Yovich & Co. Market Update - 13 May 2020

May 12, 2020 | Commentary

13 May 2020

From 11.59pm 13 May New Zealand will be at alert level 2, and we will be progressively moving back to the office when practically possible. COVID-19 has not affected any services Yovich & Co provide and remember to keep up with social distancing, stay safe and shop local.

New Zealand Equities

2020 05 8 market

 

In summary, last week the NZ50G saw 21 companies on the downside, 1 remained unchanged and 28 on the upside. On 14 May, Grant Robertson will announce the governments finance budget, key points to look at are: plans to reduce unemployment and support for the unemployed, support for Small to Medium Enterprise (SME) and the amount of money the government is willing to borrow, current net debt to GDP sits at 21%. One key indicator that investors look at is the unemployment rate. This link provides government expectations in different scenarios: https://treasury.govt.nz/publications/tr/treasury-report-t2020-973-economic-scenarios-13-april-2020-html#section-7. As investors try to navigate the post COVID-19 world, Yovich & Co are advising that if clients’ goals and time frame have not changed then to stay the investment course. If at all concerned please contact your adviser.

2020 05 13  movers

 

Investment News

Pushpay Holdings

Provides a donor management system, including donor tools, finance tools and a custom community app, to the faith sector, non-profit organisations and education providers in the US, Canada, Australia and New Zealand. Pushpay's leading solutions simplify engagement, payments and administration, enabling customers to increase participation and build stronger relationships with their communities. Tax paid profit for the FY2020 was down 15% at US$16m from US$18.8. The previous financial year included one-time benefit items contributing to a net gain of US$18.8m. Pre tax profit for the FY2020 was up at $21.7m from a loss of US$1.4m. Operating income up 33% at UD$127.5m form US$95.9m, operating cash flow up at US$23.5m from –US$2.8m. Total customers up 42% at 10,896 from 7,649, total processing volumes up 39% at US$5b from US$3.6b. There is an increased demand for Pushpay services as more donations are processed via the app due to COVID-19. Current Share Price: $6.54.

Spark

Has announced that it has secured management rights for 5G spectrum that will allow services to start in several cities and regions over the next year. Spark CEO Jolie Hodson said the allocation enables a significant investment in 5G infrastructure across the country over the coming year, which will play a critical role in New Zealand’s response to and recovery from Covid-19. Work done for Spark by NERA Economic Consulting estimates that the rollout of 5G in New Zealand could add between $5.7 billion and $8.9 billion per year to the New Zealand economy over the next 10 years. Current Share Price: $4.69, Price/NTA: 21.32, EPS: $0.23, Gross dividend yield: 6.89%.

 

Z Energy

Plans to raise $360m through an underwritten placement of $290m and a Share Purchase Plan (SPP) of $60m. A successful under underwritten placement of 100 million new shares at $2.90 per share was completed on 11 May, representing a discount of 7.6% to the last close price of $3.14 on 8 May. The SPP of $60m is open to Z Energy shareholders as of 5pm 8 May 2020. The SPP allows these eligible shareholders to purchase up to NZ$50,000. The price being be the lower of the Placement share price of $2.90 or a 2.5% discount to the 5-day VWAP of Z shares traded on the NZX during the last 5 days of the SPP offer period. Offer opens and offer booklet to be dispatched 15 May. Current Share Price: $3.17.

The Warehouse Group

Has announced third quarter sales ending 26 April 2020 down 17.9% at $586.3m.

By sector:

·         The Warehouse sales down, 23.0% at $297.3m

·         Warehouse Stationery lower by 9.8% at $64.5m

·         Noel Leeming shrunk 10.9% at $193.5m

·         Torpedo7 less, 18.3% at $32m

Prior to COVID-19, up to 25 March sales were up 18.8%. The group has extended total banking facilities by $150m to total $330m. Currently the additional banking facilities are undrawn and allow for the redemption of Group’s NZX listed bond of $125m that matures in June. Online sales represented 15.9%, $93m of total sales for the quarter (+74.8% vs pcp). Pre-crisis, 8% of sales were made online. Net debt levels remain $102m, up from $68.6m at the start of 2H20. Current Share Price: $2.18, Price/NTA: 3.26, EPS: 17.15.

Macquarie Group

Tax paid profit for year ending 31 March 2020 was down 8% at A$2,731m, partly due to credit and other impairment charges of $A1,040m, up from $A552m primarily related to the potential economic impacts of the COVID-19 pandemic. Assets under management up 10% at A$606.9b. There are multiple headwinds in the near term; these are transaction volumes, asset realisations, performance fees and the potential for further impairments. Headwinds should dissipate towards mid 2020.  Final dividend payment of A$1.80 per share, with a dividend date of 18 May and payable 3 July, brings total full year dividend to A$4.30 per share. Current Share Price: $106.76, Price/NTA: 2.13, EPS: $7.91, Gross dividend yield: 5.72%.

 

 

Disclaimer: This publication has been prepared for your general information. While all care has been taken in the preparation of this publication, no warranty is given as to the accuracy of the information and no responsibility is taken for any errors or omissions. This publication does not constitute financial or insurance product advice. It may not be relevant to individual circumstances. Nothing in this publication is, or should be taken as, an offer, invitation, or recommendation to buy, sell, or retain any investment in or make any deposit with any person. You should seek professional advice before taking any action in relation to the matters dealt within this publication. No part of this publication may be reproduced without prior written permission from our company. Disclosure statements relating to the financial advisers associated with this newsletter are available on request and free of charge. 

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Nathanael McDonald



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