Australia

• Telix Pharmaceuticals (TLX AU) is looking to raise around US$190m in its US ADS listing. The bookrunners on the deal are Jefferies, Morgan Stanley, Truist Securities, and William Blair.
• TLX is a commercial-stage biopharmaceutical company focused on the development and commercialization of therapeutic and diagnostic radiopharmaceuticals.
• In this note, we talk about the updates since our last note and current deal dynamics.

• Iron ore continued to operate in its band from 95-130 USD/ton over the last few years, with a recent drop from 120 USD/ton to 105 USD/ton on tepid China data.
• With incremental news on China’s stimulus in the property and infrastructure sectors, we remain confident that iron ore will return to 120 USD/ton in the short term. 
• We also remain bullish on the 65-62 spread, which has expanded to the teens. Rio Tinto Ltd (RIO AU) and Vale (VALE US)  are good plays on the spread.

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.

• Nickel Industries
• Road King Infrastructure
• Yankuang Energy Group

• CSR Ltd (CSR AU) is expected to stop trading on 19 June following the acquisition by Cie De Saint-Gobain (SGO FP). 
• Judo Capital (JDO AU) will be added to the S&P/ASX 200 (AS51 INDEX) at the close on 19 June to replace CSR Ltd (CSR AU). 
• There has been short covering in Judo Capital over the last 3 months and there does not appear to be enough positioning for the index inclusion yet.

• In response to media speculation, Bapcor Ltd (BAP AU) disclosed an indicative non-binding proposal from Bain Capital at A$5.40 per share, a 23.9% premium to the last close.
• The offer is opportunistically timed to take advantage of the share price collapse precipitating from the profit warning on 2 May. 
• The offer is unattractive. Several substantial shareholders and a high retail base suggest Bain needs to bump. Bain’s offer could also draw other suitors. 

• The Alumina Ltd (AWC AU) IE considers Alcoa (AA US)’s scheme offer (0.02854 Alcoa shares per Alumina share) fair and reasonable as the terms are within its valuation range. 
• The offer is conditional on FIRB and Alumina/Alcoa shareholder approval. FIRB approval should be forthcoming as Alcoa already owns most of Alumina’s sole assets (AWAC).
• The support of the substantive shareholders and the re-rating of Alcoa shares since 12 March (entry into a SID) has materially lowered the vote risk. This is a done deal.

• Back in February 2022, automotive aftermarket parts provider Bapcor Ltd (BAP AU) was  reportedly subject to multiple buyout proposals. BGH Capital, Quadrant, and Pacific Equity Partners were touted.
• That all came to nought. Shares drifted sideways. Then down. Shares touched a four year low late last month.
• After the incoming CEO had a change of heart, and weaker FY24E guidance, Bain has now tabled a cheeky A$5.40/share indicative Offer. That won’t fly; but value is evidently emerging. 

• Alumina Ltd (AWC AU) and Alcoa (AA US) announced an NBIO on the 26th Feb, before entering  into a Scheme on the 12th March. 
• Alcoa is offering  0.02854 new shares for each Alumina share, a 13% premium to undisturbed. Key shareholders Allan Gray and CITIC are supportive.
• The Scheme Booklet is now out, with a Scheme Meeting to be held on the 18th July. Expected implementation on the 1 August. The IE says fair & reasonable.

• There is 1 change for the S&P/ASX20 Index, 1 change for the S&P/ASX50 Index, 2 changes for the S&P/ASX100 Index, and no regular changes for the S&P/ASX200 INDEX in June.
• The surprise inclusion of Wisetech Global (WTC AU) means that positioning is likely to be lower than the passive buying and there could be a move higher in the stock.
• There will be one adhoc inclusion to the S&P/ASX 200 (AS51 INDEX) at the close on 19 June following Cie De Saint-Gobain (SGO FP)’s acquisition of CSR Ltd (CSR AU). 

• Guzman Y Gomez (GYG) now plans to raise US$221m, an increase from its earlier target of US$160m, in its 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 in our past notes. In this note, we talk about valuations.

