Ten days on and Myer has yet to touch its listing price of $4.10, despite a couple of very solid days trading in the market and a not so bad day yesterday.
The overall market is up around 5% in the past week, Myer shares rose 3 cents yesterday to $3.85.
They had closed around $3.76 on the first day of trading.
The trading range since listing has been a high of $3.93 and a low of $3.70 on the first day when millions of shares were dumped by shareholders looking for a fast turn, especially those high up the register.
The second rate rise in two months may not have helped, but consumer confidence remains high and investors confidence seems higher again.
So it shouldn’t come as too much of a surprise that the next float up to list, adventure wear retailer, Kathmandu has pulled up a bit short on the expected offer price.
Kathmandu sold at an underwhelming $1.70 each – the bottom of its indicative price range.
Private equity owners Goldman Sachs JB Were and Quadrant Private Equity will sell all of their stakes in the retailer after the bookbuild.
The company was marketed with an indicative price range of $1.65-$1.90 a share.
Myer’s recent float saw its shares priced at $4.10 each, compared with the indicative price range of $3.90 to $4.90.
The small fall away late last week in the market may have helped, but Monday and Tuesday of this week saw some of the strongest trading in months as investors realised that the banks had shrugged off their bad debt problems and that earnings would be strong in coming periods.
The $10 billion AMP/AXA SA offer for AXA Asia Pacific also helped lift confidence.
But Kathmandu is a specialist retailer, operating in a niche where competition for disposable income is fierce (although with the dollar high, imported product should be falling in cost and there should more Australians looking to travel especially younger people in the backpacker age groups of 18 to 30).
Brokers pointed out that reports that Kathmandu founder and former owner Jan Cameron would launch her own adventurewear chain of shops didn’t help confidence during the marketing period.
At the price of $1.70 the company will raise $335 million for the IPO.
The company has previously said that sales rose from $133 million in 2006-07 to $176 million in 2008-09.
Sales of $197 million have been forecast for the 2009-10 year, with earnings before interest, tax, depreciation and amortisation of $47 million also forecast.
Kathmandu has forecast net profit of $25.3 million for 2009-10, rising to $30.9 million the next year.
It will have a price earnings ratio of 13 to 15 times, the retailing segment of the market has a P/E of just over 14 times, so it is not underpriced.
And, in another blow to the ambitions of some asset owners to use the market to cash in, a big property IPO was pulled late yesterday.
Morgan Stanley abandoned plans to list seven major CBD office blocks, worth an estimated $1 billion, in Investa Property Group.
Despite a road show to sell the idea to big investors, the float couldn’t get acceptance for some of the asset values, according to market reports.
Morgan Stanley offered a suggested price that was 7.5% premium to the value of the assets, which was a big ask seeing rival listed office trusts are still selling at a discount to their asset backing.
