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$3.19 costa group holdings limited

Great post Mike! good to see some actual related figures not...

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Pilbrapros

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29/10/19

00:51

Post #: 41110639
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Originally posted by DrMike: ↑

looking at things purely rationally, I don’t see how this could drop to anywhere near $2.20.
My guess is that it could briefly drop below $3, but won’t stay there too long?
If we ignore all the bad news for a moment, and just look at the impact of a 1 for 4 rights issue @ $2.20, then the SOI will increase from 320.6m to 400.8m. Before the issue, the shares traded at $3.46 (market cap = $1.109B).
The new shares will add another $176.3m of equity, increasing the market cap to $1.286B, or $3.21 per share.
Alternatively, just looking at share prices, each new share is offered at a discount of $1.26 to the last traded price (or -36%). When pro-rated across 5 shares (4 original + 1 new), this is a 25c (7%) discount, so the shares should now be worth $3.21 each).
Hence, all things being equal, the rights issue should reduce the share price pre/post by about 7%. However, now factoring the additional circumstances (bad news), my guess is that the knee-jerk drop will be in the 10-15% range, so taking the price close to, or just under $3.
I’m happy to keep accumulating at these prices, so will be taking up my full allotment.

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Great post Mike! good to see some actual related figures not just a crystal ball guess at a SP

CGC Price at posting: $3.46 Sentiment: Hold Disclosure: Held
2 Upvote

0 Great analysis

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