Australia

• The stock price has corrected to the anticipated level and rebounded
• Dates announced for acceptance and payment for the rights issue
• There may be more weakness once the rights shares start  trading

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• RaaS Research Group has published an update report on purpose-led proptech Rent.com.au (ASX:RNT) following its fully-underwritten entitlement offer to raise $2.5m at $0.02/share, with one quoted option for every two shares issued.
• Separately and on June 3, RNT provided a trading update in which it announced that RentPay’s customers at the end of May were up 64% to 9,271.
• We have incorporated the capital raise in our forecasts, but having already modelled an additional $2.5m raise in H2 FY25, the impact to our forecasts is only due at the EPS line.

• Cyan Renewables has bumped its Mma Offshore (MRM AU) offer to A$2.70 per share, a 3.8% premium to the previous A$2.60 offer.
• The bump is derisory in the context of recent earnings upgrades. Since the binding proposal, MMA has upgraded its FY24 EBITDA and EBIT guidance by 9.8% and 15.5%, respectively.
• The AFR reported that around 30% of the register opposed the previous offer. A cursory 3.8% bump is unlikely to sway most of these dissenters to change their views.

• Diagnostic imaging provider Capitol Health (CAJ AU) has announced it has entered into a process deed with Integral Diagnostics (IDX AU)
• This non-binding indicative Offer, by way of a Scheme, involves 0.12849 new IDX shares for each share of Capitol.  The next step is four weeks of two-way confirmatory due diligence.
• The implied Offer Price under the scrip terms is A$0.3284/share. Should the transaction complete, Integral would hold 63% in the combined group. This is the second Integral/Capitol merger attempt.

• Tamboran Resources (TBN AU) is looking to raise US$175m from listing its shares in the US.
• Tamboran Resources is an early stage, independent natural gas exploration and production company.
• In this note, we talk about the deal dynamics and the listing impact.

• Guzman Y Gomez (0817833D AU) has raised A$335.1m in a primary + secondary offering, valuing the company at A$2.23bn. The stock starts trading on the ASX Ltd (ASX AU) today.
• Just over 54% of the shares are escrowed which means there is a lot of stock that will be available for sale on listing day.
• Guzman Y Gomez (0817833D AU) could be added to the S&P/ASX 300 Index in September and there could be global index inclusions in November and December.

• On 17 June, Capitol Health (CAJ AU) disclosed a non-binding merger proposal from Integral Diagnostics (IDX AU) at 0.12849 Integral shares per Capitol share.
• Integral has been granted a four-week exclusivity period that ends on 15 July. The transaction will require approval from the ACCC and Capitol shareholders. 
• The offer is attractive compared to historical exchange ratios, trading ranges and peer multiples. At the last close, the gross spread was 11.7%.  

• Guzman Y Gomez  raised around US$221m in its upsized Australian IPO. 
• GYG is a quick service restaurant business with more than 200 restaurants globally. It mainly focuses on fresh, made-to-order, Mexican-inspired food.
• We have looked at the company’s performance  and valuation in our past notes. In this note, we talk about the trading dynamics.

• Back on 25 March, marine and subsea services provider MMA Offshore (MRM AU) entered into a Scheme with Singapore’s Cyan Renewables, a wholly-owned vehicle of Seraya Partners.
• The A$2.60/share Offer in cash, a 11% premium to last close, was within the IE’s fair value range of A$2.03 to A$2.83. However, shares have consistently traded through terms.
• Cyna has now bumped the Offer to A$2.70/share – best & final. Thorney (7.95% of shares out) is supportive. The Scheme Meeting will still be held on the 1 July.

• Telix Pharmaceuticals (TLX AU) has withdrawn its proposed IPO in the U.S. due to unfavorable market condition. The proposed Nasdaq listing was not predicated on the need to raise capital.
• As a profitable, cash generative company, Telix is confident that its existing and upcoming cash resources will be sufficient to meet R&D and commercialization needs.
• Following the successful commercial launch of Illuccix, Telix has demonstrated its ability to develop and commercialize innovative product portfolio, which should accelerate its growth trajectory.

• Count (ASX:CUP) is an accounting and wealth business in Australia which is both the 18th largest Accounting firm whilst simultaneously being the 3rd largest AFSL holder in the country after its consolidation of Diverger (ASX:DVR) due to be implemented on the 1st of March 2024.

• As some may gather, our shares in Count have come from the implementation of Diverger transaction, and as a result I will be focusing on the specifics of the combined business and its prospects.

