Australia

• Blackmores Ltd (BKL AU) has signed a Scheme Implementation Deed with Kirin Holdings (2503 JP) for the acquisition of 100% of Blackmores by way of a scheme of arrangement.
• The A$95/share offer is a 23.7% premium to the last close and is at least a 20% premium to most other VWAPs.
• Blackmores Ltd (BKL AU) intends to pay a fully-franked special dividend of A$3.34/share. This will enable eligible shareholders to benefit from franking credits of A$1.43/share.

• The highly-anticipated Defence Strategic Review, released on the 24 April, clarifies the five key missions for the Australian Defence Force: maritime, land, air, space, and cyber.
• One takeaway recommended Defence balance the need for local content against its timely acquisition, suggesting increased off-the-shelf acquisitions. This may favour overseas contractors in place of the domestic industry.
• Codan (CDA AU), whose metal detectors and communications technology are used by the military, is one SME whose procurement speed may be scrutinised. 

• Amaero International Ltd (ASX:3DA) is a global specialist in metal additive manufacturing for the defence, aerospace, and other industrial sectors.
• The company has reported a Q3 operating cash loss of $3.33m which was in line with our expectations.
• The cash balance at the end of Q3 was $9.8m with an additional $2.05m in non-recurring cash payments has been received since the end of the quarter. 

• The latest release of the USDA Rice Crop Outlook Report (April 13) provides useful data on the global and US rice markets, which has implications for the rice-related businesses within Ricegrowers Limited, trading as SunRice (ASX:SGLLV).
• The global rice market is forecast to see the second consecutive year of demand exceeding supply (due mainly to supply issues), with global-ending rice stocks expected to be the lowest since 2017/2018 and equal to just four months’ demand.
• Prices for most grades, as a result, remain at record highs (US-medium-grain, which is a proxy for Australian grades) or trending higher in recent months (including Thailand +4%-5% and Vietnam +7%). 

• Woodside Energy Group delivered a decent financial performance in 2022, driven by higher prices and adding former BHP assets to the portfolio and the Pluto KGP interconnector.
• Besides that, Woodside Energy completed subsea tieback and enhancement initiatives across its Gulf of Mexico and West Australian LNG assets, keeping the plants occupied.
• We give Woodside Energy Group Ltd. a ‘Buy’ rating with a revised target price.

• On the 9th Jan, lithium player Essential Metals (ESS AU) entered into a Scheme with Tianqi Lithium JV, comprising Tianqi Lithium (9696 HK) (51%) and IGO Ltd (IGO AU) (49%). 
• Shortly before the 20 April Scheme Meeting, Mineral Resources (MIN AU) announced a 19.55% stake. 
• A Scheme failure was expected. And 68.47% voted against the transaction. The question is – now what? 

Lucror Analytics Weekly Wraps provide an overview of all Morning Views comments and reports published by our analyst team in the past week, and also showcase a list of the most-read reports.

In this Insight:

1. Vedanta Resources
2. Yankuang Energy Group
3. Alam Sutera Realty
4. Guangzhou R&F Properties
5. Fosun International

and more…

Alkane continues to increase its production guidance, indicating confidence in a strong close to FY23, from 62,000–70,000oz to 65,000-73,000oz. It also lowered its expected unit costs to an AISC of A$1,550–1,700/oz, from previous guidance of A$1,550–1,800/oz. These updates follow confirmation of Q323 gold production of 16,641oz and a total for the year to date of 54,431oz, at an AISC of A$1,446/oz.

• Wesfarmers Ltd (WES AU) has made a non-binding indicative Offer, by way of a Scheme, for Silk Laser Australia (SLA AU), an operator of specialist clinic networks across Australia. 
• The Offer Price of $3.15/share is a decent 30.2% premium to last close. Wilson Asset Management, with 9.3% of shares out, is supportive. 
• Wesfarmers has been granted 30 days to undertake due diligence on an exclusive basis.

• Armour Energy Limited (AJQ.ASX) is a junior energy producer and explorer with assets across northern, southern and eastern Australia.
• The company has been listed on the ASX since April 2012 and is set to pursue a growth strategy with particular focus on production optimisation at Kincora to be delivered over the next 24-30 months.
• Importantly, we should also see a return to high-impact exploration with the drilling of the Enterprise North-1 well in the Otway Basin subject to regulatory approvals.

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.

• Central China Securities
• Nickel Industries Ltd
• China Datang Corp Renewable Power
• Yankuang Energy Group

EML Payments has announced the appointment of a new interim CEO and a renewed focus to solve the immediate challenges facing the company. This includes strengthening support for the regulatory remediation process, optimising costs, targeting growth in core business areas and retaining talent. The board has also appointed Barrenjoey to conduct a strategic review of the business. We maintain our estimates.

