A2m in cost efficiencies to be made, while financial headroom was strengthened by a A$2m (net) entitlement offer. Estimates look well supported and we believe SenSen looks well positioned to remain self-funding and generate positive cash flows on an annual basis.

• Carly Holdings Limited (ASX:CL8) operates a vehicle subscription business, which it launched in March 2019, leveraging existing operations, strategic relationships, and technology.
• Car subscription allows business and retail customers to pay a single monthly fee to access a car for 30 days or more and is an alternative to purchasing or financing a vehicle.
• Carly has attracted larger automotive industry businesses as shareholders, with a direct offering and services to support automotive manufacturers and dealers to generate revenue from car subscriptions. 

• Empire Energy Group Limited (ASX:EEG) is an oil and gas producer/developer with onshore Northern Territory (NT) and US oil/gas production assets.
• EEG has the largest tenement position in the highly prospective Greater McArthur Basin, which includes the Beetaloo Sub-basin.
• The investment case continues to build with a FID point on the Carpentaria Pilot Project tantalisingly close. 

• The S&P/ASX 200 INDEX started to go up again after just 1 week down, now starting the 2nd week up, we want to evaluate how far it can go.
• There are a number of Q2 resistance levels just above the 7600 price area for the next 2 weeks, so if the index goes up there it will be overbought.
• This pattern is bullish, you need to wait for at least 3 or 4 weeks up in a row before going SHORT, unless you love to take risks…

• Human services company Millennium Services Group Ltd (ASX:MIL) has released its Q2 FY24 cash-flow report and a Q2/H1 FY24 revenue update.
• Total Q2 FY24 revenue increased 17.7% on the pcp, accelerating from Q1 FY24 and above RaaS estimates with ad-hoc revenue the key surprise, up 40% due to additional extended trading hours at retail malls and new security project work.
• MIL is on track to achieve its FY24 revenue guidance of $300m to $305m. 

• BWP Trust (BWP AU), the owner of  75 properties (mostly Bunnings Warehouses), will merge with smaller landlord Newmark Property REIT (NPR AU), whose tenants also include Bunnings.
• Via an off-market transaction, BWP is offering NPR unitholders 0.4 new BWP units for every NPR unit held, for an implied Offer price of $1.36/unit, a 43.1% premium to undisturbed.
• The key condition is a 50.1% tendering threshold. 18.3% of NPR have given an irrevocable. This looks done; although NPR was listed at A$1.89/unit a little over two years ago.

• Newmark Property REIT (NPR AU) has disclosed an off-market takeover merger proposal from Bwp Trust (BWP AU) of 0.40 BWP units per NPR unit, implying A$1.39 per NPR unit. 
• The proposal is conditional on a 50.1% minimum acceptance condition, which can be waived or lowered. Irrevocables represent 18.35% of NPR units.
• The offer is attractive given the weak sector sentiment due to ongoing high-interest rates. At the last close, the gross spread was 2.6%.

• On the 2 March 2023, Aspen Group (APZ AU) made an all-scrip NBIO for Eureka Group (EGH AU), a senior accommodation rental play. The implied A$0.399/share Offer was subsequently rejected.  
• Aspen held 13.7% of shares out at the time, having acquired the stake in December 2022. Aspen has returned with all-scrip off-market Offer with an improved implied price of A$0.431/share. 
• The Offer is contingent of Aspen getting to 50.1% of shares out. Eureka said it hasn’t received a formal approach. I think they’ll ask for more gruel.

• 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.
• It derives its revenue from personal loans, vehicle finance, sale of goods and store services.
• In recent years, the business has faced both company specific and industry headwinds involving litigation and regulatory scrutiny, but it has worked through those and evolved into a highly regulated, well-run profitable business with a clear strategic direction and multi- layered growth opportunities. 

• QANTM Intellectual Property Ltd (ASX:QIP) owns a group of intellectual property (IP) services businesses operating under the independent brands of Davies Collison Cave (DCC), FPA Patent Attorneys, and Sortify.tm.
• It is a major player in the mature and regulated Australian patent, trade marks and IP legal services market, and has a diversified mix of local and foreign clients (~45%/55% split; ~50% US$ revenue).
• The company has provided a trading update that it expects underlying EBITDA (post AASB 16) to be between 8% and 10% higher than the analyst estimate of $31m and that reported EPS will be between 20% and 25% higher than the analyst estimate of $0.081/share. 

• Rent.com.au Limited (ASX:RNT) is a purpose-led company seeking to empower home renters through its technology platform and a growing number of aligned transactional services.
• The company has provided a trading update noting that its RentPay rental payments platform had now processed $200m in payments since its relaunch.
• Achieving the $200m milestone comes just three months after passing the $150m mark, demonstrating a continued acceleration in the take-up of the platform. 

