Australia

• In this insight, we take a look at the potential index changes for ASX 200, 100, 50, and 20 in the run up to the June 2023 Rebalance.
• Ventia (VNT AU) has appeared as a “surprise” potential addition to the ASX 200 index in June 2023 after recent block sales by top shareholders.
• Including Ventia, we currently expect two ADDs and two DELs for the ASX 200 index in June 2023.

• Amaero International Ltd (ASX:3DA) is a global specialist in metal additive manufacturing for the defence, aerospace, and other industrial sectors.
• The company has provided to shareholders an executive summary from the Frost & Sullivan Feasibility Study for its titanium powder project in Abu Dhabi which concludes that the project is feasible across technical, financial and market parameters, and supports the Chairman’s prior guidance to shareholders.
• Amaero is progressing an 827-tonne a year titanium powder facility in the United Arab Emirates which it expects to greenlight before the end of this financial year.

• There are 39- mostly firm, mostly Asia-Pac – transactions currently being discussed and analysed on Smartkarma. Inside is a timetable of upcoming key events for each deal.
• One new deal was discussed on Smartkarma this past week: the unconditional Offer for Penguin International (PBS SP) from its Chairman and Dymon Group.
• Key updates took place for Liontown Resources (LTR AU), AAG Energy Holdings (2686 HK), Lian Beng (LBG SP), and Golden Energy & Resources (GER SP).

• Clinuvel Pharmaceuticals (CUV AU) recorded 19% YoY revenue growth in H1FY23, driven by the growth of network of prescriber, treatment demand, and number of prescriptions of Scenesse.  
• In March, Clinuvel announced the test launch of the first dermatocosmetic product Cyacêlle, a polychromatic screen, formulated to protect skin against ultraviolet A & B and high-energy visible lights.
• Clinuvel has published encouraging initial readouts of the DNA repair programs. In March 2023, the company has initiated Prénumbra Instant trial in acute ischemic stroke patients.

• Ventia (VNT AU) completed an A$300m placement overnight with Apollo and CIMIC Group Ltd (CIM AU) selling around 14% of the shares outstanding at a small discount to the close.
• The placement will significantly increase Ventia (VNT AU)‘s float and make the stock a high probability inclusion to the S&P/ASX 200 (AS51 INDEX) at the June rebalance.
• We now expect two changes to the S&P/ASX 200 (AS51 INDEX) in June and the impact on the stocks is over 5.5 days of ADV to trade.

• Ventia (VNT AU)‘s two largest shareholders, Apollo Global Management and CIMIC Group, aim to raise around US$166m via a secondary block deal. 
• The deal is a slightly large one to digest at 12.5 days of three month ADV, 23 days of ADV and about 11.5% of current mcap. 
• In this note, we will talk about the placement and run the deal through our ECM framework.

Vection Technologies’ Q323 activities report confirms that contract growth continued to accelerate in H223, with the company reporting 100% total contract value (TCV) growth from the end of January to 28 April. The momentum in TCV growth indicates that management is well-positioned to deliver the triple-digit half-on-half top-line growth required to reach its FY23 expectations. Cash receipts on a quarterly and nine-month basis increased year-on-year. Vection Technologies’ balance sheet is set to be sustained by a further A$3.5m in Q423 from an R&D tax receipt and outstanding invoices, supporting the company’s M&A pipeline.

• Black Rock Mining Ltd (ASX:BKT) is developing the Mahenge natural graphite project in Tanzania, eastern Africa and is well advanced in defining and planning a low capex, high margin, high return operation.
• The company holds an 84% interest in Mahenge with the Tanzanian government retaining a free-carried 16% stake.
• Mahenge is one of the largest JORC-compliant flake graphite resources globally and is well positioned to benefit from growing global demand for natural graphite from use in Li-ion batteries. 

• Sovereign Metals Ltd (ASX:SVM) is an ASX-listed company focused on developing the world’s largest known natural rutile deposit and second largest flake graphite deposit in Malawi in south-east Africa.
• The company is well advanced with its pre-feasibility study and mineral resource update for the Kasiya rutile project and expects to complete this in coming months.
• In March 2023, Sovereign Metals demerged its other graphite projects into a new unlisted public vehicle, NGX Ltd, via an in-specie distribution to shareholders, in order to concentrate on developing Kasiya. 

• Pureprofile Ltd (ASX:PPL) is a data analytics and consumer insights business underpinned by proprietary technology, servicing business decision makers in brands and media companies as well as market researchers.
• The company has an established position delivering insights to clients across 89 countries and has captured through its panel fully declared, deep consumer profiles, first-party data and insights.
• Pureprofile has delivered a 22% increase in quarterly revenue to $10.3m from its core Data & Insights and SaaS platform businesses. Normalised EBITDA from these businesses increased 121% to $1.0m for the quarter. 

• International Graphite Ltd (ASX:IG6) is focused on developing its Springdale graphite project near Hopetoun, Western Australia, in conjunction with its planned Battery Anode Materials (BAM) facility 450kms away in Collie.
• The company listed in April 2022 raising $10m at $0.20/share to give a market capitalisation at listing of $35.9m, fully diluted.
• Since listing, the company has made significant progress with both projects, completing more than 20,400m of infill and exploration drilling at Springdale, leading to four new graphite discoveries; establishing a downstream research and development facility in Collie housing pilot graphite micronizing, spheroidising and purification equipment and completing a definitive feasibility study for a $12.5m commercial micronizing facility at the Collie operation. 

