DomaCom and Ingham shares take flight on ASX

Australia’s biggest chicken meat production and processing business Ingham Group’s shares eventually climbed after struggling to take flight on Monday.

Former family-owned Ingham’s was initially expected to be listed for as much as $4.14 a share, but its recent owner, US private equity firm TPG, ended up floating 53 per cent of its stake for $3.15 and netting $440.2 million.

The price dropped further to $3.10 before recovering to highs around $3.30 on Tuesday.

New hopeful in the rural property market, the crowdfunding investor, DomaCom, saw its shares slip to 37 cents each on Tuesday after making its ASX debut at up to 41c.

DomaCom’s unusual fractional property investment model has gained attention in the past year after the company made an eleventh hour attempt to join the initial sale process for S. Kidman and Company’s outback pastoral estate late in 2015.

Meanwhile, another relative newcomer to the ASX, A2 Milk saw its shares lift about eight per cent early this week to $1.87 after reporting continuing strong demand from China.

A2 Milk shares peaked above $2 each in August, but have been struggling to keep the momentum which saw the company’s popularity shoot up late last year, mirroring a similar leap at the time by another dairy company vying for the Asian nutrition market, Bega Cheese.  

Share market analysts said while Ingham Group was a major player in the poultry meat sector, chicken was a “mature” staple food market and the revamped business would need to deliver significant productivity gains and cost cutting to achieve the growth targets it talked about leading up to its float.

Ingham supplies 40 per cent of Australia’s chicken market, with its customers including fast food chain KFC, and the Woolworths and Aldi supermarket chains.

Forager Funds Management analyst, Daniel Mueller, warned investors could risk a similar fate suffered by exposure to other large food sector suppliers such as Goodman Fielder or Patties Foods, which had been squeezed by their deep exposure to the tough supermarket industry.

"When you have a commoditised product, dealing with powerful customers is not a recipe for earnings growth,” he told clients.

“It's a recipe for wealth destruction.”

Ingham's chief executive, Mick McMahon, has rejected the critics saying some commentators misunderstood the value of vertically integrated farming, processing and marketing enterprise.

He said big global investment funds had joined the company’s share register.

“That's what is important to me and the business ultimately because we want access to the capital markets to continue to grow and develop the business over time," he said.

The DomaCom managed investment scheme (MIS) group has been primarily involved in buying commercial real estate and residential apartment investments on behalf of small investors whose funds were raised via crowdfunding campaigns.

After bowing out of the Kidman race last month it re-set its rural property sights on buying smaller, but still sizeable, rural properties in Queensland and Victoria, with the view to leasing the land back to the farming operators.

It has lately raised about 32pc of the bookbuild required to purchase of a majority stake in cattle station “Pajingo”, near Charters Towers in North Queensland.

DomaCom’s Kidman foray proved it could rally small shareholders together to give ordinary Australians a chance to take ownership of the iconic 10.1 million hectare pastoral business and its 185,000-strong beef herd.

However, while its Kidman estate ambitions received public pledges of financial support worth about $80m, most investors held back contributing to the fund waiting to see if any big superannuation group would chip in.

Chief executive officer, Arthur Naoumidis, said the company had raised $7.33m from more than 500 new investors for its initial public offering on the ASX, giving it a total shareholder base of more than 700 at the start of the week.

“We have completed 24 bookbuilds for properties in Victoria, NSW, Queensland, South Australia and Western Australia, with another 59 bookbuilds in the pipeline,” he said.

“In addition to these bookbuilds we have launched public crowdfunding campaigns for The Block apartments and (the 32,000ha) `Pajingo’.”

He said The DomaCom Fund was now on the approved product list of 41 Australian Financial Service Licensees spanning more than 1200 independent financial advisers.

Mr Naoumidis said controlled asset allocation to real property was a reality in Australia and overseas, and being structured as a registered MIS brought the asset class within the financial planners’ purview, potentially increasing the advisors’ client reach, their sphere of influence and funds under management revenue.

The DomaCom Fund enables investors to select properties in which they would like to invest.

Via a bookbuild process, investors can commit as much as they wish towards the eventual purchase of a property in partnership with other like-minded contributors.