Australia

• Ricegrowers Limited, trading as SunRice (ASX:SGLLV), held its AGM last week and provided some updated commentary around trading for FY24.
• Most notably, the ‘strong momentum from H2 FY23 has continued into Q1 FY24’, remembering H2 FY23 EBITDA increased 37% on the pcp.
• Factors supporting this growth include the cycling of annualised price rises, additional pricing reviews, international market expansion, improvement in freight and logistics costs, and the ongoing recovery in the CopRice business.

• Telix Pharmaceuticals (TLX AU) reported 1H23 revenue of A$221M, a nine-fold increase on 1H22, reflecting continued growth in sales of its prostate cancer imaging agent, Illuccix.
• Gross margin improved to 64% in 1H23 from 56% in 1H22. Telix has transitioned to positive earnings on an adjusted EBITDAR basis. Net loss decreased 80% YoY to A$14M.
• With the increasing adoption in global PSMA PET imaging market, Illuccix has positive outlook. Telix is expected to launch two new products in 2024 for brain and kidney cancer imaging.

• Opthea Ltd (OPT AU) is seeking to raise A$80M ($51M) through a combination of private placement and accelerated non-renounceable entitlement offer. The proceeds will fund the clinical development of OPT-302.
• The proceeds of the offer, pending funds from the earlier agreements, along with existing cash balance, are expected to fund the company’s operation through Q3 2024.
• OPT-302 is in two phase 3 trials, which are expected to be fully enrolled by 1H24. In phase 2 trial, OPT-302 has demonstrated superior visual acuity over standard of care.

Alkane Resource’s FY23 financial results were broadly in line with our forecasts, with profit after tax totalling A$42.5m (compared to our forecast of A$44.0m) and EPS of 7.10c (cf 7.38c). Cash flows from operations exceeded our forecasts (A$95.5m cf A$75.6m) as a result of an increase in deferred tax liabilities, albeit this was balanced by higher exploration capex of A$58.1m to result in a net cash flow of A$4.1m (cf A$2.4m). Following FY23 production of 70,253oz at an all-in sustaining cost (AISC) of A$1,602/oz, FY24 guidance for Tomingley is 60,000–65,000oz at an AISC of A$1,750–2,100/oz. Our forecasts remain largely unchanged in the aftermath of Alkane’s FY23 results. We maintain our valuation.

• APM Human Services (APM AU) raised about US$730m by selling a mix of primary and secondary shares in Nov 21. The second IPO linked lockup is set to expire next week.
• APM is an international human services provider, it runs 800 sites spanning 10 countries with its largest market being Australia.
• In this note, we will talk about the lock-up dynamics and updates since our last note.

• APA Group (APA AU) is looking to raise A$675m (US$430m) in its primary follow-on to partially fund its acquisition of the Alinta Energy assets in the Pilbara region.
• The deal is a well flagged one with APA having been one of the last remaining bidders on the asset. Short interest has been on the rise as well.
• However, the deal doesn’t seem accretive at our end, and the results reported today seemed to have missed analyst expectations.

• Holistic Educational Suite: 3PL enriched its product portfolio, with the APAC debut of WritingLegends and BrightPath Assessement. 
• Steady Financial Growth: Amidst challenges in the UK, 3PL’s 9% ARPU growth highlights its consistent performance and market strength. 
• Setting the Pace: With attractive-priced offerings, an integrated product approach, and an innovative teacher training vision, 3PL is expected to continue growing its top line as more schools join. 

Recce recently reported the completion of its data review from its earlier long-infusion Phase I study of the intravenous (IV) RECCE 327 (R327) formulation, confirming that the drug candidate shows favourable safety characteristics, a robust dose-dependent pharmacokinetic drug concentration response, as well as evidence of increased drug concentration into the urinary tract. The company is proceeding with a Phase I/II study assessing using a more rapid infusion rate, with recent completion of the first 2,500mg cohort of the Phase I part ahead of schedule. Obtaining financing is a near-term strategic priority given the cash at hand (A$1.6m at 30 June 2023), and the company’s current cash runway is short (into late Q3 CY23). Recce has signalled that it is seeking to raise A$12–15m. After rolling forward our estimates and updating forex assumptions, we obtain an rNPV valuation of A$562.4m (or A$3.15 per share), up from A$535.6m previously.

