Some follow-ups from Wednesday’s ASX session on various stocks we’ve been watching of late, namely GUD, GrainCorp and Costa Group.
GUD Holdings (ASX: GUD) shares fell yesterday when they came out of the trading halt called to allow it to raise money from big shareholders to help finance the $745 million purchase of AutoPacific Group (APG) from private equity.
GUD will pay for APG with cash and shares to the owners, funds controlled by Pacific Equity Partners.
The shares fell 8.7% to $10.65 before recovering to be down 2.2%, then falling again to end the day down 10.4% at $10.78.
That was still well above the discounted $10.40 a share price for the $170 million raised from existing and new institutional shareholders. The shares had closed at $11.66 on Monday.
GUD will issue about 27.9 million new shares as part of the process. It said 87%of entitlements available to institutional investors were taken up.
“We are pleased with the strong support shown by new and existing shareholders for the equity raising and the acquisition of APG,” GUD’s CEO Graeme Whickman said in Wednesday’s statement.
A retail entitlement also priced at $10.40 is down to raise a further $115 million. It opens on Monday and closes the following Wednesday.
Brokers have upgraded GrainCorp (ASX: GNC) in the wake of the December Australian Bureau of Agricultural and Resource Economics and Sciences (ABARES) crop report which upgraded estimates for a record winter grains crop, especially wheat, barley and canola.
ABARE reckons the winter crop for the east coast will hit a near-record 29.1 million tonnes which is great news for grain handlers like GrainCorp which has spent heavily in the past 2 years on new facilities to handle and process grains.
That enabled it to handle the previous record crop in 2020-21 and has put GrainCorp in good position to handle a second record crop in a row.
The stock was up as much as 3.3 per cent to $7.025 before easing to end at $6.95, up 2.2% but well below the all-time high of $7.28 hit in mid-November on what is proving to be a dour day for the market.
Analysts at UBS raised their price target for Graincorp to $7.55 with a Buy recommendation, and Morgans which maintained its Add rating with a new price target of $7.90.
Morgans says that while the forecast is still below the records achieved in 2021, there is still time for a further upgrade from ABARES.
But GrainCorp was cut to a Sell at Bell Potter with a price target of $6.15 (closed at $6.95).
The biggest negative is the impact on yields and grain quality for wheat especially from the Big Wet in NSW and Southern and Central Queensland.
The share price of fruit and vegetable grower Costa Group (ASX: CGC) fell more than 3% at one stage yesterday to trade around 15-month lows.
The shares ended at $2.80, down 2.4% on the day.
Analysts had no reason for the slide (the wider market was also weaker) but theories like the new Covid variant and the impact of the big wet in some of its key growing areas impacting fruit and berry availability.
The new border restrictions might have also worried investors about labour availability.