Australia

• On the 18th July, diagnostic imaging provider Capitol Health (CAJ AU) entered a Scheme with Integral Diagnostics (IDX AU). IDX will issue 0.12849 new IDX shares for each Capitol share
• Upon completing the transaction, Integral would hold ~63% in the MergeCo. They key risk is the ACCC signing off. A decision is expected on (or around) the 28th November.  
• The Scheme Booklet is now out, with a Scheme Meeting to be held on the 31st October. Expected implementation on the 14th November. The IE says fair & reasonable.

• Clinuvel Pharmaceuticals (CUV AU)’s Scenesse is the only approved erythropoietic protoporphyria (EPP) treatment. Patent protection and orphan drug status solidifies Clinuvel’s market position.
• Clinuvel is expanding Scenesse’s (afamelanotide) use and developing and testing additional products for clinical and photo-cosmetic use. 
• Profitability metrics and growth are solid and cash position strong to support R&D for trials and new product development.

• The Capitol Health (CAJ AU) IE considers Integral Diagnostics (IDX AU)’s merger proposal (0.12849 Integral shares per Capitol share) fair and reasonable. 
• While ACCC informal clearance is an overhang, the evidence suggests that clearance should be secured. The shareholder vote risk is low.
• The offer terms are attractive. At the last close and for the 14 November payment, the gross/annualised spread is 4.7%/37.3%.  

• SGX Iron Ore futures closed the week $1.38 lower, with wide trading range of $5.85/ton in a week filled with economic releases including FOMC and PBoC rate decisions.
• Momentum indicators are neutral; RSI at 37.70 signals potential upside, while the price remains below key moving averages, including the 9, 21, 50, 100, and 200-day SMAs.
• Prices broke below key volume profile support at $91.27 and may see a short-term rebound to $90/ton due to limited trading volume below this level.

• Iron underperformed the commodity complex, falling 1.2% WoW, vs the average complex performance of 3% WoW. 
• PBOC rate cuts have yet to spur borrowing significantly. Despite the seasonal uptick, loan growth has trended negatively.  
• We remain cautious till China shows any sign of a pick-up in demand. Indicators like mill margins and property/auto demand continue to be uninspiring. 

• Lotus released a scope and study for the Little Cane project in Botswana
• The project hosts a low grade resource with 71% inferred
• The study includes three scenarios for production and focuses on reducing the need for drill and blast operations, potentially using drag lines for waste removal.

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• Back on the 19th August, MyState Ltd (MYS AU), Tasmania’s biggest bank, entered into a merger agreement by way of a Scheme with Queensland-based Auswide Bank (ABA AU).
• Under the terms, MyState will issue 1.112 new shares for every share held by Auswide shareholders, with MyState/Auswide investors holding 65.9%/34.1% ownership in the combined group.
• This is done and is expected to be wrapped up in December. Today is the last day of trading for Auswide cum-FY24 final dividend. 

• China’s industrial production grew 4.5% YoY in August, missing the 4.7% forecast and marking the slowest growth since March.
• Property investment fell 10.2% YoY YTD, with house prices declining 5.3% YoY, the steepest since 2015.
• Iron ore imports dropped 1.38% MoM as port inventories rose continued rising into September. Typhoon Bebinca disruptions may drive inventory drawdown in coming weeks.

• SGX Iron Ore futures closed 55 cents higher at $92.80/ton, after fluctuating between a $95.55/ton high and $89.60/ton low.
• Short-Term technicals reveal bearishness as the 9-day moving average fell below the 21-day, triggering a death cross signal.
• Iron ore prices failed to sustain a 50% Fibonacci retracement level, indicating weak market support amid poor fundamentals.

• RaaS Research is initiating coverage of vertically-integrated aviation designer and manufacturer Structural Monitoring Systems (ASX:SMN) with a DCF derived valuation of $0.82/share, representing potential capital upside of 44% from the current share price.
• SMN delivered its maiden EBITDA profit in FY24 and we expect the company to maintain profitability into FY25 while bringing key new products to market.
• A likely decline in contract manufacturing revenues to make way for higher margin own brand products should have a positive impact on group gross margins going forward, adding to the earnings leverage from expected revenue growth (management have forecast 25% revenue growth in FY25).

• Platinum Asset Management (PTM AU) has confirmed, and is “considering the merits” of an  unsolicited confidential, non-binding, indicative proposal from Regal Partners (RPL AU).
• Regal has offered, by way of a Scheme, 0.274 Regal shares for every Platinum share. A $0.24/share special dividend is permitted, and added. Regal holds an estimated 5.1% stake.
• With funds under management down 27% yoy, a merger with Regal is just the tonic for Platinum’s long-suffering investors. Founder Kerr Neilson, holding 21.7%, will have the final say.

