BAO1101 DECISION MAKING IN SHAREMARKET

PART 2c – SHARE MARKET PERFORMANCE

(i) WOOLWORTHS GROUP LIMITED

The share price of WOW has shown the following movement during the tracking period, Monday 1 July to Wednesday 31 July 2019:

The major movements as well as lowest and highest share pries during the tracking period stood as follows:

The movement on July 3, 2019 occurred because of an ASX announcement by Woolworths regarding its agreement with ALE Property Group (ASX: LEP) for the merger of WOW’s Endeavour Drink’s division with Australian Leisure and Hospitality Group (ALH). According to the management of WOW this would eventually lead to the formation of Australia’s largest integrated drinks and hospitality business resulting in leading market positions by the merger entity. Other benefits highlighted in the ASX announcement include strong cashflow positions for future business ventures, attractive and resilient revenue and better earnings profile. This was perceived by the shareholders as highly beneficial for the future of the company and  hence the 2.7% increase in share price which also reflects the synergistic effects of the combined entity and perhaps a value added to the Net Present Value (NVP) of the new project in merged entity and perhaps the realization of the full potential of both the divisions of the companies.

As a part of its efforts to build up a strong, profitable and more sustainable store and distribution center network, WOW announced that it has reached agreements with the landlords to close its 30 stores and distribution centers over next couple of years (Marketscreener, 2019). The average increase over the tracking period also pertains to these announcements.

An article published as Fool.com.au also reported that growth in sales dampened over June at 7% as compared to earlier months of May (8%) and April (11%) and March (13%). Hence Morgan Stanley suggested that the upward movement in share price reflect that the share is overprice without any significant signs of improvement. The 4.6% increase on July 25, 2019 is no supported with any further piece of news that could be found on the internet or elsewhere, and is also not supported with any other ASX announcement. However, as highlighted by Brendon Lau at Fool.com.au, it could be because of the fair expectations resulting from the ongoing capex program at WOW (Fool, 2019).

(ii) BHP GROUP LIMITED

The share price of WOW has shown the following movement during the tracking period, Monday 1 July to Wednesday 31 July 2019:

The major movements as well as lowest and highest share prices during the tracking period stood as follows: