Daily Brief Australia: Carsales.Com Ltd, X2M Connect ltd, Recce Ltd and more

• Carsales.Com Ltd (CAR AU) aims to raise around US$330m (A$501m) via a renounceable entitlement offer. The deal is relatively large to digest at 28.2 days of three month ADV. 
• The use of proceeds will be to acquire 40% of Webmotors SA and strengthen its balance sheet. 
• In this note, we will talk about the deal dynamics and run the deal through our ECM framework.

• X2M Connect Limited (ASX:X2M) has reported a 23% reduction in RaaS-adjusted EBITDA losses (to $2.4m) for H1 FY23 on the back of operating leverage from 96% sales growth, 135% gross profit growth and just a 14% increase in operating costs.
• While sales growth was driven by hardware sales (connected devices +100% over the pcp), hardware margins have improved ~500bps and connected devices in the field ultimately drive SaaS/maintenance fees (platform fees).
• Cash at bank was $3.05m with an additional net $0.5m received in January 2023 from an R&D tax credit. 

Recce Pharmaceuticals is developing a novel class of broad-spectrum synthetic anti-infective drugs to which, so far, all tested bacteria have been unable to develop resistance. This could be a very desirable trait given widespread concerns about antimicrobial resistance (AMR). The lead indication for Recce’s synthetic polymer antibiotic, Recce 327 (R327), is sepsis, a substantial area of unmet need with significant mortality and high costs of care. A Phase Ib/IIa multiple-dose study of an intravenous (IV) R327 formulation in healthy subjects is planned to start in H1 CY23. The company is also assessing other infection indications, such as complicated urinary tract infections (UTIs). A topical (spray-on) formulation of R327 is also being assessed in human trials for burn wound infections, and a new study for diabetic foot infections is expected to start shortly. We value Recce at A$497m, or A$2.79/share.