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Everything you need to know about Kogan’s share purchase plan

Hand of a stock broker analysing line graph on computer screen

Stock chart.

The Australian retailer is offering stocks at a discount of 13% until July.

Kogan is well-known for its bargain price consumer goods – now its shareholders are getting their own sale.

The retailer and recent ASX favourite this week announced a share purchase plan (SPP) for regular investors at a price of $11.45 per share, a 13% discount to Friday's closing price (12 June).

The offer is only open to Australian and New Zealand Kogan shareholders and you must have already held shares as of the 9 June 2020.

Up to $15 million of new shares is being offered and each shareholder can purchase up to $30,000 worth. However, it's up to Kogan's discretion if they choose to increase that allocation later.

If you're interested in investing in the SPP, the offer opens from 18 June and you'll have until 3 July to apply. Further application details are being emailed to eligible shareholders, though in most cases investors will need to apply directly through the company or to the share registry (Kogan's is Computershare).

Key dates:

  • SPP record date: 9 June 2020 (must have owned KGN shares on this date)
  • SPP offer opens: 18 June 2020
  • SPP closing date: 3 July 2020
  • Issue date for SPP shares: 10 July 2020

The SPP follows its $100 million capital raise to institutional investors, which was completed Thursday 11 June.

Is the SPP a good deal?

It's tough to say where Kogan's share price will be in 12 months time, however its price rally during COVID-19 has been extraordinary.

In the last 3 months, KGN stock has risen by 235%, making it one of the most successful ASX stocks of 2020.

An online shopping boom during lockdown, especially of electronic and home office equipment, has resulted in Kogan sales doubling during April and May, according to its founder Ruslan Kogan. Kogan told investors the uplift has allowed the company to take advantage of new growth opportunities in retail shopping.

While investors were optimistic about the news, the major brokers appear less certain.

Credit Suisse and UBS delivered neutral ratings following Kogan's SPP and capital raising announcement this week.

Credit Suisse has a target share price of $11.72, while UBS is targeting $12.10, sitting neatly between its SPP price and this week's closing price of $13.15.

A price target is an analyst's prediction of a stock's future price, typically within 12-18 months, so the brokers are expecting a slight drop over the next year.

There's much uncertainty in the markets this year. The sudden need for online shopping has given a boost to some retailers, but it's unclear how long this trend will last.

And with Australia and the US entering a recession, many analysts believe the stock market is over-priced and due for another correction.

August will be a key month to watch as this is when most companies (including Kogan) release their annual profit results. Until then, as analysts say, "the outlook is uncertain".

Kogan offers a fully franked dividend with an annual average yield of 3% (2019) which has been steadily climbing since it listed in 2016.

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