Spotless Group Holdings Ltd

SPO Details
Takeovers Panel declines Spotless application: Spotless Group Holdings Ltd (ASX: SPO) has recently reported that the Takeovers Panel has rejected the application submitted by the group with regards to conducting proceedings in relation to its affairs. The Panel has particularly cited that no reasonable prospect could be made to declare unacceptable circumstances, and therefore, declined to conduct the proceedings. Post a discussion with the Panel and ASIC, Downer EDI Services Pty Ltd (DOW, which has been considering Spotless for an off-market takeover bid) is preparing to provide additional disclosure in a replacement bidder’s statement clarifying the operation of withdrawal rights for accepting Spotless shareholders while the bid is conditional. With this, DOW has now prepared and submitted the replacement bidder’s statement for the formal takeover offer to Spotless shareholders. On the other hand, SPO had requested for a delay by the Panel with regards to the dispatch of the bidder's statement for the $1.15 per share offer citing some “misleading and deceptive” assertions that were made by DOW. SPO had earlier revealed that the offer is a hostile and opportunistic one, whch is timed to take advantage of short-term factors. It is said that Downer is preparing to close the retail component of its $1 billion equity raising with an aim to use proceeds for the proposed takeover. SPO stock has risen 41.8% in last one month (as at April 07, 2017). We maintain a “Hold” on the stock at the current price of $ 1.09
 

SPO Daily Chart (Source: Thomson Reuters) 

CIMIC Group Ltd

CIM Details
Contract winning from one of the world’s biggest home furnishing brands: CIMIC Group Ltd.’s (ASX: CIM) Leighton Asia has been chosen by the IKEA Group to construct its first retail outlet in Hyderabad, India. The construct-only contract will help generate revenue of about A$70.4 million for Leighton Asia, and offers a strategic opportunity to deliver IKEA’s flagship store in India and add to the group’s international experience and local expertise for an efficient and effective construction program. The construct-only contract includes the delivery of civil and structural works; mechanical, electrical and plumbing services; and façade and external works associated with a retail store and warehouse building on a 5.2-hectare site with a total built-up area of 40,000m² with parking. CIM has further reported that construction has already commenced and completion is targeted for early 2018. Leighton Asia was also recently selected by Airport Authority Hong Kong to deliver the Terminal 1 (T1) Annex Building and Carpark 4 Expansion Project at Hong Kong International Airport (HKIA). CIMIC Group company, CPB Contractors, had also won a contract from Transurban to deliver Victoria’s multi-billion dollar West Gate Tunnel Project in a 50:50 joint venture with John Holland. In the last six months (as at April 07, 2017), CIM stock has surged 32.7% and is trading at higher levels. We believe the stock is “Expensive” at the current price of $ 36.59
 

CIM Daily Chart (Source: Thomson Reuters) 

IMF Bentham Ltd

IMF Details
New funding agreement secured: IMF Bentham Ltd (ASX: IMF) has announced about a new USA funding agreement from its United States investment vehicle, Bentham IMF 1 LLC for a new matter, USF3, relating to funding of a contract dispute in an arbitration in the US. 

Growth Strategy (Source: Company Reports)
 
In its half year report, IMF reported NPAT of $13.99m, up 3784% for the half-year ended 31 December 2016 over prior corresponding period while revenue from ordinary activities was up 179% to $36.48m. Basic and diluted EPS were 8.22 cents compared to (0.56) cents last year. The interim dividend declared was 3 cents while no interim dividend was paid during last year. In the last one year (as at April 07, 2017), IMF stock has moved up 33%. We give a “Hold” at the current price of $ 1.80
 

IMF Daily Chart (Source: Thomson Reuters)

Afterpay Holdings Ltd

AFY Details
Merger Implementation Agreement with Touchcorp: Afterpay Holdings Ltd (ASX: AFY) and Touchcorp Ltd (ASX: TCH) have entered into a formal Merger Implementation Agreement (MIA) and the merger is expected to take effect in June. Under this, a newly incorporated Australian company, Afterpay Touch Group Ltd will be issuing new shares to Afterpay shareholders (excluding Touchcorp) on a 1:1 basis and to Touchcorp shareholders on a 0.64:1 basis. The merged group will be owned 64% by AFY shareholders (excluding TCH) and 36% by TCH shareholders on a fully diluted basis.This move will provide growth opportunity for AFY and TCH will benefit from recurring revenue streams. Scheme booklets are to be released in the month of May 2017. 

Key Metrics (Source: Company Reports)
 
AFY stock surged 5.1% on April 10, 2017 as the group bagged a deal with Officeworks wherein the latter will offer Afterpay’s payment service to its online customers. The stock has otherwise fallen 7.91% in last one month (as at April 07, 2017). Given the current scenario on the merger aspects and trading performance, we believe it would be better to wait and watch and give an “Expensive” recommendation at the current price of $ 2.05
 

AFY Daily Chart (Source: Thomson Reuters)

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