Vita Group (ASX:VTG)
Former market darling Vita Group (ASX:VTG), the Telstra retailer, surprised investors once more with an earnings downgrade and the reworking of the commercial relationship with Telstra. The stock dropped 30% on Thursday. Remuneration changes from earlier this financial year were only partly offset with new store additions: guidance for the current year implies a poor second half and a 20% downgrade for next financial year. Meanwhile the widely publicised pressure on Telstra in the mobility market has forced a rethink of remuneration for partners like Vita; another uncertainty for investors to consider. Glennon Capital does not own VTG in the portfolio.
On Thursday GrainCorp (ASX:GNC) announced a strong set of first half (to March) numbers and the stock rose 8%. A large east coast crop helped the business’s storage and logistics segment deliver earnings before interest, taxation, depreciation and amortisation of $113m, up from $28m last year. This places GrainCorp in a position to be at the top end of their guidance range for this financial year, despite dealing with a $10m hit from an industrial dispute at their Victorian rail operator. Glennon Capital does not own GNC in the portfolio.
Another disaster this week was Quintis (ASX:QIN), the old TFS Corporation, a sandalwood plantation business. The stock dropped 44% on Wednesday followed by another fall of 23% on Thursday. The latest problems stemmed from a failure to alert the board and investors that a high profile contract was terminated back in December. In March short seller Glaucus released a report valuing the equity of QIN at zero, stating it had concerns about the business model, Ponzi-like marketing, and phantom product buyers. Then founder and managing director Frank Wilson resigned from the business. Glennon Capital does not own QIN in the portfolio.
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