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Lifestyle clothing and accessories company Merino & Co (ASX: MNC) has blamed investor exuberance for a massive spike in its shares after listing on the ASX last week.
In a brief statement to the ASX following a ‘please explain’ issued by the securities exchange, the Perth-based company says it is not aware of any reason why the company’s 20c share price shot to a high of $1.50 on Tuesday this week.
The shares, which closed at 23.5c on their ASX debut on 30 October 2024, galloped ahead over four subsequent trading days before the ASX sought a pause in trading on 5 November 2024 – with the shares last trading at $1.45 on that day.
“The company can only speculate that the increase in price is as a result of positive press exposure following its successful listing on ASX, which has raised its profile,” says Merino & Co.
Related story: Riding on the sheep’s back, Merino & Co makes a strong debut on the ASX
Today’s response led to an immediate pullback in the Merino & Co share price once they resumed trading today.
The shares were trading at 64c – down 81c or 55.8 per cent – at 10.33am (AEDT).
Merino & Co issued 31.77 million shares at 20c each in its IPO to raise $6.35 million, initially capitalising the company at $14.75 million.
Founded by Fiona Yue and Tim Kang, a couple who were seasoned cashmere producers in Inner Mongolia before emigrating to Australia, Merino & Co is one of the few merino apparel brands that manufactures in Australia.
The vertically integrated company is involved in the manufacture, marketing and sale of wool products through more than 600 points of sale in Australia.
Established in 2013 as Aclink International, a wool clothing and accessories business that largely focused on the local market, the company rebranded as Merino & Co in 2020. The move followed Aclink’s purchase of NSW-based Australian Wool Network’s Merino & Co and MerinoSnug businesses.
Among the key business priorities following the ASX listing is for Merino & Co to redevelop its website and e-commerce platform to make it more user friendly and drive more direct-to-consumer sales.
The company is also exploring new product development which it says is essential for the constant evolution of its offering, while also expanding its Perth manufacturing facility through the addition of highly automated woven loom machines.
The surge in the company’s share price since listing is not backed by positive financial forecasts as the company did not present any targets for the current year in its prospectus.
Merino & Co reported revenue of $5.5 million in FY24, down from $7.5 million a year earlier, leading to a net profit of $137,256 for the year.
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