• In OreCorp: Silvercorp Switches To Off-Market Bid, after Silvercorp Metals (SVM CN) switched to an off-market Offer for Orecorp Ltd (ORR AU), I expected Perseus Mining (PRU AU) to counter. 
• Orecorp announced this morning Perseus (with 19.9% of shares out) has pitched an all-cash Offer of A$0.55/share, primarily conditional on getting to 50.1%
• Orecorp has responded by saying Perseus Offer is not superior to Silvercorp cash/scrip terms. Perhaps it’s Orecorp’s way of (temporarily) skirting the break fee and letting the market decide.

• In this insight, we take a look at the potential index changes for ASX 300, 200, 100, 50, and 20 in the run-up to the March 2024 index review.
• The conclusion of the Costa Group Holdings (CGC AU) M&A deal could trigger an index change in February 2024.
• Separately, there could be a “surprise” index change in March 2024 caused by a long-term trading suspension. 

• Perseus Mining (PRU AU)’s competing all-cash takeover offer for Orecorp Ltd (ORR AU) is A$0.55, a 4.0% premium to the implied value of the Silvercorp Metals (SVM CN) off-market takeover offer. 
• The Board opines that the PRU offer is not superior. Since announcing the revised SVM scheme on 23 November, the PRU offer has averaged 3.0% lower than the SVM offer.
• The SVM offer, which closes on 23 February, has struggled to gain traction. PRU has the balance sheet to sweeten its offer and gain shareholder traction.   

• In the world of 8-10% dividend-yielding commodities, Fortescue Metals (FMG AU) almost makes the cut. We would wait for a better entry point here despite iron ore strength.
• We are also mindful of the risks associated with capex in the green energy space to achieve zero emissions and ramp costs with the recent production increase.
• We believe numbers are at par, trading at 9.6x PE on the current spot price (130 USD/ton) with a 7% dividend yield ( assuming a 65% payout ratio). 

Key points (machine generated)

• Apple’s focus on carbon-neutral products and use of titanium in iPhone 15 Pro is driving interest in titanium resources.
• Sovereign Metals’ discovery of the world’s largest undeveloped natural rutile deposit has attracted the attention of Rio Tinto, which recently became the largest shareholder in the company.
• Titanium is considered a critical material due to supply shortages and China-controlled supply chains, with its use in Apple products highlighting its growing importance. Investment in Sovereign Metals offers an interesting opportunity, especially given the lack of upcoming funding requirements and a discount to Rio Tinto’s entry price.

This article is sourced from an online content aggregator through publicly available sources and is displayed below for general informational purposes only. This article was originally published 3 months ago on Value Investors Club.

• A rig is expected to be mobilised to the high impact Welchau-1 drilling location during the last week of January.
• Welchau gross prospective resources have been independently estimated at 365 to1,128 bcf (ADX’s internal estimates: 212 to1,631 bcf).
• During 4Q24, ADX plans to drill the IRR-1 gas prospect with 38 bcf gross prospective resources or the LICHT prospect.

• Kinatico Ltd (ASX:KYP) is a ‘Know Your People’ regtech company providing workforce compliance monitoring and management technology and services.
• KYP has reported a 6% year-on-year increase in Q2 FY24 revenue to $7.1m, and a 145% year-on-year increase in SaaS revenue to $2.4m.
• SaaS revenue accounted for 33% of total revenue for the quarter, compared to 14% in Q2 FY23. 

• State Gas Limited (ASX:GAS) is a junior energy producer and explorer with assets concentrated in the Bowen Basin, Queensland.
• The Rolleston West CNG Project in the Bowen Basin is now in the final stage with mechanical completion and tie-in of the Rougemont-2/3 well anticipated within the next week to be followed by pre-commissioning activities.
• Importantly, first production and shipments are tantalisingly close and whilst the rate will initially be modest, up to 0.75TJd, the project has intrinsic growth potential (up to 1.7TJd) which could fund modest appraisal and evaluation works, particularly converting contingent gas to bankable reserves.

• The S&P/ASX 200 INDEX closed last week down at 7421.20 (CC=-1). The index was rallying in the previous weeks, but then pulled back before reaching the previous all time highs.
• The next strong support for a LONG trade is 7288 (Q3 support), but there is a risk of a slide to lower levels, so hedge your LONG trades.
• This looks like a temporary correction (buy-the-dip opportunity to add LONG positions, or to re-enter LONG at better prices).

• The Scheme Meeting for PSP’s acquisition of Costa Group Holdings (CGC AU) will be held on 30 January and Costa Group could stop trading after the close on 8 February.
• Strike Energy (STX AU), SiteMinder (SDR AU) and Audinate (AD8 AU) are potential inclusions to the S&P/ASX 200 (AS51 INDEX) at an ad hoc rebalance.
• For the stocks that are not added at the ad hoc rebalance, there is a very high probability of S&P/ASX 200 (AS51 INDEX) inclusion at the March rebalance.