• Whitehaven Coal (WHC AU) guided down production in an update released yesterday by 5-10% from a range of 19-20 mnt to 18-19 mnt for FY23.
• Net cash increased 300 mn AUD QoQ from 2.5 bn to 2.7 bn AUD representing 44% of market capitalization with 1.2 bn AUD of operating cash flow alone in Q3!
• We agree an OCF yield of 80% (1.2 bn*4 qtrs on a six bn mkt cap) is unsustainable; the capital allocation possible on this name is mind-boggling. 

• 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.
• Based on the latest data, I do not expect any changes for ASX 20, ASX 50, and ASX 100.
• I expect Neuren Pharmaceuticals (NEU AU) to be added to ASX 200 and Domain Holdings Australia (DHG AU) to be deleted from ASX 200.

• Rio Tinto’s business remained resilient in the last quarter and the company successfully entered the year with quite a good operational momentum, particularly in Pilbara iron ore.
• However, accelerating cost inflation and lower prices throughout the year led to margin compression.
• At Simandou, Rio Tinto incorporated the infrastructure joint venture with its various partners and the government of Guinea.

• Pointerra Ltd (ASX:3DP) provides a powerful cloud-based solution (Pointerra3D) for managing, visualising, analysing, using, and sharing massive 3D point clouds and datasets.
• The company has taken a highly manual, slow, and cost-prohibitive process and turned it into a fast, efficient workflow solution for 3D data, enabling digital asset management from any device in any location.
• The Pointerra3D suite of solutions spans target sectors including survey and mapping; architecture, engineering, and construction (AEC); utilities; transport; resources; and defence and intelligence. 

• Gold miner St Barbara Ltd (SBM AU)’s reverse merger with Genesis Minerals (GMD AU) always had a whiff of biting off more than they could chew. That’s now validated.
• St Barbara has confirmed it will sell its flagship Leonora gold project to Genesis for $600mn (in cash and GMD scrip). The reverse merger has been cancelled.
• Post transaction, St Barbara will hold up to ~19.5%,  and be left with no debt and ~$197m in cash. Genesis will emerge with no debt, and ~$175mn cash (pre-transaction costs). 

• Initiation of Coverage with a DCF valuation of $1.57/share. QIP is trading at a 60% discount to its nearest peer, IPH (ASX:IPH)
• Key areas of focus  are completing its business transformation programme and expanding geographically.
• Success will lead to EBITDA margin expansion, greater exposure to Asia, and a growing exposure to automated and IP technology.

• 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 with 16.5% market share (H1 FY23) in its key patents segment (68% of revenue) and a diversified mix of local and foreign clients (~45%/55% split; ~50% US$ revenue).
• QIP produces ~$97m service revenue (3.7% five-year CAGR) primarily via various workstreams underlying the patent and trade marks lifecycles, and has a history of profitability and cash flow generation which facilitates high dividend pay-outs. 

Vection Technologies reported a 60% uplift in its total contract value (TCV) to A$16m from the TCV metric announced at the half year, driven by new contract wins, upsells from existing clients and recognising delayed contracts from Q223. Delivering rapid contract growth in H223 instils further confidence in management’s FY23 revenue guidance of A$24–26m for its IntegratedXR technology stack, reflected in the 9% rise in share price following the announcement. As illustrated by our previous note, promising pilot projects, including a potential A$30m tender in the defence sector, should bolster the company’s growth trajectory. A proven track record of converting c 100% of TCV into revenue by year-end further de-risks the group’s FY23 growth target and our forecasts, which are unchanged.

• We summarise the latest spreads and newsflow of merger arb situations covered by us across Hong Kong, Australia, New Zealand, Singapore, Japan, Indonesia, Malaysia, Philippines, Thailand and Chinese ADRs.
• Highest spreads  111 Inc (YI US), Alliance Aviation Services (AQZ AU), Estia Health (EHE AU), United Malt Group Ltd (UMG AU), Aag Energy Holdings (2686 HK), Origin Energy (ORG AU). 
• Lowest spreads – Healius (HLS AU), Essential Metals (ESS AU), Liontown Resources (LTR AU), Lian Beng (LBG SP), Golden Energy & Resources (GER SP),  Mincor Resources NL (MCR AU).

• There are 42 – 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: Singaporean construction firm Lian Beng (LBG SP) announced a voluntary unconditional cash Offer from the controlling Ong family,
• Key updates took place for Newcrest Mining (NCM AU) and OZ Minerals Ltd (OZL AU), and Glory Star New Media Group Holdings (GSMG US).