• First, Count’s Accounting division generates the lion’s share of its revenue and earnings, but the same can be said of its invested capital with all the related contract assets and receivables of some $20m at YE FY2023 whereas the net revenue due to advisers is more than what is due to from the client by an estimated $2.4m in the wealth division (negative net working capital).

• Centrepoint Alliance (ASX:CAF) is an Australian financial services business providing licensing in both financial and credit advice along with a managed portfolios business and support services such as assistance with Xplan implementation (Financial Planning software.
• Centrepoint is a business I have been following for many years, having owned it myself in the past when it was a net-net.
• Back then it was paying significant amounts of cash to legacy clients claiming remediation for fee-for-no-service complaints. 

• Selfwealth is an ASX-listed online broker Selfwealth is ironically the domestic broker the trust uses with me having used it for over 6 years with great satisfaction.
• Comparing ASX pricing of Selfwealth to some of its primary competitors it is worthwhile to note that the cheapest broker I could find is Superhero which just this month introduced $2 brokerage fees on ASX trades up to $20,000 as it engages in a price war with Stake.
• Selfwealth at a price of $9.50 might seem monumental in comparison, but I would say that Selfwealth has a $9.50 regardless of trade size, making trades >$95,000 cheaper than both Stake and Superhero.

• Wrkr is an Australian regulatory software business founded in 2009 which helps employers with the various compliance moments for their employees such as superstream contributions, Single touch payroll (STP), employee onboarding and so on.
• It is a business which predominately offers its solutions through the larger corporates and APRA superannuation funds across millions of employees at a very low average ticket size.
• It is one of just 9 gateway operators on the Superannuation Transaction Network (STN) and one of 9 ESA providers (only 5 including Wrkr can process rollovers and release) in the country.

• There are no constituent changes for the VanEck Vectors Junior Gold Miners ETF (GDXJ US) in June but there are a lot of float and capping changes.
• Estimated one-way turnover is 3.9% resulting in a round-trip trade of US$418m. There are 17 stocks with over 1x ADV to trade from passive trackers.
• The largest inflows are expected in Cia de Minas Buenaventura SAA (BVN US), Equinox Gold (EQX US) and Red 5 Ltd (RED AU). 

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.

• Bharti Airtel
• China Vanke
• Nickel Industries

• Abacus Storage King (ASK AU) will be deleted from the Vaneck Vectors Australian Property ETF (MVA AU) in June. There are float changes and capping changes too.
• Estimated one-way turnover is 3.33% and will result in a one-way trade of A$19m. There are a couple of stocks with over 1x ADV to trade.
• There has been a recent spike in shorts on Abacus Storage King (ASK AU) but passive selling will be larger than the short interest.

• Core Lithium Ltd (CXO AU) and Piedmont Lithium (PLL US) will be deleted from the VanEck Rare Earth/Strategic Me (REMX US) at the close on 21 June.
• Constituent changes, float changes and capping changes result in an estimated one-way turnover of 6.4% and in a one-way trade of US$28m.
• The largest inflows will be in Sociedad Quimica y Minera de Chile (SQM US), Pilbara Minerals (PLS AU), Arcadium Lithium (ALTM US), Lithium Americas (LAC US) and Sigma Lithium (SGML).

• IDP Education (IEL AU) and Lendlease Group (LLC AU) will be deleted from the MV Australia Equal Weight Index at the June rebalance.
• Constituent, float and capping changes will result in a one-way turnover of 5% and in a round-trip trade of A$228m.
• There are many stocks from the S&P/ASX index family that will have same way or opposing flows from VanEck Vectors Australian Equal Weight ETF (MVW AU). 

• Back on the 11th December 2023, pharmacy distributor Sigma Healthcare (SIG AU) announced a “transformational merger” – in effect a reverse takeover – with mega chain Chemist Warehouse (CWG).
• In Sigma Healthcare (SIG AU): Chemist Warehouse’s Reverse Takeover I flagged pushback from ACCC; but on balance thought the merger should still get up.
• Travis Lundy struck a more tentative tone in Sigma Healthcare: ASX200 Inclusion Now, MUCH More Squeezy Fun Later. Maybe… Rightfully so it seems. The ACCC has now raised competition concerns. 

• Telix Pharmaceuticals (TLX AU) is looking to raise around US$190m in its US ADS listing. The bookrunners on the deal are Jefferies, Morgan Stanley, Truist Securities, and William Blair.
• TLX is a commercial-stage biopharmaceutical company focused on the development and commercialization of therapeutic and diagnostic radiopharmaceuticals.
• In this note, we talk about the updates since our last note and current deal dynamics.

