Frozen water battering its citrus trees in an unseasonal manner is the latest worry for the Costa Group (ASX code CGC).
Three of its four farms in SA's Riverland were hit by a severe hailstorm on November 5. In view of the fact that the company is currently urging shareholders to give it more money, Costa felt obliged to spell out a preliminary assessment of the storm's impact. Although only about a third of the farms' area was affected, the bottom line could be a drop of $3-$4 million drop in net profit - between 5-7 per cent.
With the harvest already completed, most of the damage was to the fruitlets, most of which will fall off anyway. The fear is that there may be some impact on the quality of the eventual harvest.
However, the company is not changing its overall profit forecast, mainly because the estimate is very preliminary, and partly because improvements in other parts of the business may offset any loss of revenue.
The news had little impact on the share price, which remains nicely above the price of the current share offer. Under that offer, the Punter is entitled to buy up to 125 shares at $2.20 each. With the shares selling on the market for about $2.75, and the offer closing on Monday, November 18, he has decided to take up his entitlement in full. It will cut the average cost of his CGC holding to $3.704 a share. He is hoping the company is right in thinking that its woes are largely cyclical.
In the meantime, he has decided after all to sell his CropLogic (CLI) while he is still showing a small profit. He will keep them on his watchlist but is a bit concerned that growing hemp, rather than its crop monitoring technology, is becoming the company's main focus.
Drought, Brexit and the China/US trade war hasn't managed to dent Australian Vintage shares. The Punter has given up hope of buying them at 41c, but he will keep them on his watchlist.
- 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.