Investment Matters

Company News: United Malt, Regis Healthcare and others

Australian Equities Portfolio

United Malt Group (neutral impact) was a notable performer over the week after releasing its full-year result.

Profit was ahead of expectations, with Warehouse and Distribution performing better than expected. The company noted that craft brewers have found innovative ways to continue serving their customers (take away containers, outdoor seating etc) which has supported sales. However, sales volumes remain below normal levels (-10%) as ‘on-premise’ consumption continues to be impacted.

Our initial investment was made on the assumption that the company’s share price had priced little in the way of future growth and carried a significant COVID discount. Despite the uncertainty surrounding the pandemic and its continuing impact on sales, its result indicates sales have been more resilient than anticipated.

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Regis Healthcare (positive impact) received an opportunistic, non-binding indicative takeover offer from WH Soul Pattinson (WHSP) late on Thursday, which sent its share price 20% higher. The offer is for a consideration of $1.85, which represents a 25% premium to the closing share price on Thursday.

The proposal allows shareholders to receive a consideration of either cash or shares (scrip) in the proposed privatised entity. However, early today, the board rejected the proposal given it significantly undervalues the company’s medium to long term prospects.

There is a possibility a higher bid may materialize in the future. Regardless, we see the news a positive as it draws attention to the unappreciated value we see in the company.

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Property sub-portfolio

Centuria Industrial REIT (CIP) (neutral impact) announced it will raise $125m of equity to purchase three cold storage assets for a consideration of $171.1m.
All three assets are under long term leases – with an average WALE (weighted average lease expiry) of 6.4 years and will be purchased at a cap rate of 5.43%.
We participated in the placement on clients’ behalves – which was conducted at a small discount to the last traded price.

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Eildon Capital (positive impact) completed the internalisation of its investment management functions (the purchasing of its investment manager – a separate entity). We supported the decision which will provide the company (which continues to trade at a material discount to its assets) with a platform for future income growth through management fees (being the manager of several other real estate entities), as well as future asset growth.