Investment Research Updates

Company Updates: ARF, CWY, ALX, SGM, IGO, TAH, NAB


Arena REIT (ARF) revealed yesterday its portfolio valuation program resulted in a ~$102m net revaluation uplift for the six months ending 30 Jun’ 22. This represents a ~7.8% increase from 1H22 and a lift in Net Asset Value per security to $0.29. ARF’s portfolio has recently benefited from strong macroeconomic drivers. With ARF noting that the Labor Government’s intention to raise the maximum Child Care Subsidy (CCS) is likely to support the trend of increasing female workforce participation rates. AFR shares fell 2.43% to close at $4.21.

Cleanaway Waste Management (CWY) announced yesterday that a fire on Wednesday had caused significant damage to its medical waste processing facility in Dandenong, Victoria. CWY advised its Health Services business unit will be disrupted for some time, at a cost of approximately $2-3m in EBITDA per month, with further information to be provided by CWY in due course. This is in addition to the May’22 announcement of a $15-20m EBITDA impact expected in 2H22, driven by inflationary pressures, East Coast Floods damage and increased pandemic related waste volumes. CWY shares fell 1.73% to close at $2.84.


Atlas Arteria Limited (ALX) revealed yesterday that the IFM Global Infrastructure Fund had acquired close to 15% of ALX’s issued shares after Tuesday’s market close paying $8.10 per share. IFM intends to request financial information from ALX to assess whether it will make an indicative takeover proposal for the entire company. The potential transaction values ALX at ~$7.8bn, or 13.3 times trailing 12-month EV/EBITDA. ALX shares rose 16.20% to close at $8.25.

Sims Limited (SGM) provided a guidance update yesterday for its upcoming FY22 results. SGM is expecting FY22 EBIT to be in the range of $750m and $770m, due to higher metal prices and improved volumes. Although the business continues to face inflationary cost pressures, SGM has worked to partly offset these by seeking efficiency gains across other areas of its operations. SGM shares rose 0.94% to close at $18.30.


IGO Limited (IGO) announced yesterday that the Supreme Court of Western Australia had approved the scheme of arrangement to which IGO will acquire 100% of nickel miner Western Areas (WSA). Following WSA lodging a copy of the Court’s orders with ASIC today (8 Jun’), it is expected that WSA’s shares will cease trading on the ASX by the close of the trading day. The $1.1b transaction announced in Dec’21 aims to enhance the nickel portfolio for IGO shareholders and is expected to be free cash flow accretive to IGO by FY24. IGO shares fell 0.42% to close at $11.82.


Tabcorp Holdings Limited (TAH) announced yesterday the settlement of Racing Queensland litigation conditional on proposed reforms to the Queensland wagering industry. The reforms relate to the point of consumption tax (POCT), payable by wagering operators in QLD in 2018. Under the proposed changes, key industry agreements with Racing Queensland will terminate, leveling the playing field between TAH and wagering competitors in the state. In FY21 TAH paid 44.5% on revenue of $315m in fees and tax’s to the QLD Government, if the proposed changes are applied, this would be lowered to 35%. TAH’s shares finished the day 5.32% higher at $0.99.

National Australia Bank Limited (NAB) revealed yesterday it plans to raise $1b by offering a new Tier 1 Capital security, NAB Capital Notes 6. In the same announcement, NAB also noted it would redeem its NCN2 Capital Note for approximately $1.5b on 7 July.  The margin on the new notes is expected to be between 3.15% to 3.35% pa. Under the offer, the notes will mandatorily convert into NAB ordinary shares on 17 September 2032 unless they are converted, redeemed or sold earlier. NAB shares finished Monday 0.54% lower at $31.11.


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