Daily Brief Australia: Pacific Smiles, Duratec Ltd, Recce Ltd and more

• After what appeared indecisiveness from Genesis Capital, Crescent Capital’s National Dental Care snuck in on the 29th April and entered into a Scheme with Pacific Smiles (PSQ AU) at A$1.90/share. 
• The Scheme Meeting is the 1st August with expected implementation on the 19th August. The IE (Deloitte) reckoned terms are fair & reasonable. All good right? Not quite.
• The Takeovers Panel has concluded Genesis Capital, with 19.9% of shares out, is free to vote. Assuming Genesis votes against the Scheme, Crescent Capital’s Offer is effectively dead.

• Duratec Ltd (DUR AU) with strong financials, a robust order pipeline and ability to leverage technologies makes it a solid small-cap infrastructure maintenance and asset protection play
• Shares are at least 30% below fair value given profitability, growth and order book profile. Historical numbers suggest solid execution of a diverse service contract portfolio. 
• Duratec is a play on growing need for more efficient, accurate and  innovative approach for proactive infrastructure inspections and maintenance. 

We highlight the opportunity of topical RECCE® 327 (R327) to address diabetic foot infections (DFIs), which is the leading cause of limb morbidity in diabetic patients and an area of unmet need as currently available topical drugs have limited effectiveness. Recce is planning to initiate a Phase III registration-enabling study in H2 CY24 in Indonesia. We anticipate that positive results from the trial could lead to Recce’s earliest R327 commercialisation opportunity, through a launch in South-East Asia in the DFI indication in H2 CY26. The company announced an A$10m equity financing that is expected to extend its runway into FY26. We now obtain an rNPV valuation of A$688.5m (or A$3.07 per share), versus A$661.3m (or A$3.27 per share) previously. The reduced value per share is due to the anticipated increase in share count post-financing.