Thoughts on CGC and SIQ please?

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Question asked 26/08/2023

Thoughts on CGC and SIQ please?

Hi MM Team Once again Costa disappoints! - How likely do you think the takeover will go ahead and if so would it be at a lower price? Not long ago - "Costa Group (CGC) +12.08% rallied on a private equity takeover tilt lobbed at $3.50 per share" SIQ - Smart group rallied prior to reporting and has been on your hitlist. The results were not liked by the market. Has it been overdone? The day before salary packaging and novated leasing services company McMillan Shakespeare (MMS) soared 13.03% to an all-time high of $22.03 which also lifted SIQ - but the day after it has tumbled as well. Confused??? Has this sector been re-rated?? regards Debbie

Answer

Hi Debbie,

Costa Group (CGC) $2.92 – This week saw CGC tumble on softening demand and a results delay which came as a shock/concern to many as they consider the companies fall from grace over the last 5 years. The news certainly cast further doubt over Julys takeover bid of $3.50 but we believe its more about price with Paine appearing pretty keen on CGC considering their involvement/holding in the company – the risk-reward looks excellent near Thursday’s ~$2.70 low but not so much around $3.

Smart Group (SIQ) – The car leasing stock has endured an extremely volatile week after rallying into Thursday’s result before tumbling over 10% after its 1H EBITDA declined on higher operating costs i.e. the devils in the detail. We are currently neutral on the stock.

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Costa Group Holdings Ltd (CGC)

LAST UPDATED 25/08/2023 11:36

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