In today’s briefing:
- Rio Tinto Taps Arcadium As Lithium Prices Sag
- Arcadium Lithium (ALTM US/LTM AU): Rio Tinto’s Rumoured Bid Is Light
- Cash Converters International – Growth and value
- Pioneer Credit Ltd – Refinancing completed
- ALK AU – Australian Gold Conference 2024 – Who and What did we find interesting at the event?
- [IO Technicals Weekly 2024/40] Expanded China Stimulus Supports Bullish Iron Ore
- SunRice (Ricegrowers) Interview Transcript
- Wrkr (ASX:WRK) Webinar Transcript 2 August 2024
- Fluence Corp Ltd – The pipeline is being converted
- Carly Holdings – Fleet size up, sales up, costs up less
Rio Tinto Taps Arcadium As Lithium Prices Sag
- Rio Tinto Ltd (RIO AU) has confirmed it has approached Arcadium Lithium (LTM AU)/(ALTM US) regarding a potential acquisition.
- No Offer Price has been announced; however a proposed bid with a 30%+ premium, on top of last week’s 11% bounce, has been rumoured. That implies a price of ~$6/share.
- Given shares were trading ~A$10/share in January this year, one Aussie-based fund reckons such an Offer would be highly opportunistic; and that a bid 2.5-3x higher is reasonable.
Arcadium Lithium (ALTM US/LTM AU): Rio Tinto’s Rumoured Bid Is Light
- In response to media reports, Arcadium Lithium (LTM AU) confirmed receiving a non-binding proposal from Rio Tinto Ltd (RIO AU). No terms were disclosed.
- According to press reports, Rio aims to acquire Arcadium at a valuation range of US$4-6 billion (A$5.9-8.8 billion). Blackwattle thinks a fair price is closer to US$8 billion.
- The rumoured valuation range is unattractive and arguably a bear case valuation assuming no significant recovery in lithium prices.
Cash Converters International – Growth and value
- RaaS has published an update report on consumer finance group Cash Converters International (ASX:CCV) following the release of its FY24 results which saw 26% growth in revenue on the pcp and EBITDA growth of 21% in line with our forecasts.
- The gross loan book grew 6% to $288m, which we find impressive as the business transitions away from SACC products due to regulatory change.
- This was more than offset by growth in other products, domestically and internationally.
Pioneer Credit Ltd – Refinancing completed
- RaaS Research Group has published an update on ethically-motivated, diversified financials group Pioneer Credit (ASX:PNC) following the company’s announced new $272.5m four-year syndicated senior finance facility.
- Our base case valuation has increased to $250m (previously $217m) or $1.94/share due to lower finance costs in FY26 (down $8m to c.
- $20m) and ongoing.
ALK AU – Australian Gold Conference 2024 – Who and What did we find interesting at the event?
- From time to time, RaaS Research produces non-commissioned research reports on industries and companies which we believe deserve attention.
- Josh Baker attended the Australian Gold Conference last week and found eight stocks he believes have clear catalysts for a re-rate.None of these companies are currently covered by RaaS.
[IO Technicals Weekly 2024/40] Expanded China Stimulus Supports Bullish Iron Ore
- SGX Iron Ore futures surged by $5.64/ton last week, with prices peaking at $113.55/ton on 30 Sept amid China’s expanded stimulus measures.
- Short-Term moving averages signal a bullish trend, with the 9-day MA crossing the 100-day MA on 4 Oct, indicating further upward momentum.
- Overbought conditions, with RSI nearing 70, suggest caution, and a tight stop loss remains advisable as support at $105/ton remains weak.
SunRice (Ricegrowers) Interview Transcript
- RaaS Research Group interviewed Ricegrowers Ltd (trading as SunRice) Group Chief Financial Officer Dimitri Courtelis post the company’s FY24 results.
Wrkr (ASX:WRK) Webinar Transcript 2 August 2024
- Wrkr presented at a RaaS-focused Coffee Microcaps Webinar on 2 August 2024
Fluence Corp Ltd – The pipeline is being converted
- RaaS Research Group has published a flash comment on environmental services company Fluence Corporation (ASX:FLC) following its announcement yesterday that it had secured a US$7.1m contract to provide a Sea Water Reverse Osmosis project for Stereau on Mayotte, a French archipelago in the Indian Ocean.
- This material project for the Municipal division (MWW) is complemented by a US$1.5m contract win in the Industrial Wastewater & Biogas division (IWB) for a food processor in the US.
- When combined with other recent successful tenders the new orders secured in the first 6 weeks of the current quarter total ~US$12m.
Carly Holdings – Fleet size up, sales up, costs up less
- RaaS has published an update on vehicle subscription business Carly Holdings (ASX:CL8) following the release of its FY24 results which saw a 71% year-on-year increase in revenue to $3.6m, a 40% increase in gross profit to $1.15m and 22% increase in EBITDA loss to $3.57m.
- Carly’s FY24 accounts underline the company’s success in growing fleet and subscriptions but highlights the drag which deploying vehicles as they are acquired necessarily has on the cost base.
- Revenue was again up strongly but so were fleet-related costs, albeit at only slightly over half as much.
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