Azzet reports on three ASX with notable trading updates today.
Johns Lyng Group enters trading halt ahead of expected takeover
Johns Lyng Group (ASX: JLG) has requested a trading halt in the lead up to an expected takeover offer for the property services midcap from Pacific Equity Partners (PEP).
It’s understood that the 57% drop in Johns Lyng Group's share price this year and 37% fall year to date has seen the local private equity group resurface with a takeover offer for what appears to be a compelling value play.
While both Johns Lyng and PEP have declined to comment, the buyout firm is understood to have started lining up its debt funding for the mooted deal.
Talk of a pending takeover follows informal, non-binding offers for Johns Lyng by two global private equity giants, New York-based KKR and Swedish operator EQT last year.
While KKR was the preferred bidder, the deal fell through after the numbers couldn’t be made to stack up.
This time around a deal appears to be in sight with JPMorgan advising Johns Lyng together with Nomura, while PEP has engaged MA Moelis and Goldman Sachs.
While Johns Lyng's share price appears to be languishing, the stock has been in growth-by-acquisition mode for some time.
Last month the group acquired The Beach Hotel in Byron Bay in an offmarket sale for $140 million.
Last year, the group acquired an 87.4% stake in Qld-based insurance building and restoration services business Keystone Group for $44.1 million upfront, 100% of SSKB Strata and 84% of Chill-Rite HVAC.
Previous acquisitions also include Smoke Alarms Australia and Linkfire alongside a $65 million equity raising underwritten by JPMorgan to fund these acquisitions in 2023.
Unless ASX notifies otherwise, Johns Lyng will remain suspended from trading until the earlier of either the commencement of normal trading on Thursday or the release of the announcement to the market.
Johns Lyng Group has a market cap of $719 million; the share price is up 11% in the last month.
Based on Morningstar’s numbers, the stock is trading at a 39% discount to fair value of $4.30.
At the half year the group updated its guidance and now expects total earnings for FY25 to be around $126.5 million, down 4.5% from the previous guidance of $132.5 million, and total FY25 revenue to be $1.167 billion, down 5% from the previous guidance of $1.228 billion.
The stock’s shares appear to be in a strong near-term rally within a longer-term bearish trend.
Consensus is Moderate Buy.
Austal rises on Hanwha announcement
Shares in Austal (ASX: ASB) were up around 6% at midday after Australia’s largest shipbuilder confirmed that South Korea’s Hanwha Group received clearance from the Committee on Foreign Investment in the United States (CFIUS) to potentially increase its shareholding in Austal up to 100%.
Underscoring the significance of this announcement is the power CFIUS has the power to block the flow of any overseas capital into such businesses on national security grounds.
Austal told the market this morning that upon receipt of that advice from Hanwha it has subsequently sought independent verification.
However, based on informal discussions to date, Austal understands that the approval granted by CFIUS may be different from that claimed by Hanwha.
“Austal is seeking written confirmation from CFIUS and will update shareholders on receipt of that information,” Austal said.
Hanwha, which currently holds a 9.9% equity position in Austal - and a further 9.9% economic interest through a cash settled total return swap - has applied to Australia’s Foreign Investment Review Board (FIRB) to increase its equity position in Austal to 19.9%.
Meanwhile, it’s understood that this application is still under FIRB consideration.
“As Austal is an ASX-listed defence company, ultimately FIRB with its recommendation and the Australian Treasurer with his decision will determine the extent of any foreign ownership in Austal,” it said.
Hanwha's original bid to become a major shareholder in Austal occurred in March this year.
In 2024, Hanwha submitted an indicative offer to the Austal board to acquire the global business of Austal, via a scheme of arrangement.
At the time, Minister for Defence, Richard Marles, was previously unconcerned by the prospect of a Hanwha takeover of Austal.
Austal has a market cap of $2.5 billion; the share price is up 153% in one year and up 97% year to date.
The stock appears to be in a strong bullish trend confirmed by multiple indicators.
Consensus is Moderate Buy.
Monash IVF tumbles following another disastrous update
Shares in Monash IVF (ASX: MVF) tanked 23.9% today after yet another IVF embryo incident.
After shedding around half its value in April, following revelations of a Brisbane incident in 2023, the company today disclosed yet another embryo mix-up, incorrectly transferring a patient to its Clayton facility.
The company has apologised for the most recent incident, which occurred on 5 June, and expects it to fall within the scope of its insurance coverage.
The company has told the market that its guidance remained unchanged.
Meanwhile, Monash IVF has appointed Melbourne barrister Fiona McLeod, SC, to investigate the Brisbane incident.
The company also told investors it would put in place more verification checks and safeguards “over and above normal practice and electronic witness systems”.
“Whilst industry-leading electronic witness systems have and are being rolled out across Monash IVF, there remain instances and circumstances whereby manual witnessing is required,” notes Monash IVF.
Unsurprisingly, the company denies any material uptick in the transfer of medical records and human materials to alternative providers.
The share price is currently down over 60% since trading at $1.42 in August last year.
Monash IVF has a market cap of $221 million; its share price was down 26% in the last week.
The stock shares appear to be in a long-term bearish trend confirmed by multiple indicators.
Consensus is Strong Buy.
This article does not constitute financial or product advice. You should consider independent advice before making financial decisions.
