DGL (ASX:DGL) share price down despite positive update

The chemical company has some positive news about a new facility.
The post DGL (ASX:DGL) share price down despite positive update appeared first on The Motley Fool Australia. –

The DGL Group Ltd (ASX: DGL) share price is edging lower in mid-morning trade on Monday. At the time of writing, the DGL share price was trading at $1.18, down 1.67%.

This follows the chemical company’s latest announcement to expand its geographic footprint.

What did DGL announce?

According to its latest announcement, DGL is seeking to expand operations with a chemical warehousing, distribution and manufacturing facility. The site will store 5,000 tonnes of chemicals, taking DGL’s total capacity to 133,000 tonnes across Australia and New Zealand.

Located in Irongate, an industrial zone in Hawke’s Bay, New Zealand, the plant will aim to capture new customers. The site is situated close to major roads and to Napier Port, offering significant logistical advantages.

DGL is expected to spend around NZ$5 million (A$4.63 million) for construction of the new warehouse. This will be funded from the proceeds of the company’s Initial Public Offering (IPO).

Local consulting engineers, Strata Group is in discussions to design the new facility. DGL noted that the Strata Group has been involved in several projects within the Irongate industrial area.

The contract phase of the contract will be tendered in the last quarter of the 2021 calendar year.

What did management say?

DGL founder and CEO, Simon Henry commented on the company’s near-term plan, saying:

This new facility further expands our footprint in New Zealand where we see ample opportunity for organic growth. Ensuring we have the right facilities, in key industrial areas across Australian and New Zealand, with proximity to customers, is and will continue to be a key priority for our business.

We are assessing sites strategically, based on existing assets and customer demand. After identifying that there are no purpose-built chemical storage facilities in the Hawke’s Bay region, we saw a significant opportunity for DGL. The region is an industrial hub, renowned for its agriculture and forestry, and has a need for agriculture chemical formulations. We are well advanced in our discussions with new and existing customers for the utilisation of the facility.

About the DGL share price

Since listing on the ASX boards in late May for the price of $1, DGL shares have gained 20%.

DGL has a market capitalisation of roughly $308 million, with 257 million shares listed on its registry.

The post DGL (ASX:DGL) share price down despite positive update appeared first on The Motley Fool Australia.

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Motley Fool contributor Aaron Teboneras has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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