The stapled securities of former Toll holdings associate, Asciano Group were put in a trading halt yesterday morning after a sharp plunge on the back of some seemingly well informed trading.
The securities shed nearly 60% in value in early trading.
The securities opened at $1.28 and quickly fell to a low of 63.5c, before rising slightly to 69c when the halt was granted at 10.42 am.
They were down 59% at that stage.
The company asked for the halt until today, but didn’t elaborate.
Then just before 6 pm chairman, Tim Poole issued a three page letter to securityholders.
In it he was confident.
He attempted to quell the panic among its investors, denying rumours it was about to launch a capital raising. It also reiterated its forecast of a 24c to 30c per security distribution for the 2008-09 financial year.
"Asciano is not currently contemplating an ordinary equity raising, and has not approached or appointed any advisers in respect of such a capital raising," Asciano chairman Tim Poole said in the letter.
The suspension came after the ASX queried the sharp fall.In its reply to the query the company made it clear it knew nothing why the security price should fall so sharply.
The fact that there was a fall before is a disgrace and raises questions about the flow of information.
For 42 minutes the market traded uninformed and the shares plunged: more than 6.1 million shares were traded in that time.
It’s not the first time there has been some well informed trading in these securities. The shares had a strong run up earlier this year when private equity group TPG first appeared on the scene.
Asciano is the country’s major port operator containing much of the businesses of Patrick, which Toll took over several years ago.
US private equity group TPG and another investor have been sniffing around the company off and on for the past three months. TPG made a half hearted $2.9 billion offer and then renewed its interest.
One explanation for the sharp, unexplained fall is that TPG has walked.
Asciano shares fell 12% on Monday and a week ago were at $2.11.
Their all-time high was at $11.64 in June last year, just after the split from Toll in a demerger.
The trading halt came at Asciano’s request, pending its response to an ASX price query.
Citigroup slashed its price target to 82c from $6.08 yesterday in a note to clients called "a crisis of confidence".
In the report the broker called the stock "worthless" and said a takeover is unlikely.
"The uncertainty around the timing and the delivery of AIO’s monetisation program means that the share price volatility is likely to remain high in the near term.
"Together with recent 30% drop in global multiples for Ports and Rail businesses to c7x EV/ EBITDA, we advise investors to cut their losses and pull our stock rating to Sell (from Buy) with a lower TP at 9x to $0.82ps (from $6.08ps). At 7x, the stock is worthless.
"A takeover without the support of the Board and CEO’s blocking stake is unlikely," Citi wrote in the report.
Shares in Sydney based women’s clothing retailer, Speciality Fashion Group (SFH) shook off a monstering from analysts at Credit Suisse yesterday.
The shares rose half a cent to 30c, 2c above the all time low of 28c, and then fell 1c in late trading to 28.5c.
CS retail analysts revised their forecasts for SFH, cutting earnings estimates for the next three years.
"Comparable sales growth is negative and inventory is accumulating.
"The business is highly geared and under-capitalised following an 18 month on-market buyback.
"Based on industry feedback, we have revised our forecast earnings.
"The net impact to EPS is -27% in FY09, -30% in FY10 and -20% in FY11.
"This reflects our expectation for comp sales growth of -5% and a 180bps fall in EBIT margins to 5%. We have forecast only a moderate improvement in FY10."
CS cut its target share price from $1.00 to $0.30 following the earnings revisions.
"Specifically, SFH’s current level of gearing and the impact of margin contraction on future gearing suggest the stock should trade at a significant discount to the market multiple."
SFH competes in the same area as the smaller Sydney based retailer, Noni B does. Noni B abandoned its 2008 earnings forecast last month.
