Australia

• On the 27 Feb 2024, construction play Adbri (ABC AU) entered into a Scheme Implementation Deed with CRH (CRH US) and 42.7%-shareholder Raymond Barro (Chairman) at $5.20/share.
• Conditions include Adbri’s shareholder approval and FIRB signing off. Optically, it doesn’t appear to be a knockout price. However, Adbri’s share price has laboured since the onset of Covid.
• The Scheme Booklet is now out, with a Scheme Meeting to be held on the 12th June. Expected implementation on the 1 July. IE says fair & reasonable.

• Wrkr Ltd (ASX:WRK) offers compliance solutions for Australian superannuation contributions and payroll including member onboarding, super payments, messaging and employee validation.
• WRK has reported a record quarterly cash receipt in Q3 FY24, +76% on the previous corresponding period (pcp) and +46% on Q2 FY24, boosted by a first-time contribution from Hong Kong, Link milestone payments relating to the Superannuation Clearing House (SCH) and the timing of client payments (from Q2 into Q3).
• Operating cash flow as a result was +$465k for the quarter, also the highest on record.

• On 2 April, Austal Ltd (ASB AU) rejected a non-binding proposal from Hanwha Ocean (042660 KS) at A$2.825 due to concerns about obtaining Australian and US regulatory approvals. 
• The Board’s claims are on shaky grounds. On 1 May, the AFR reported that Australian Defence Minister Richard Marles had no concerns with Hanwha’s privatisation bid. 
• The Board’s rejection is a clumsy attempt to negotiate better terms, such as a bump, ticking fees, or significant break fees. At the last close, the gross spread was 21.8%. 

• Seven Group Holdings (SVW AU) now holds 85.8% of Boral Ltd (BLD AU) and that will lead to deletion of Boral from the S&P/ASX 200 (AS51 INDEX). 
• As expected, Sigma Healthcare (SIG AU) will be added to the S&P/ASX 200 (AS51 INDEX) at the close on 9 May.
• Sigma Healthcare (SIG AU) price movements will be largely influenced by its pending merger with Chemist Warehouse Group (CWG).

• ADX has raised A$13.5 mm of new equity priced at A$0.105 per share.
• One free-attaching option will be issued for evert two placement shares with an exercise price of A$0.15 per share and an expiry date of 08/05/2026.
• The proceeds from the raise will fund (1) the production testing of the 450 m gas column encountered at the Welchau exploration well (the well might also be deepened to assess the exploration potential below the current total depth of the well), (2) the residual drilling cost (net of the carry provided by MND) of a gas exploration well on the ADX-AT-I licence, (3) the residual cost (net of the carry provided by MND) of the drilling and tie-in the Anshof-2A sidetrack and (4) upgrades to the gas processing facilities at ADX’s Vienna Basin fields.

SenSen’s Q324 results reflect the move to a lower cost base that provides a platform for future profitability. Minor delays to the National Heavy Vehicle Regulator (NHVR) contract affected Q3 but should not affect FY24 as most of the deployment is now complete. North American Smart Cities growth is gaining traction via partnerships, underpinning Q424 momentum alongside strong fuel theft solution uptake. Restructuring to drive a return to sustainable free cash flow is mostly complete but resulted in one-off costs. We revise down our FY24 forecasts assuming similar Q4 growth from a lower Q3 base.

• The Discounts to NAV of covered holdcos mainly widened during April. Discounts to NAV: C.F.Alba, 49.1% (vs. 47.3%); GBL, 39% (vs. 38.1%); Heineken Holding, 17.3% (vs 16.7%); 
• Industrivärden C, 4.7% (vs. 1.4%); Investor B, 8.3% (vs. 6.1%); Porsche Automobile Holding, 41.1% (vs. 45.4%). Rio DLC spread tightened to 22.5% (vs. to 24.9%).
• What seems interesting: Porsche SE vs. listed assets and the Rio DLC (long RIO LN/short RIO AU).

• Recently, I surmised FIRB would approve Sociedad Quimica y Minera (SQM US)/Hancock’s bid for Azure (AZS AU); but ding Hanwha Ocean (042660 KS)‘s Austal (ASB AU) tilt. I’m batting 50%. 
• Whereas FIRB gave the green light for Azure this week; reportedly (no official ASX announcement as yet), the Aussie government is “not concerned” with Hanwha’s acquisition. Austal gained 3% yesterday.
• Even Austal didn’t high hopes of securing Aussie approval. Presumably the US government is similarly onboard. This development also signals an expanding AUKUS security pact. 