• Iron ore continued to operate in its band from 95-130 USD/ton over the last few years, with a recent drop from 120 USD/ton to 105 USD/ton on tepid China data.
• With incremental news on China’s stimulus in the property and infrastructure sectors, we remain confident that iron ore will return to 120 USD/ton in the short term. 
• We also remain bullish on the 65-62 spread, which has expanded to the teens. Rio Tinto Ltd (RIO AU) and Vale (VALE US)  are good plays on the spread.

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
• Road King Infrastructure
• Yankuang Energy Group

• CSR Ltd (CSR AU) is expected to stop trading on 19 June following the acquisition by Cie De Saint-Gobain (SGO FP). 
• Judo Capital (JDO AU) will be added to the S&P/ASX 200 (AS51 INDEX) at the close on 19 June to replace CSR Ltd (CSR AU). 
• There has been short covering in Judo Capital over the last 3 months and there does not appear to be enough positioning for the index inclusion yet.

• In response to media speculation, Bapcor Ltd (BAP AU) disclosed an indicative non-binding proposal from Bain Capital at A$5.40 per share, a 23.9% premium to the last close.
• The offer is opportunistically timed to take advantage of the share price collapse precipitating from the profit warning on 2 May. 
• The offer is unattractive. Several substantial shareholders and a high retail base suggest Bain needs to bump. Bain’s offer could also draw other suitors. 

• The Alumina Ltd (AWC AU) IE considers Alcoa (AA US)’s scheme offer (0.02854 Alcoa shares per Alumina share) fair and reasonable as the terms are within its valuation range. 
• The offer is conditional on FIRB and Alumina/Alcoa shareholder approval. FIRB approval should be forthcoming as Alcoa already owns most of Alumina’s sole assets (AWAC).
• The support of the substantive shareholders and the re-rating of Alcoa shares since 12 March (entry into a SID) has materially lowered the vote risk. This is a done deal.

• Back in February 2022, automotive aftermarket parts provider Bapcor Ltd (BAP AU) was  reportedly subject to multiple buyout proposals. BGH Capital, Quadrant, and Pacific Equity Partners were touted.
• That all came to nought. Shares drifted sideways. Then down. Shares touched a four year low late last month.
• After the incoming CEO had a change of heart, and weaker FY24E guidance, Bain has now tabled a cheeky A$5.40/share indicative Offer. That won’t fly; but value is evidently emerging. 

• Alumina Ltd (AWC AU) and Alcoa (AA US) announced an NBIO on the 26th Feb, before entering  into a Scheme on the 12th March. 
• Alcoa is offering  0.02854 new shares for each Alumina share, a 13% premium to undisturbed. Key shareholders Allan Gray and CITIC are supportive.
• The Scheme Booklet is now out, with a Scheme Meeting to be held on the 18th July. Expected implementation on the 1 August. The IE says fair & reasonable.

• There is 1 change for the S&P/ASX20 Index, 1 change for the S&P/ASX50 Index, 2 changes for the S&P/ASX100 Index, and no regular changes for the S&P/ASX200 INDEX in June.
• The surprise inclusion of Wisetech Global (WTC AU) means that positioning is likely to be lower than the passive buying and there could be a move higher in the stock.
• There will be one adhoc inclusion to the S&P/ASX 200 (AS51 INDEX) at the close on 19 June following Cie De Saint-Gobain (SGO FP)’s acquisition of CSR Ltd (CSR AU). 

• Guzman Y Gomez (GYG) now plans to raise US$221m, an increase from its earlier target of US$160m, in its Australian IPO.
• GYG is a quick service restaurant business with more than 200 restaurants globally. It mainly focuses on fresh, made-to-order, Mexican-inspired food.
• We have looked at the company’s performance in our past notes. In this note, we talk about valuations.

• Champion Iron (CIA AU) reported an inline result for FY24, with revenue/profits up 9%/16% YoY.  Q4 revenue/profits were -28%YoY/-73%YoY due to lower pricing on 60% of volumes in transit. 
• The company-guided production volumes have reached the annualized 15 mnt mark, but logistics continued to be challenging in Q1. Easing is expected in August, and base case a 1.5-year destock.
• The name carries some risks trading at 7x PE FY25 (March end), but it could be one to watch in case the 65-62 spread widens.