Yovich & Co. Market Update - 9 June 2020
Jun 8, 2020 | Commentary
New Zealand Equities
In summary, last week the NZ50G saw 5 companies on the downside, 4 remained unchanged and 42 on the upside. As of midnight NZ is in level 1, businesses and life will start to feel normal again. The latest Global Dairy Trade was up 0.1%, with whole milk powder and butter milk powder up 2.1% and 9.4% respectively. Volumes sold increased 30.8% to 21,968 MT, with an average price of $2,902. The increase in demand is currently driven by supply chains restocking while consumer demand is still opaque. The US market is seeing an uptick as 2.7m jobs were created in May. The unemployment dropped from 19% to 13.3%, this bolstered expectations for the US economy to have a quick recovery. 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, to then stay the investment course. If at all concerned please contact your adviser.
Has signed an exclusive distribution agreement with Austria’s Ever Valinject (Ever) for the commercialisation of Maxigesic IV, the intravenous form of its patented analgesic, in a significant portion of Western Europe: Germany, Austria, Italy and France. The agreement will see Ever drive the launch of Maxigesic IV in Germany, Italy, France and Austria where the total analgesic market is worth US$585m, US$545m, US$587m and US$125m respectively. AFT Pharmaceuticals market share and sales in the Australasian over-the-counter (OTC) medicine range has increased, as consumers seek protection against the COVID-19 infection. Current Share Price: $4.73, EPS: $0.13, PE ratio: 36.04, Target Price: $4.34, Rating: Neutral.
Released its May metrics. Trade equity trades were up 143% year on year (YoY) up 1.04m, value traded up 22.8% at $4,220m. The average on market trade size was down 34.9% at $2,848, this could elude to greater amount of retail investors in the market throughout the lockdown period. Capital raising increased 15.7% YoY up $6,751m year to date with $1,583m in the month of May. Current Share Price: $1.48, EPS: $0.05, PE ratio: 27.72, Gross dividend yield: 5.72%. Target Price: $1.47, Rating: Neutral.
AWF Madison Group
Tax paid profit for the full year ending 31 March 2020 was up 33% at $2.6m, total revenue down 1.6% at $26.5m. The acquisition in June 2019 of JacksonStone & Partners Ltd for $10.52m has boosted revenue in the white-collar segment of $27m. The white collar segment last year contributed 63% of Group revenues, up from 57% in FY2019 and 53% in FY2018. Current Share Price: $1.52, EPS: $0.07, PE ratio: 19.24.
Air New Zealand
Has announced that the company’s new Survive, Revive and Thrive 800 day plan is to be completed by August 2022. By this time Air NZ expects to be flying 13m customers annually versus almost 18m pre COVID-19. Survive; has already taken place with over 4,000 jobs cut, grounding their 777 fleet and deferring expenditure on new aircraft, to name a few cost saving actions. Phase 2 of Survive is to remove around an additional $150m from the wage bill. September will see the start of phase Revive. Air NZ expects to be a far smaller business and slowly increasing as expectations of a Tasman and Pacific Island flying for leisure and business returns. August 2020 will see phase Thrive; when Air NZ will be a digital company that monetises through aviation and tourism in a very sustainable manner not focused on size, but on quality. Air NZ will be smaller, flying fewer routes but will not change their outstanding reputation for care, compassion and heart. Current Share Price: $1.86, Price/NTA: 1.14, EPS: $0.19, PE ratio: 9.57, Target Price: $1.09.
Has announced that a special shareholder meeting will be held Friday 10 June 2020. The meeting will give shareholders the opportunity to vote if the board of directors are to pursue the earlier takeover agreement with Asia Pacific Village Group Limited (the resolution). If voting does not reach 75% in favour of the resolution, the board will withdraw the Statement of Claim and Metlifecare would likely need to pay costs to APVG and EQT (those costs, at this early stage of the Litigation, will be low compared to the costs which will be required to pursue the Litigation to its conclusion). Current Share Price: $4.76, Price/NTA: 0.68, EPS: $0.18, PE ratio: 25.79, Target Price: $6.63.
The Warehouse Group
Announced that by 31 August 2020 it will be shifting to an agile operation model to match customer preference. “We are confident that Agile principles will support the business by improving speed to market, collaboration, innovation and productivity, enabling us to further increase our focus on serving New Zealanders’ needs in this uncertain environment,” said Mr Grayston. The change is expected to cut 1,100 jobs, 100 to 130 at head office and 700 to 950 store employees. The planned reduction of store employees is equivalent to 450 full-time staff. Current Share Price: $2.27, EPS: $0.17, PE ratio: 13.24, Target Price: $2.19.
Has announced a equity raise of $300m. Made up from an institutional placement of $250m and a SPP of $50m. Investors via the SPP are eligible to purchase up to NZ$50,000 of new shares at NZ$4.76 per new share. Current Share Price: $5.17, Price/NTA: 1.72, EPS: $0.37, PE ratio: 13.78, Gross dividend yield: 6.62,Target Price: $5.45, Rating: Outperform.
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