• The changes for the next rebalance will use closing prices from 31 August, will be announced after the close on 8 September with implementation at the close on 15 September.
• One stock is very close to the 85% cumulative market cap inclusion threshold, while there are two stocks that are near the 98% cumulative market cap deletion threshold.
• With one inclusion and capping changes, estimated one-way turnover at the rebalance will be 3.5% resulting in a one-way trade of US$20m. That could change over the next week.

• Ventia Services Group Pty (VNT AU)’s two largest shareholders, Apollo Global Management and CIMIC Group, will come off their placement linked lockup soon.
• The two largest shareholders together owned nearly 30% of the company and have pared their stake twice this year.
• In this note, we will talk about the likely placement and past deal performance.

• New release shows surge in Australia residential mortgage non-performing exposures QoQ
• From March 2023 to June 2023 these NPLs rose by 10.5% and this is not an annualized rate
• Its total NZ non-performing loans rose from AUD671m to AUD741m or 10.4% QoQ

• In tandem with a trading update this morning, Aussie retailer Premier Investments (PMV AU) announced a break-up of the empire. And the departure of the CEO. 
• Premier said it is exploring the demerger and creation of (at least) three new separate companies, encompassing Peter Alexander, Smiggle, and Apparel Brands (Just Jeans, Dotti and Portmans, etc.).
• Separately,  Richard Murray, who joined Premier from JB Hi-Fi Ltd (JBH AU) two years ago, will exit the company on September 15.

• We summarise the latest spreads and newsflow of merger arb situations we cover across Hong Kong, Australia, New Zealand, Singapore, Japan, Indonesia, Malaysia, Philippines, Thailand and Chinese ADRs.
• Highest spreads – 111 Inc (YI US), Symbio Holdings (SYM AU), ENM Holdings (128 HK), Eoflow (294090 KS), Orecorp Ltd (ORR AU), Mason Group Holdings (273 HK), Costa Group.
• Lowest spreads – Healius (HLS AU), Toyo Construction (1890 JP), Celltrion Healthcare (091990 KS), Yaizu Suisankagaku Industry (2812 JP), Kenedix Retail REIT (3453 JP), Penguin International (PBS SP). 

• Mayne Pharma (MYX AU) divested its retail generic portfolio. The divestment is part of the transformation strategy which refocused the company on the U.S. women’s healthcare and dermatology markets.
• Mayne Pharma will announce FY23 result on August 25. With business restructuring and cost management, the company is expected to cut net loss significantly and turn EBITDA positive from FY24.
• Mayne Pharma announced a share buyback for up to 10% of issued capital, which will be funded through cash reserves. As of April 30, Mayne Pharma held A$239M in cash.

• AMP released 1H23 numbers with 24-26% underlying NPAT growth in 2 key divisions
• AUD610m of returned capital in past 12 months will see AUD140m added by October
• AMP Bank is unlike peers, which is deposit-funded, small, focused on mortgages

Tomingley delivered Q423 gold production of 15,822oz, meeting its quarterly forecasts at an AISC of A$2,174/oz. These results concluded a strong year, with full year production of 70,253oz at an AISC of A$1,602/oz beating original FY23 guidance of 55,000–60,000oz production (at an AISC of A$1,650–1,900/oz), and meeting April 2023 production guidance of 65,000–73,000oz (at an AISC of A$1,550–1,750/oz). Full year gold sales totalled 70,498oz, generating revenue of A$190.5m at an average price of A$2,703/oz. FY24 guidance has been set for Tomingley at 60,000–65,000oz production at an AISC of A$1,750–2,100/oz as Alkane anticipates increased costs in wages, and electricity, fuel and reagent prices. Following Alkane’s updates since our last note in April, we have increased our FY23 EPS estimate by 26.8% to 7.38c (cf 5.82c previously).