• Champion Iron (CIA AU) reported an inline result for FY24, with revenue/profits up 9%/16% YoY.  Q4 revenue/profits were -28%YoY/-73%YoY due to lower pricing on 60% of volumes in transit. 
• The company-guided production volumes have reached the annualized 15 mnt mark, but logistics continued to be challenging in Q1. Easing is expected in August, and base case a 1.5-year destock.
• The name carries some risks trading at 7x PE FY25 (March end), but it could be one to watch in case the 65-62 spread widens.

• The Genex Power Ltd (GNX AU) IE considers Electric Power Development C (9513 JP)’s scheme (A$0.275) and off-market takeover offer (A$0.270) fair and reasonable. 
• The offer is conditional on FIRB and shareholder approval. Skip Capital, which can block the scheme, has not declared its intention regarding J-Power’s offer or launched a competing offer.
• Skip’s silence suggests a greater probability of accepting the scheme offer. If the scheme fails, the takeover offer, due to its structure and price, caps the downside.

• The ASX 20/50/100 index changes for the June 2024 index rebal event was announced after market close on Friday 7th June 2024.
• In this insight, we take a look at our flow expectations for the ADDs/DELs and the trends in short interest buildup for these names.
• Separately, the completion of the CSR Ltd (CSR AU) M&A deal could trigger an intra-review deletion in June 2024 and the potential replacement name could have very high-impact.

Key points

• AMA Group is positioned as the dominant player in the Australian vehicle repair industry
• The company offers opportunities for revenue and cost synergies similar to Boyd’s success in North America
• Mimval’s 2022 write-up on AMA reflects optimism for the company’s growth potential and ability to capitalize on opportunities in the market

This content is sourced through publicly available sources and has been machine generated. Information displayed is for general informational purposes only. This article was originally published 3 months ago on Value Investors Club.

• I tally 47 – 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 discussed on Smartkarma this week: Asia Cement China (743 HK)‘s rubbish Scheme; and the low-balled MBO for Nagatanien Holdings (2899 JP).
• Key updates took place on: CPMC Holdings (906 HK), APM Human Services (APM AU), Altium (ALU AU), Austal  (ASB AU),Shinko Electric Industries (6967 JP), and Hollysys Automation Technologies (HOLI US).

• Guzman Y Gomez plans to raise around US$160m in its 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.
• In this note, we look at the company’s prior performance and future prospects.

• The Altium Ltd (ALU AU) IE considers Renesas Electronics (6723 JP)’ A$68.50 scheme offer fair and reasonable as it is above the midpoint of the A$62.37 to A$70.27 valuation range. 
• The offer is conditional on remaining regulatory approvals (FIRB, CFIUS) and shareholder approval. 
• The offer price is attractive and 31% above the all-time high. At the last close and for the 1 August payment, the gross/annualised spread was 1.7%/11.6%.

• With the review period complete, there are 3 stocks that are close to the deletion zone and could be removed from the index at the June rebalance.
• Even if there are no constituent changes, capping changes will lead to one-way turnover of 3.6% and a one-way trade of A$83m.
• There are 6 stocks with over A$5m to trade from passive trackers but the impact on the stocks is not very high.

• Guzman Y Gomez plans to raise around US$160m in its 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.
• In this note, we talk about the not-so-positive aspects of the deal.

• Back on the 15th Feb, Renesas Electronics (6723 JP), a supplier of advanced semiconductors, entered into a Scheme with Altium Ltd (ALU AU).
• Altium shareholders are being offered A$68.50/share, in cash, a lifetime high.
• The Scheme Booklet is now out, with a Scheme Meeting to be held on the 12th July. Expected implementation on the 1 August. The IE says fair & reasonable.

• Long Brookside Energy offers high-quality assets at a significant discount to its net present value and reserves value
• Investors are essentially getting 5,000 acres, 1,400 barrels of production, and 12 million barrels of reserves in the South SCOOP play in Oklahoma for a bargain
• Management is actively buying back shares to take advantage of the undervaluation, with plans for more buybacks in the future

This content is sourced through publicly available sources and has been machine generated. Information displayed is for general informational purposes only. This article was originally published 3 months ago on Value Investors Club.

