Costa Group Holdings Ltd

CGC Details

Costa Group Holdings Limited (ASX: CGC), has signed an agreement for the acquisition of the Lankester Avocado orchards and packing operations from the Lankester family. This strategic acquisition is another step in executing its strategy to build avocados into fifth vertically integrated core produce pillar. The company’s production and supply period will now span from February to August, bringing it closer to achieving 52-week supply. Lankester Avocados is a grower of high quality avocados with three farms located in the Atherton region of Far North Queensland. The business also undertakes packing and marketing activity for third party growers. There are total plantings of 130 hectares across the three farms with the season running from February through to June. With the current circa 370 hectares of avocados Costa has in central Queensland and the South Australian Riverland, this acquisition will bring the Company’s total plantings to circa 500 hectares and allow it to continue to build production scale. We maintain a “Hold” recommendation on the stock at the current market price of $5.00


CGC Daily chart; (Source: Thomson Reuters)

REA Group Limited

REA Details

REA Group Limited (ASX:REA) has announced that it expects to recognize a non-cash impairment charge of approximately $180.0 million (pre-and post-tax) in its results for the year ended 30 June 2017. The impairment relates to the carrying value of goodwill for the Group’s Asian reporting segment and reflects a downturn in market conditions in Asia. The impairment has no effect on current trading and will not impact REA Group’s compliance with its banking covenants. It is intended that REA Group’s final dividend for FY2017 will be determined based on the Group’s Net Profit after Tax (NPAT) excluding the above impairment charge and the $161.6 million profit from the sale of the European operations. In determining the carrying value of its assets, REA Group considers a range of macro assumptions including market conditions, volume of property transactions and new development projects. There has been a decline in several Asian property markets, as a result of changes to government and banking regulations. In Malaysia, there has been a 33% reduction in the number of properties sold. In Hong Kong, the Government has introduced several cooling measures to soften a highly competitive market over the past few years, including the increase of stamp duty for residential property transactions to 15% introduced in November 2016. We maintain a “Hold” recommendation on the stock at the current market price of $64.24


REA Daily chart; (Source: Thomson Reuters)

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