• On the 28 March, lithium play Liontown Resources (LTR AU) rejected Albemarle Corp (ALB US)‘s third proposal of $2.50/share, citing the revised terms as opportunistic.
• Since, that date, it’s been “crickets.” Preliminary due diligence was not provided to Albemarle. Liontown responded to media speculation today saying it has received no new takeover proposals. 
• Yet behind the scenes, an interested party has been building a stake, paying up to $2.75/share, 1.5% above the last close.

Actinogen’s Q323 update reiterated the company’s focus on advancing its lead asset Xanamem. Patient recruitment in the Phase IIa XanaCIDD study in cognitive impairment (CI) associated with major depressive disorder (MDD) is ongoing, and the company plans to start the Phase IIb portion of the XanaMIA study in Q2 CY23 in the company’s lead indication, Alzheimer’s disease (AD). This study portion is designed to assess Xanamem in a population of patients with mild CI and/or mild AD, who at baseline will have been confirmed as biomarker-positive for progressive AD. We continue to see the results from the XanaCIDD study (expected in late CY23 or early CY24) as the next major clinical data milestone and a potential share price catalyst. We expect the company’s A$12.3m cash balance at 31 March to fund operations into Q4 CY23.

• Armour Energy Limited (ASX:AJQ) is a junior energy producer and explorer with assets across northern, southern and eastern Australia.
• The company is set to pursue a growth strategy with particular focus on production optimisation at Kincora to be delivered over the next 24-30 months.
• The success case should be readily apparent by end-2023. 

Incannex has released its Q323 cash flow report, providing key operational highlights. Clinical developments during the quarter included a positive interim review of its Phase II Psi-GAD trial (assessing psilocybin for generalized anxiety disorder (GAD)), initiation of the Phase II trial of IHL-675A (for treatment of rheumatoid arthritis (RA)), and continued progression of the BA/BE study for its lead asset IHL-42X (for obstructive sleep apnea). In a new development, Incannex announced the commercial launch of psychedelic-assisted psychotherapy clinics for treatment-resistant depression (TRD) and post-traumatic stress disorder (PTSD), with plans to scale across Australia. Though we have low visibility on the prospects of the clinics currently, if they materialize, they may support the company’s cash inflows in the medium term. With a cash balance of A$37.1m at end-March 2023 and at the current quarterly burn rate (A$4.3m), management has guided that operations are funded into CY25.

Paradigm has shared its March 2023 quarterly update. In Q323, net cash outflow from operating activities was A$10.3m (A$28.1m for the first nine months of FY23). R&D costs amounted to A$9.0m, attributed to ongoing recruitment and analytical activities for the PARA_OA_008 Phase II clinical trial assessing injectable pentosan polysulfate (iPPS, or Zilosul) as a potentially disease-modifying treatment for knee osteoarthritis (kOA), site operations for Phase II studies in mucopolysaccharidosis (MPS I and MPS VI), and ongoing NDA-enabling non-clinical studies. This expenditure is comparable to the prior quarter (A$13.2m), and we anticipate an increase in burn rate in the near-term to support the company’s active pipeline. With a cash position of A$73.2m at end-Q323 and at the current quarterly burn rate, management estimates that operations remain funded into CY24.

• There are 39 – mostly firm, mostly Asia-Pac – transactions currently being discussed and analysed on Smartkarma. Inside is a timetable of upcoming key events for each deal.
• Two new deals were discussed on Smartkarma this past week: Kirin (2503 JP)‘s Offer for Blackmores (BKL AU); First Pacific (142 HK) & Co’s Offer for Metro Pacific (MPI PM).
• Key updates took place for Invocare Ltd (IVC AU), AAG Energy Holdings (2686 HK), and Jiangnan (1366 HK) 

Respiri released its Q323 activity report, updating investors on key highlights during the quarter. The period was marked by continued expansion of the company’s commercial footprint in the US, which included the signing of three additional contracts (taking the total client count to nine) and the appointment of a US-domiciled chief commercial officer to spearhead its growth strategy for the country. In addition, Respiri disclosed that it is in ongoing negotiations with two large insurers and four to six healthcare organisations, indicating a strong sales funnel. With the company recognising its first Centers for Medicare & Medicaid Services (CMS) reimbursement claims during the quarter and an increasing number of patients onboarded (including at Michigan Children’s Hospital and an undisclosed North Carolina-based healthcare organisation in Q123), we see initial validation for the company’s wheezo remote patient monitoring (RPM) model with subsequent traction likely with early patient responses. The period-end cash balance stood at A$0.9m, highlighting the need to raise capital in the near term, pending any material sales-related inflows.

• Japan’s Kirin Holdings (2503 JP) has proposed taking Aussie vitamin play Blackmores Ltd (BKL AU) private by way of a Scheme at A$95/share. 
• That’s a 23.7% premium to last close, and represents 23.1x LTM December 2022 EBITDA. 
• Irrevocables are 18% of shares out. This Scheme requires clearance from ACCC, FIRB – and China’s SAMR.

• Blackmores Ltd (BKL AU) has entered a binding proposal with Kirin Holdings (2503 JP) at A$95.00 per share, a 23.7% premium to the undisturbed price (16 April).
• The offer is attractive. Marcus Blackmore, the largest shareholder, will vote in favour of the offer. Regulatory approvals should be forthcoming.   
• The scheme meeting is in July. At the last close, the gross and annualised spread for a late August payment is 0.8% and 2.2%, respectively.

• Millennium Services Group Ltd (ASX:MIL) has announced an update on Q3 FY23 revenue and cash flow from operating activities.
• MIL achieved the first positive quarterly revenue growth since Q1 FY22 at +3.5%, while contract revenue growth was ~+12.6% on the pcp (excludes ad-hoc revenue).
• The COVID-related ad-hoc revenue has now all but cycled out of the quarterly numbers while new contract wins cycle in.