Continuous Disclosure: Will Radius be the next listing? Graeme Hart’s Pactiv Evergreen offer falls flat
Aside from Rua Bioscience’s listing on the NZX last week it’s been slim pickings for investors, but the talk continues that more stocks will make it onto the exchange before the year is out.
The medicinal cannabis company’s shares have been well supported, the 50c shares last trading at 67c.
Rua’s debut was the first full equity listing in a year, but aged care company Radius is understood to be in the throes of undertaking a compliance listing soon.
Compliance listings typically involve a company gaining a presence on the exchange without raising fresh capital, but affording them the right to do so upon becoming a listed entity.
Radius Care is a specialist health and aged care provider for elderly and disabled New Zealanders.
The company is New Zealand owned and operated. It has 22 locations around New Zealand, employs over 1500 staff and provides professional aged care for more than 1700 residents.
The company was established in 2003 to meet New Zealand’s growing demand for aged care and associated health care services.
Early in 2010, chief executive and director Brien Cree led a management buyout of the company, which brought it back into New Zealand ownership from foreign investors.
NZX powers ahead
The relative dearth of listings has not stood in the way of NZX, the company, which has enjoyed a strong run in both its financial performance and its share price over the third quarter, despite Covid-19 headwinds.
Both cash valued traded and totalcapital raised during the quarter exceeded NZX’s targets for the full year, which were set out in February 2020.
Brokers Forsyth Barr said it had marginally increased its full year 2020 EBITDA forecast to NZ$33.2m against the company’s guidance of $30–$33.5m.
“We remain positive on the company’s outlook, with NZX well placed to benefit from either bull or bear market scenario given its exposure to global equities through its funds under management business, and secondary markets set to benefit from future periods of high volatility,” it said in a research note.
“We also expect both Saturn Advisory, with $500 million in funds under management, and Hobson Wealth ($3.0b) to be added to theWealth Technologies platform in the coming weeks, which is a key catalyst in our opinion,” the broker said.
“Given its strong balance sheet, diversified revenue streams and defensive qualities NZX remains attractive and we raise our target price to $2.03,” Forsyth Barr said.
Graeme Hart’s US Food packaging manufacturer and distributor Pactiv Evergreen has put in a mixed performance since listing on Nasdaq last month.
The stock was off to a slow start in mid-September, falling to US$10.93 from itsUS$14 initial public offer price, which was well below the expected IPO range of US$18 to US$21 a share.
Pactiv Evergreen rebounded to US$14.41 mid-way through this month, but last traded back down at US$12.79.
The company offered 41.03 million shares in the IPO. Hart, who owns Rank Group, agreed to buy 3.6 million shares for about US$50 million.
The Illinois-based food packaging company raised US$574 million in the IPO and was valued at about US$2.46 billion at the IPO price.
Fourteen banks underwrote the deal, the proceeds of which were to be used to repay debt and for general corporate purposes.
Pactiv Evergreen is big in the US. When consumers there buy a container of fruit at the grocery store or takeaway cup of coffee there’s a good chance that the packaging for them came from Pactiv Evergreen.
Castle Point Funds co-founder Richard Stubbs says current high share prices and markets can be justified by low interest rates.
“Growing companies do particularly well because their cash flow is further out in the future and its value today is more sensitive to interest rates,” he says.
“But this also works in reverse and growing companies’ share prices will be particularly vulnerable when interest rates increase,” he said.
Stubbs rates Eroad and AFT Pharmaceuticals as the NZX’s quiet achievers.
“Both appear to have great management teams, are highly innovative, and are steadily and successfully executing international expansion strategies,” he said.
“Eroad’s growth will be capital intensive as they generally rent their in-vehicle hardware, so we would expect more capital raises over time if they are successful,” he said.
Eroad this week said it remained confident that it would achieve first half revenue between $43.5m -$44.5m and EBITDA between $12.0m -$14.2m.
The company currently expects to report at the upper end of the ranges.
Eroad’s six-month result is due on November 26.
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