What Happened to Orica’s Share Price?
Shares in explosives and chemicals maker Orica Ltd [ASX:ORI] fell by more than 3% today. It’s been a tough few weeks for the company, whose shares have slumped by nearly 9% since late July.
Why Did This Happen to ORI Shares?
This morning Orica announced its intention to spin off its chemicals division, by either demerger or sale. The company will seek to focus on its core mining services business.
This seems opportunistic of Orica, which has fielded a number of unsolicited enquiries about its chemicals business from private equity and global strategic buyers.
The market has reacted cautiously to Orica’s attempt to ‘double down’ on mining services. That’s why the shares have faltered in today’s trading.
What Now for Orica Ltd?
There is certainly scope here for investors to reap rewards. Orica has solid form when it comes to spinoffs — its demerger of Dulux Paints in 2010 rewarded investors handsomely.
Free Reports:
Get Our Free Metatrader 4 Indicators - Put Our Free MetaTrader 4 Custom Indicators on your charts when you join our Weekly Newsletter
Get our Weekly Commitment of Traders Reports - See where the biggest traders (Hedge Funds and Commercial Hedgers) are positioned in the futures markets on a weekly basis.
Mining companies will always need explosives…even more so if they want to work existing mines harder. That should guarantee demand for Orica’s products into the future.
Any cyclical upswing in commodity markets would bode well for this stock. More immediately, if a buyer lobs a great bid for Orica’s chemicals business, investors who buy the stock on this dip should enjoy the benefits.
In any case, you’ll be paid a fully-franked dividend yield of nearly 5% to own the shares until mining services sentiment improves.
Cheers, Tim Dohrmann+
Small-Cap Analyst, Australian Small-Cap Investigator
Join Money Morning on Google+
The post Why the Orica Ltd Share Price Slumped Today appeared first on Stock Market News, Finance and Investments | Money Morning Australia.
