Once again the Punter is pondering the value of voluminous and repetitive documents required to enable a company to trade on the stock market. Murray River Organics (ASX code MRG) was floated on the bourse in December. Experts priced the shares at $1.36 – it is, after all the world’s biggest integrated organic dried vine fruit company, covering the whole business, from soil to supermarket shelf.
The forecast was for profits to virtually double, to $6 million, in the year to June. But they crashed to a loss of $6.6 million and eight months after the initial float, MRG had to raise another $12 million, selling shares at a mere 30 cents. Hardly surprising then, at last week’s annual meeting, shareholders voted against every resolution except to give retrospective approval to the August share offer. The directors must now find a new non-executive director and new auditors, and take a hard look at how much they pay themselves. It is also possible that BLBD Pty and Meredith nominees, who between them control more than 5 per cent of the shares, will renew their attempt to replace some or all remaining directors. The Punter, with more than a streak of speculative vulture, has bought 5000 MRG at 45c. It’s partly a gamble on August’s management revamp, and in particular on George Haggar, who took over as chief executive earlier in November.
Haggar comes to Murray Organics from the Costa Group, after eight years as chief operating officer. Costa (ASX code CRG) has much in common with Murray Organics, one dealing with fresh fruit and vegetables, the other in the dried trade. One key difference, however, is that Costa has been a winner for investors, rising steadily from around $2 when it first came to market in 2015, to about $6.50 now. While MRG has gone from $1.36 to 45c this year, the CRG price has doubled. Hopefully Haggar will bring some Costa magic to Murray.
- The Punter has no financial qualifications and no links to the financial services industry. He owns shares in a number of companies featured in this column.