The Australian share market has produced yet another disappointing month of returns for investors, with the ASX 200 slipping 1.3% since November 15.
However, there have certainly been some diamonds in the rough for investors, with certain companies substantially outperforming the market over the last month, including Trade Me Group Ltd (ASX: TME), Costa Group Holdings Ltd (ASX: CGC) and Yancoal Australia Ltd (ASX: YAL).
Let's take a look at why…
Trade Me Group
Shareholders of New Zealand's leading online auction site will be pleased with how the company has fared over the last month, with the Trade Me Group share price rising 24% since November 15.
This is primarily due to the takeover offer received from private equity firm, Apax Partners, which is in a bid to acquire 100% of the shares in Trade Me Group for $6.45 per share. This represents a 35% premium to the company's share price before the takeover bid on November 20. The agreement is subject to approval from Trade Me Group shareholders, the High Court of New Zealand and from the New Zealand Overseas Investment Office.
Trade Me Group is currently priced at $5.97 per share, indicating that the market isn't completely certain that the takeover will materialise. Although it does look likely to me that shareholders will approve the takeover, given the substantial premium that has offered by Apax Partners to purchase their shares. If the proposal is approved, the Trade Me Group share price will most likely converge to the $6.45 mark, representing further share price appreciation of around 8%.
Costa Group Holdings
Australia's largest grower and marketer of fresh fruit and vegetables is also enjoying a positive end to 2018, with the Costa Group share price rising 23% since November 15. This is on the back of the company's annual general meeting on November 22, which was very well received by the market.
Key highlights include:
- Net profit after tax before self-generating and regenerating assets (SGARA) and material items of $76.6 million, up 26.3% on FY17
- Revenue of $1,002 million, up 10.2% on FY17
- EBITDA before SGARA and material items of $150.8 million, up 30.9% on FY17
Costa Group also re-affirmed its prior guidance that in the transitional half year from July to December 2018, the company will generate softer earnings compared to July to December 2017, which is driven by the impact of seasonal trends, new capital investments and higher expected depreciation and interest charges.
The company advised that it expects to generate strong earnings growth of around 30% in the 2019 calendar year, which is clearly making shareholders more optimistic about Costa Group's long-term outlook.
Yancoal Australia
Australia's largest pure-coal producer has also been a standout performer over the last month, with the Yancoal share price rising by around 18% since November 15.
This comes following the announcement that Yancoal is in the process of undertaking an initial public offering on the Hong Kong Stock Exchange (SEHK), meaning that the company is seeking to be dual listed on both the SEHK and the ASX.
The offer price for shares in connection with the global offering is $23.48 per share in Hong Kong Dollars, which converts to around $4.20 in Australian Dollars. This represents a 28% premium to the company's November 28 closing price of $3.25.
In conjunction with this, Yancoal has also announced an entitlement offer to existing shareholders, who have the opportunity to apply for 0.05387 new shares for every 1 share held on the record date, at the offer price of HK$23.48.
This global offering will reportedly raise total proceeds of HK$1.605 billion (c. A$287 million), while the entitlement offer is expected to raise up to HK$1.589 billion (c. A$284 million). Yancoal indicates that the funds raised will primarily be used to repay existing debts, to finance potential future acquisitions and for working capital and general corporate purposes.
