Why the Brambles Share Price Fell 1.10% this Morning

Stocks sell off, valuation

The share value of Bramble Limited [ASX:BXB] fell 1% today shortly after the market opened. From there shares bounced slightly, before falling again. As of time of writing, shares are down 1.1%.

This comes as the company announced the issue of 521,177 new shares, as part of its employee share plan and employee performance share plan.

Shares had generally been on the rise this year, until now.

Brambles Limited is a massive Business services company, which provides supply-chain logistics solutions.

Their market cap is valued at $15.55 billion, and they currently have 14,000 full time employees.

As of February 2018, Brambles owns 590 million pallets, crates and containers through a network of hundreds of service centres.

Accelerating growth in digital arm investment

Brambles is planning to further invest millions into a digital arm that was set up last year.

The arm itself, is being developed by tech developers BXB Digital, who specialise in applying technology to collect data intro various services and track goods.

This act is nothing out of the ordinary for Brambles. Despite being well known for its iconic blue-chip pallets, harbouring a strong technology aspect isn’t out of the company’s character.

The digital arm had very few resources to work with during its start-up year period. However, it quickly shot up by millions in 2017.

Now it will gain an even larger budget for this year. Brambles wants to throw in an extra US$7 million making its total investment pot to $21.4 million Australian dollars.

Selling business branch

This year Brambles announced that it had entered an agreement to sell its recycled whitewood pallet business, CHEP recycled for an enterprise value of US$115 million.

Last month Brambles announced that the completion of the sale took place in New York City.

The sale was in line carrying the over all value of the CHEP Recycled business. The cash inflow will be fully reported when Brambles releases its full-year results for the financial year in 2018 during the month of August.

Where to from here for Brambles?

With the share price falling in the immediate aftermath of this morning’s announcement, it’s possible that shareholders were simply reacting to the dilution of their shares. While a 1% drop is quite a large move for such a massive company, in the absence of any bad news, Brambles may soon resume its recent steady growth.

Regards,

Harje Ronngard,
Editor, Money Morning

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