• Following its acquisition by Nationwide, Virgin Money UK Plc (VUK AU) is scheduled to stop trading on the ASX Ltd (ASX AU) after market close on 25 September.
• Virgin Money UK Plc (VUK AU) is a member of the S&P/ASX100 Index and S&P/ASX 200 (AS51 INDEX) and there will be adhoc inclusions at the close on 25 September.
• There are a couple of stocks vying for inclusion in each index and the next couple of days will determine which ones make it.

• Platinum Asset Management (PTM AU) confirmed it received a non-binding indicative proposal from Regal Partners (RPL AU) at 0.274 RPL shares per PTM share + special dividend of A$0.24.
• The implied offer price of A$1.14 per share based on Regal’s undisturbed price of A$3.30 per share is a 15.6% premium to the undisturbed price of A$0.99 (16 September).
• Despite the modest takeover premium, the offer is attractive compared to historical and peer multiples. Expect the Board to engage to facilitate an improved binding proposal.

• RaaS Research Group has published a flash comment on advanced materials manufacturing group Amaero International (ASX:3DA) following the completion of an upsized institutional placement to raise $25m at $0.35/share to fund capital equipment purchases and further fit out its Tennessee facility.
• The raise was not unexpected; we had factored in a $22.5m raise at $0.34/share in our modelling before 30 September.
• We have incorporated the raise into our forecasts with no impact on current numbers.Post raise, the company will have pro-forma cash of approximately $37.5m to fund the capex programme ahead of ramping up production and transitioning to commercial sales.

• The ANS-2A sidetrack well has encountered a 6.5 m net vertical oil column in high quality Eocene-aged sandstone reservoir.
• The reservoir quality encountered at ANS-2A is consistent with ANS-2 (porosity and permeability ~20% higher than at ANS-3).
• The oil-water contact was encountered very close to the top of the water wet reservoir encountered at ANS-2.

• Back on the 15th August, lithium play Latin Resources (LRS AU) entered into a Scheme with significantly larger peer, Pilbara Minerals (PLS AU). Timing appears fortuitous. 
• PLS is offering 0.07 new PLS shares for each LRS share held.  LRS shareholders will own ~6.4% of the combined entity. LRS’ largest shareholder, José Luis Manzano (7.9%), is supportive. 
• The scrip terms back out an implied price of A$0.20/share or a 67% premium to last close. This is done. And trading accordingly. Expected implementation late November, early December.

• After Crescent Capital ‘s National Dental Care’ (NDC) A$2.05/share Offer, by way of Scheme, failed on the 9 August. it was just a question of when Genesis re-loaded its Offer.
• Genesis has now announced a A$1.90/share off-market Offer ( its 29 July A$1.90/share approach was a Scheme), conditional on a 90% minimum acceptance. Pricing falls within the IE’ fair value range.
• Pacific Smiles (PSQ AU)‘s board previously gave unanimous support for NDC’s prior A$1.90/share Offer. The question is whether the 90% hurdle is met. I think it will.

• Ingenia Communities (INA AU) will be deleted from the Vaneck Vectors Australian Property ETF (MVA AU) in September. There are float changes and capping changes too.
• Estimated one-way turnover is 2.9% and will result in a one-way trade of A$19m.
• After declining over the last year, shorts have started to tick higher in Ingenia Communities (INA AU). 

• Pro Medicus Ltd (PME AU) will be added to the MV Australia Equal Weight Index while IGO Ltd (IGO AU) and nib holdings (NHF AU) will be deleted.
• Constituent changes, float changes and capping changes result in a one-way turnover of 6.9% leading to a round-trip trade of A$330m.
• Shorts are pretty big in Pro Medicus Ltd (PME AU) while there has been a recent spike in short interest for IGO Ltd (IGO AU). 

• Sayona Mining (SYA AU) will be deleted from the VanEck Rare Earth/Strategic Me (REMX US) at the close of trading on 20 September.
• Constituent changes, float changes and capping changes result in an estimated one-way turnover of 5.7% and in a round-trip trade of US$35m.
• The largest inflows will be in Eramet, Tronox and Lithium Americas Argentina while the largest outflows will be from Lynas Corp, Sayona Mining and MP Materials (MP US).

• RaaS has initiated coverage of video software and hardware technology group BirdDog Technology (ASX:BDT) with a base case valuation of $0.27/share, representing 335% potential upside to the current share price.
• A challenging FY24 is now behind the business and the causes of the problems have been addressed and resolved, in our view.
• BDT invested heavily in R&D through the downturn with the investment program set to yield results on a strong revenue uptick from the release of multiple new products across several categories.

• There are 2 adds and 3 deletes for the VanEck Vectors Junior Gold Miners ETF (GDXJ US) in September. Plus there are capping and float changes.
• Estimated one-way turnover is 11.4% resulting in a round-trip trade of US$1.14bn. There are 16 stocks with over 1x ADV to trade from passive trackers.
• The largest inflows are expected in B2Gold Corp, Evolution Mining and Pan American Silver while the largest outflows are from Kinross Gold and Cia de Minas Buenaventura SAA.