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 September 2024 index rebal event.
• In July 2024, a couple of important Australian M&A deals could close and one of them could trigger intra-review additions for ASX 100 and ASX 200.
• Separately, we see one ASX 100 change and one ASX 200 change during the September 2024 rebalance. For ASX 300, there could be 13 ADDs and 6 DELs.

Actinogen Medical announced that the prespecified biomarker subset analyses on stored plasma samples (n=72) from its previous Phase IIa XanADu study (n=185) in patients with mild Alzheimer’s disease (AD) has been published in the peer-reviewed Journal of Alzheimer’s Disease (JAD). As reported in Q422, patients with elevated baseline phosphorylated Tau-181 (pTau-181) protein (at least 6.74pg/mL), representing 34 patients (16 on Xanamem 10mg daily, 18 on placebo), showed a 0.6 mean difference (effect size) on the CDR-SB scale at 12 weeks between the placebo and treatment arms, representing a 60% relative reduction in progression. This suggests that Xanamem’s potential cognitive or disease-slowing effects may be sensitively detected by the CDR-SB endpoint, which is one of the critical endpoints in the ongoing XanaMIA Phase IIb trial (planned n=220) enrolling participants with cognitive impairment (CI) in mild to moderate AD as confirmed through elevated baseline p-Tau181. Actinogen’s next milestone will be results, expected in early Q3 CY24, from its Phase IIa XanaCIDD study of Xanamem in patients with CI and major depressive disorder.

• ASX is seeing the number of listed companies in decline, although there are some positives with average daily turnover and secondary listings.
• Higher costs are keeping positives from reaching the bottom line fully, with costs to revenue are now 40% in 1H24 where this was 29% in recent interim periods.
• Capex plans for ASX and sticky inflationary figures on staff costs, the current year and following year net profit can see reasonable pressure.

• The original trade was discussed at end-April in Tax-Loss Selling in Australia 2024 – Historical Analysis and A Trade Basket then updated here and here. 
• That has done OK. The LIQUID basket has delta neutral performance of +8.4% over 2mos; LIQUID+LESSLIQUID +7.2%; If one did a mixed basket (3x L+LL + 1x Illiquids) it’s +8.6%.
• Now it is time to reverse the trade, buying the basket you were short, and running it against index for the next 6-8 weeks.

• Redox (RDX AU), a chemical and ingredients distributor, raised US$270m in its IPO in Jun 2023. Some of its founding family shareholders will be released from their IPO lockup soon.
• Redox primarily serves the ANZ market, and it has a presence in Malaysia and the US. It is one of the largest chemicals and ingredients distributors in Australia.
• In this note, we talk about the upcoming lock-up expiry and possible deal dynamics.

• RaaS Research Group has published a report on Ballymore Resources ahead of the company presenting at the Sydney Mining Club on July 4.
• BMR is an exploration company with a portfolio of projects across northern Queensland which range from early-stage target generation and discovery through to resource delineation.
• BMR’s most advanced asset is the Dittmer project located ~20km west of Proserpine in which the company has identified probable extensions to the previously mined orebody at depth and down plunge.

• RaaS Research Group has published a report on Santana Minerals (ASX:SMI) ahead of the company presenting at the Sydney Mining Club on July 4.
• SMI is developing the Bendigo-Ophir gold project in the Otago region of New Zealand.
• The project has a combined mineral resource estimate of 37Mt at 2.1gpt for 2.5Moz of gold using a cut-off grade of 0.5gpt.

• The MMG (1208 HK) rights, designed to raise US$1.15bn to pay off loans to the parent for the purchase of a large copper asset, start trading 24 June 2024. 
• There is some risk up for grabs, and it is likely to trade according to standard Hong Kong Rights Trading Dynamics. Shorts are down somewhat, but covering should be expected. 
• There is path-dependency to the Rights Trading, and while they trade for 7 trading days through Tuesday next, one should expect the volume to trade this week. 

• 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.

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