The Costa (ASX:CGC) share price is slipping lower today. Here’s why

The Costa Group Holdings Ltd (ASX: CGC) share price is lower today on news the company has signed a new lease implementation deed.
The post The Costa (ASX:CGC) share price is slipping lower today. Here’s why appeared first on The Motley Fool Australia. –

A women looking surprised with kiwifruit slices on her eyes, indicating share price movement for farming and produce shares

The Costa Group Holdings Ltd (ASX: CGC) share price is slightly down today on news the company has signed a lease implementation deed with Macquarie Infrastructure and Real Assets (MIRA).

At the time of writing, the Costa share price is marginally lower at $4.01, down 0.99%. In comparison, the S&P/ASX 200 Index (ASX: XJO) is also trending lower, trading at 6,695 points, down 0.9% at the time of writing.

Quick take on Costa

Costa is an Australian horticultural company that grows, packs and markets fresh fruit & vegetables. The business operates in three main categories: Produce, Costa Farms and Logistics, and International.

Costa manages more than 4,700 planted hectares of farmland, 30ha of glasshouse facilities and three mushroom growing facilities. In addition, the company has international joint ventures covering six blueberry farms in Morocco and four berry farms in China.

What did Costa announce?

In today’s release, Costa advised that the farms which it leases from Vitalharvest could change ownership to MIRA. The implementation deed will come into effect if MIRA’s takeover bid of Vitalharvest is successful.

This can happen either by MIRA acquiring 100% of the issued units in Vitalharvest via a trust scheme; or acquiring all of the assets from Vitalharvest should the trust scheme not be approved.

Currently, Costa leases 7 farms from Vitalharvest. These include 3 citrus farms in South Australia, and 2 berry farms in each of New South Wales and Tasmania.

The signed lease implementation deed states a fixed rent lease agreement for each of the farms for 20 years. There’s an additional 10-year option should both parties be satisfised with the arrangement during the lease period.

Costa said the rental yields were in line with current market conditions for operating large-scale horticulture assets. Furthermore, the company’s existing contracts with MIRA were relatively on the same terms.

Costa pointed out that the new leases would provide long-term rental certainty for its citrus and berry assets. The current agreement would have seen its fixed and variable rental components up for review in 2026.

About the Costa share price

The Costa share price has been trending higher since the beginning of the year, up 62%. However, when looking at its shares over a 2-year timeframe, the Costa share price is down around 40%.

Costa has a market capitalisation of $1.6 billion.

Where to invest $1,000 right now

When investing expert Scott Phillips has a stock tip, it can pay to listen. After all, the flagship Motley Fool Share Advisor newsletter he has run for more than eight years has provided thousands of paying members with stock picks that have doubled, tripled or even more.*

Scott just revealed what he believes are the five best ASX stocks for investors to buy right now. These stocks are trading at dirt-cheap prices and Scott thinks they are great buys right now.

See The 5 Stocks

*Returns as of June 30th

More reading

Motley Fool contributor Aaron Teboneras has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended COSTA GRP FPO. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

The post The Costa (ASX:CGC) share price is slipping lower today. Here’s why appeared first on The Motley Fool Australia.

Trade The World Anywhere & Anytime!

Mobile app platform with over 50,000 global listed securities across 12 markets (over 70% global market capitalisation), right from your Android or iOS device.

Integrated with exclusive trading idea and investment analysis tools to help you find actionable insight on virtually every financial instrument across our 12 global markets, to help you optimise your trading strategies.

Refer Your Friends

Tell your friends about Monex and gift them FREE access to our trading tools.

We respect your privacy and will only send this one email notification to your friends. 

Share With Your Friends

Share on facebook
Share on twitter
Share on linkedin

Monex Trading Tools Access and Usage Terms

The Monex Trading Tools (referred to as ‘tools’ hereafter) are available to you inside your client portal;

To activate access to the tools, you must have a verified and approved trading account and have made a deposit of at least AUD $1000.

An active and funded account with a positive trading balance is required to continue to have access to the tools;

Although the tools are available to you indefinitely, Monex Securities may at it’s discretion disable access to the tools in the future;

Monex securities reserves the right to change these terms and conditions from time to time, as it sees fit, without notice.

Important Notice
iOS & Android App - 12 International Markets & Over 70% Global Market Cap. $0 Brokerage On US Trades. Click Here!