Costa Group Holdings Ltd

CGC Details
·         Growth initiatives:Costa Group Holdings Ltd (ASX: CGC) stock lost over 2.9% on May 02, 2017 owing to some volatility. On the other hand, the group’s growth initiatives have been making a good progress as per the recent updates. The group is initiating avocados as the 5^th core produce pillar with Avocado Ridge acquisition while constantly implementing the domestic berry growth program. The China berry expansion is gaining momentum while the group made an Agreement with Macquarie Agricultural Funds Management Ltd to jointly investigate and fund M&A opportunities.

·         Recommendation:CGC stock rallied over 63% in the last six months (as of May 01, 2017). We give a “Hold” recommendation on the stock at the current price of $ 4.37

MG Unit Trust

MGC Details
·         Weak trading update: MG Unit Trust (ASX: MGC) stock lost over 14% on May 02, 2017 impacted by their weak trading update. The group expects Farmgate Milk price (FMP) of about $4.60 per kilogram milk solids for FY17 as compared to earlier forecast available FMP of $4.70 per kilogram milk solids. However, the group expressed about a deviation from the Profit Sharing Mechanism, and included an amount of up to $34 million, for some non-recurring costs identified during the asset and footprint review. The group also offered access of up to $30 million of additional debt funded milk payments, for maintaining their FY17 FMP forecast of $4.95 per kilogram milk solids. On the other side, the group is closing MG’s manufacturing facilities at Edith Creek, Rochester and Kiewa. The group has also suspended its dividend.

·         Recommendation:We maintain an “Expensive” recommendation on the stock at the current price of $ 0.89

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