Yovich & Co. Market Update - 3 June 2020
Jun 3, 2020 | Commentary
New Zealand Equities
In summary, last week the NZ50G saw 18 companies on the downside, 3 remained unchanged and 29 on the upside. Last week the market increased four out of the five trading days ending the week up 2.06%. Markets in America are still strengthening even with the ongoing riots. The NZD/USD has appreciated, to levels not seen since early March, reaching 0.6307 intraday on 2 June. The ANZ NZ Consumer Confidence survey bounced 12 points to 97.3, well below the pre lockdown range of 110 -120. The Confidence Composite gauge (combines business expectations and intentions with overall consumer sentiment), an economic leading indicator dropped to -4% in the depths of lockdown. This is lower than levels in GFC where it reached mid -3%. As investors try to navigate the post COVID-19 world, Yovich & Co are advising clients that if their goals and time frames have not changed then to stay the investment course. If at all concerned please contact your adviser.
Tax paid profit for the FY2020 ending 31 March was up 4.9% at $147.98m, revenue up 4.8% at $3.095b, EBITA up 55.1% at $398.67m. Current debt facilities total $499 million, of which $235 million remains undrawn. Net debt at 31 March 2020, was $157.38 million, up from $130.48 million at 31 March 2019, an increase of $26.90 million. Gearing ratios remained consistent at 14.0% (13.5% at 31 March 2019). As at 30 April debt has reduced to $132m. Mainfreight is estimating that the combination of China close-down and COVID-19 impact (Jan-Mar 2020) drove a NZ$22mn reduction in revenue and NZ$6mn lower EBITDA. A final gross dividend of 47.22 cents with an ex-dividend date 9 July is payable 17 July. This brings total gross dividend to 81.94 cents. Current Share Price: $39.96, Price/NTA: 5.47, EPS: $1.58, PE ratio: 25.28, Gross dividend yield: 2.05%, Target Price: $37.50, Rating: Neutral.
Tax paid profit for the 1H 2020 ending 31 March 2020 is up at $12.8m from $9.2m, revenue rose 7.5% to $52.3m from $48.7m, container volumes up 7.5% to 135,000 total equivalent units (TEU). Bulk cargo volumes are lower by 7.3%, due to Chinese log market condition and the early impact of COVID-19. Pre COVID-19 cruise services revenue was up 22.5% to $4.2m. Full year earnings guidance is expected to be out in August. Current Share Price: $3.49, Price/NTA: 2.03, EPS: $0.03, PE ratio: 101.75, Target Price: $3.38, Rating: Neutral.
Share purchase plan (SPP) of AU$2m allows shareholders as of record date 28 May 2020 to purchase up to NZ$32,200 (AU$30,000) at 42 cents per share. Opening date is 2 June closing date 18 June. Proceeds from the capital raise will be used for growth opportunities in Australia and New Zealand, general working capital and debt repayment. Current Share Price: $0.54.
Tax paid profit for 1H2020 was down 16.8% at $19m, total revenue was down 7.4% at $245.5m, EBIT/kg was down 11 cents at 46 cents. Sanford’s diversified portfolio into King salmon and Greenshell mussel has partially offset the poorer than expected numbers in wild catch. After excluding pelagics, (the divested Tauranga-based mackerel and tuna business), overall sales volume was down 3% and sales revenue down 4%. Revenue in the Greenshell mussel division increased 13% and sales volume by 5%. Sanford’s King salmon division saw revenue and sales volume increase 6%, 2% respectively. An interim gross dividend with an ex-dividend 11 June of 6.94 cents is payable 19 June. Current Share Price: $6.91, Price/NTA: 7.24, EPS: $0.40, PE ratio: 17.07, Gross dividend yield: 4.62, Target Price: $7.94, Rating: Outperform.
Tax paid profit for the FH2020 year ending 31 March was down 28.8% at $42.6m due to change in fair value of investment property. Underlying profit was up 33.8% at $51,6m, a reflection of continued high care occupancy, a higher volume of resales and new resales, and eight months of contributions from the three villages acquired during the year. Resales of occupation rights in FY2020 set a record, surpassing $100 million. The total value of assets for the group grew to $1.9 billion at 31 March 2020, up $607 million from the start of the 2020 financial year, net tangible assets per share grew from $1.20 to $1.27. Arvida has grown to encompass a portfolio of 2,475 retirement units and 1,688 aged care beds spread nationally across 32 retirement communities. Gearing at 30% is at the midpoint of the Board’s target range. Gross full year dividend increased by 8.4% to 5.80 cents from 5.35 cents. Current Share Price: $1.38, Price/NTA: 1.09, EPS: $0.08, PE ratio: 16.47, Target Price: $1.35, Rating: Neutral.
Has announced a $50m equity raise. An institutional placement of $20m, and a 1 for 4.15 pro-rata accelerated non-renounceable entitlement offer (“ANREO”) to raise approximately $30 million. Share offer price is set at $2.50, a 27% discount to the theoretical ex-rights price (TERP) of $3.43. Eligible shareholders as of record date 29 May 2020 are entitled to apply for additional new shares in excess of their entitlement, up to a maximum of 100% over their pro-rata entitlement. The capital will be used to pay down debt, therefore reducing net debt to EBITA from 3.6x to 0.9x. Current Share Price: $3.44, Price/NTA: 1.56.
Share purchase plan (SPP) of NZ$148.1m opened 27 May and closes 5pm (NZST) 9 June 2020. Shareholders on Sky’s share register as of 7pm (NZST) 25 May 2020. Are eligible to partake in the retail offer, every 2.83 shares held for 1 new share at 12 cents per share. The offer document was dispatched 27 May 2020. Current Share Price: $0.15.
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