• Mmg Ltd (1208 HK) today announced a 2:5 Rights Offering to raise US$1.15bn at HK$2.62/share in order to pay down debt from their recent Botswanan copper mine acquisition. 
• It was a sizeable acquisition, and the near-term EV/EBITDA of the acquisition is 10x or above. The longer-term EV/EBITDA is in the 3s based on expansion later this decade.
• The Rights Offering is underwritten, supported by its 67.5% owner. SOUTHBOUND holds 10+%. There are short dynamics, arb dynamics, “don’t wanna spend more” dynamics. There’s a path here.

• Mmg Ltd (1208 HK) will raise HK$9.1bn (US$1.2bn) through 2 rights shares for every 5 existing shares rights offering. The rights price is HK$2.62, a 24.7% discount to the TERP.
• The rights proceeds will be used to repay existing debt, which will allow it to use other funds to better support the ongoing development of the operating mines.
• MMG shares should continue to decline heading into the ex-rights date. The shares go ex-rights on 11 June, and the rights start trading from 24 June to 2 July (inclusive).

• Back in February last year, the Aussie Treasurer prohibited Yuxiao Fund from buying an additional 9.92% in Northern Minerals (NTU AU) which would have increased its stake to 19.9%.
• On the 20th November 2023, Yuxiao sought the removal of Nicholas Curtis as director of the rare-metal play at an EGM; however Curtis resigned his post and the EGM cancelled.
• The Aussie Treasurer has now made orders requiring Yuxiao and four (deemed) associated investors to sell their holdings (~10.4% all-in) within 60 days. 

• The review period for the June rebalance ended last week. There could be one deletion from the index and a bunch of capping changes.
• There is one stock that is close to inclusion zone but may not make it in June.
• The expected index changes will lead to a one-way turnover of 2.5% resulting in a one-way trade of A$14m. That will increase if there is an inclusion.

• Short term overhang from expanded share count and selling from unwilling participants
• The copper supply and demand story is intact and the fundamentals of the company remain strong
• Parent’s uptake of the rights is positive but the stock will take time to build a base for the next leg up 

• RaaS Research Group has published a flash comment on advanced materials manufacturing group Amaero International (ASX:3DA) following its announcement that the first atomiser has been commissioned at its Tennessee facility ahead of schedule.
• The commissioning is an important step toward the production of C103 and specialty alloy powder at the facility and allows the company to move to the next step of achieving qualification and, ultimately, commercialisation.
• Amaero’s announcement underpins our confidence in the production timing we have applied to our estimates.

• APM Human Services (APM AU) has entered a SID with Madison Dearborn Partners (MDP) at A$1.45 per share, a 27.5% discount on CVC’s aborted non-binding proposal of A$2.00 per share.
• FIRB approval should be forthcoming as MDP is the largest shareholder, representing 45.56% of outstanding shares.
• The offer is disappointing but a weak trading update, deal fatigue and a concentrated shareholder register facilitate it. At the last close, the gross spread was 5.3%.  

• A near-term key NVX goal is to secure additional customers and lock in demand.
• NVX recently formed an agreement with PowerCo SE, part of the Volkswagen Group, to develop, test and analyze synthetic graphite anode materials customized for PowerCo’s requirements.
• If successful, this could lead to a new supply agreement.

• I am not a tax advisor and I do not play one on TV but it is a subject of interest in Australia, as an AFR article from June 2022 shows.
• The general gist: retail investors in Australia will take gains on stocks which run up in price, or get taken over, then look for losses to offset.
• The portfolio worked well in April. Now we let April ride and add the May basket.

• APM Human Services (APM AU) and US PE-outfit Madison Dearborn Partners, holding ~30%, have entered a Scheme at A$1.45/share, in cash.
• That’s a 74.7% premium to undisturbed; and a $0.05/share increase over Madison Dearborn’s April 8th A$1.40/share NBIO, a price the Independent Board Committee (IBC) previously considered disappointing.
• A scrip option is afforded, and Executive Chair, Megan Wynne and CEO, Michael Anghie will take up that option if the Scheme is implemented. The IBC is supportive. 

• I tally 51 – 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 week:Huafa Property Services Group (982 HK)‘s Scheme. Asia Cement China (743 HK) also suspended pursuant to the Takeovers Code. 
• Key updates took place on: QV Equities (QVE AU), Boral (BLD AU), Greatview Aseptic Packaging (468 HK), Sciclone Pharmaceuticals (6600 HK), and Chilled & Frozen Logistics Holdings (9099 JP).