• Spectur Limited (ASX:SP3) is a surveillance technology company providing security, safety, environmental monitoring and visual AI solutions to watch and act on assets managed by its platform.
• The company develops, manufactures and sells solar- and battery-powered, remotely-connected hardware, which is driven by SP3’s firmware, software, cloud and web-apps, providing data and solutions to its customers.
• Spectur has reported a 35% increase in Q3 sales revenue to $1.261m on the previous corresponding period (pcp) (ASX release 26 April).

Vection’s Q324 update showed strong double-digit growth in revenue and cash receipts, driven by multiple contract wins, including its largest contract to date with an existing defence customer. A swing to positive operating cash flow in Q3 (A$4.1m), coupled with contract wins, validates the company’s streamlined sales structure, designed to bolster operational efficiency. Cash generated also supported a quarter-on-quarter reduction in debt. Management is seeing early positive signs by enhancing the platform’s compatibility with Apple Vision Pro, potentially unlocking a key growth avenue from rising enterprise adoption among large global players.

• 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.
• Below I present a study using data from 2012-2023 and this year’s portfolio.

• Woolworths Ltd (WOW AU) is looking to raise A$468m (US$305m) from selling its stake in Endeavour Group /Australia (EDV AU).
• Endeavour Group was demerged from Woolworths in Jun 2021 and it runs the drinks and hospitality business of Woolworths.
• In this note, we will talk about the deal dynamics and run the deal through our ECM framework.

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
• West China Cement

• Rent.com.au Limited (ASX:RNT) is a purpose-led company seeking to empower home renters through its technology platform and a growing number of aligned transactional services.
• The company has reported its best ever quarterly revenue result with total revenue increasing 41% on the previous corresponding period (pcp) to $0.89m.
• The result was driven by a 25% year-on-year improvement in search portal revenue and a 144% increase in RentPay revenue.

• DAR Group is looking to raise A$1.5bn (US$983m) from selling the majority of its stake in WorleyParsons Ltd (WOR AU).
• DAR had attempted to privatize Worley in late 2016. Failing that attempt, it has been adding to its stake over the years.
• As the deal isn’t a cleanup, there will be an overhang post-deal, although its a relatively small one at just 4.5% of DAR’s remaining stake; locked up for 30 days

• Dar Al-Handasah has sold 19% of WorleyParsons Ltd (WOR AU) overnight at A$14.35/share, a 12% discount to the last close, to raise A$1.44bn (US$943m).
• This reduces Dar’s stake in WorleyParsons Ltd (WOR AU) to 4.5% and will trigger upweights from index providers in the next few days.
• The stake sale could also lead to a re-rating of the stock with a large blocking stake off the share register.

• On the 18th December 2023, Pacific Smiles (PSQ AU), an operator of dental centers, announced and rejected a A$1.40/share non-binding proposal from Genesis Capital. Genesis subsequently increased its stake to 19.90%.
• Genesis then bumped its NBIO to A$1.75/share on the 19 March and was granted due diligence on a non-exclusive basis. PSQ said it would support the revised terms if firmed. 
• PSQ has now entered a Scheme with National Dental Care at A$1.90/share. The Offer also requires FIRB signing-off. But the proposal is a non-starter if Genesis rejects terms. 

• Seven Group Holdings (SVW AU)‘s holding in Boral Ltd (BLD AU) continues to increase and that could lead to an index change at the June rebalance, if not earlier.
• The Silver Lake Resources (SLR AU)/ Red 5 Ltd (RED AU) merger could lead to an index change early June.
• Cie De Saint-Gobain (SGO FP)‘s acquisition of CSR Ltd (CSR AU) could lead to another index change just ahead of the regular June rebalance.

• The short term is suddenly looking bullish for iron ore, as rumors abound that tier-1 cities in China may remove home-buying restrictions in May, and auto stimulus measures were announced. 
• Cities like Chengdu and Nanjing have already announced measures to make home-buying more attractive, such as removing purchase qualifications and pilot programs for old-for-new home housing. 
• We like 62% Fe and see it trade up to its upper limit of 130 USD/ton (vs. current 117 USD/ton). On equities, we like Vale (VALE US) .

