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How these IPOs fared 1 week later

The first week of a company being on the ASX boards can be very telling. The market doesn’t get any new information until the next quarterly or half-year result, so we can get a sense of the market sentiment from how the share does in its first week.

Of course, how the market treats a share doesn’t ultimately mean anything. But, it can be interesting nonetheless.

Here are how the latest ASX shares fared:

Nickel Mines Limited (ASX: NIC)

This company wants to become a globally significant, low cost producer of ‘Nickel Pig Iron’, which is a key ingredient for the production of stainless steel.

Nickel Mines holds an 80% economic interest in the Hengjaya Mineralindo Nickel Mine, which is located in Central Sulawesi, Indonesia. The company has a collaboration and subscription agreement with Tsingshan, China’s largest stainless steel producer.

It was looking to raise $200 million at $0.35 per share and then start trading on 2 August 2018. However, it appears as though the company didn’t make it onto the boards and there isn’t another expected listing date from the ASX yet.

Vitalharvest Freehold Trust (ASX: VTH)

This is a real estate investment trust (REIT) that owns one of the largest aggregations of citrus orchards and one of the largest aggregations of berry farms, they are leased to Costa Group Holdings Ltd (ASX: CGC).

However, Costa Group Holdings confirmed it is not affiliated to Vitalharvest or its manager. Costa said that future expansion will not involve Vitalharvest and does not intend to expand operations at the Vitalharvest farms. Costa also said that at the end of FY19 all raspberry farming operations will have been relocated from the two Vitalharvest sites and added to Wesley Vale, which isn’t a Vitalharvest site.

Vitalharvest was going to list at a premium of 27.2% premium to the pro forma net asset value (NAV) per unit at 31 December 2017. The offer price was $1 and the pro forma NAV per unit was $0.79. It plans to pay an 8% distribution yield with a payout ratio of 90%, with a distribution expected every six months.

It said that the starting gearing will be 39.8% and the weighted average lease expiry (WALE) is eight years, with a 10-year option to extend. It also receives a profit share of the tenant’s earnings from the properties.

The offer price was $1 and it finished trading yesterday at $0.95, meaning it has dropped a disappointing 5% since coming onto the market.

Foolish takeaway

These businesses will be sizeable additions to the ASX once they’re both listed. Vitalharvest looks fairly interesting on a pure income basis, however I’d want to see what new farms it will be acquiring in the future and if there’s rental indexation increases before buying its shares. I prefer Rural Funds Group (ASX: RFF) at the moment.

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Motley Fool contributor Tristan Harrison owns shares of COSTA GRP FPO and RURALFUNDS STAPLED. The Motley Fool Australia owns shares of and has recommended COSTA GRP FPO and RURALFUNDS STAPLED. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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