• We summarise the latest spreads and newsflow of merger arb situations we cover across Hong Kong, Australia, New Zealand, Singapore, Japan, Indonesia, Malaysia, Philippines, Thailand and Chinese ADRs.
• Highest spreads: Qantm Intellectual Property (QIP AU), Azure Minerals (AZS AU), Hollysys Automation Technologies (HOLI US), Probiotec Ltd (PBP AU), Southern Cross Media (SXL AU), China TCM.
• Lowest spreads: Chilled & Frozen Logistics Holdings (9099 JP), Roland DG Corp (6789 JP), Mma Offshore (MRM AU), Pact Group Holdings (PGH AU), Newmark Property REIT (NPR AU).

Key points

• Jumbo Interactive Ltd (ASX: JIN) operates in the online lottery industry in Australia, with a 20% market share and offering digital Australian lottery tickets through its mobile app and website.
• The company, founded in 1995 by CEO Mike Veverka, is highly cash generative and has a favorable duopolistic market structure, positioning it for potential stock value growth and expansion as more customers shift to online channels.
• JIN is viewed as a defensive investment option with strong margins and cash generation potential, particularly through its SaaS/Managed Services offering, making it an appealing choice for investors looking for long-term growth.

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.

• Carly Holdings Limited (ASX:CL8) operates a vehicle subscription service that is a shorter-term alternative to lease, loan or outright purchase of a vehicle.
• Average subscription period is five+ months vs. three+ years for more traditional options.
• The subscription includes insurance, registration and maintenance.

• Venture Minerals Limited (ASX:VMS) is an ASX-listed critical minerals explorer with a focus on rare earth elements (REE), precious metals and tin-tungsten deposits in Western Australia and Tasmania.
• The company has recently announced significant drilling assay results from its Jupiter prospect within the Brothers rare earths element project in WA which potentially positions VMS with one of the largest clay-hosted REE prospects in Australia.
• VMS is also undertaking a feasibility study on underground mining at its Mount Lindsay tin-tungsten project in Tasmania and says it has appointed advisers, Argonaut, to undertake a strategic review of its nearby Riley iron ore mine.

• Tally 50 – 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 deals was discussed on Smartkarma this week, being Mimasu Semiconductor Industry (8155 JP)‘s Tender Offer. There’s also BHP Group (BHP AU)‘s unsolicited Offer for Anglo American (NGLOY US).
• Key updates took place on: Tietto Minerals Ltd (TIE AU), CSR Ltd (CSR AU), CPMC Holdings (906 HK), Roland DG Corp (6789 JP), and iClick Interactive Asia Group (ICLK US).

• After pitching an indicative Offer to CSR (CSR AU) shareholders of A$9/share by way of a Scheme on the 21st Feb, Saint-Gobain (SGO FP) firmed terms on the 26th Feb.  
• $9.00 is a knockout Offer. The business combination has been unanimously approved by the boards of both companies. Conditions include CSR’s shareholder approval and FIRB signing off. 
• The Scheme Booklet is now out, with a Scheme Meeting to be held on the 13th June. Expected implementation on the 9 July. IE says fair & reasonable. 

EML Payments announced that on 23 April the Financial Conduct Authority (FCA) in the UK lifted the new customer restriction for Prepaid Financial Services Limited (PFSL), which had been in place since October 2022. With the appropriate structure and risk management controls now in place, PFSL can focus on growing the business. This marks another positive step forward for the group, after exiting PFS Card Services Ireland Limited (PFS), agreeing to sell Sentenial and finalising the settlement liabilities for the PFS acquisition.

Freelancer’s Q124 results were mixed. Operationally, the company is seeing rising demand for AI specialists as customers seek affordable ways to develop proprietary AI. Notably, in Enterprise, the company delivered a large-scale AI pilot for a tech giant, sourcing 20,000 freelancers in 24 hours across 52 languages. This impressive achievement could lead to a substantial multi-year contract. Major initiatives across Loadshift and Escrow with leading organisations are set to be deployed over the coming months, potentially catalysing performance and diversifying revenue streams. We revise our forecasts to account for a weaker Q1 than anticipated, though positive lead indicators, especially relating to AI, underscore long-term optimism.

• The Italian ministry has informed ADX that it will be granted the d 363C.R-.AX gas exploration permit in the Sicily Channel.
• In addition, the Regional Administrative Court of Rome has annulled the Plan for the Sustainable Energy Transition of Eligible Areas that prevented the oil redevelopment, appraisal and exploration activities on the licence.
• The annulment, if not contested, will result in reversion to the 2018 legislation enabling oil as well as gas within the d 363C.R .AX permit to be exploited.