Yovich & Co. Weekly Update - 22 September 2014

Sep 22, 2014 | Commentary

 

Changes in Market

 

 

 

This Week’s Themes

  • The local market slid as investors weighed up all of the bad press that the National Government had been subjected to leading up to the election. In the end, National won a record number of votes which has given them the seats to govern alone, a unique situation under an MMP electoral system.

  • As predicted, the result saw the Energy companies rally by 5% as a risk of regulation starts to be removed from valuations of these utility companies.

  • The Australian market has taken a hit over the past few weeks as negative sentiment in China and Australia saw the Aussie Dollar fall below the 90 cent level.

  • The U.S. markets continued to post new highs as the Fed Reserve reiterates a stimulatory monetary policy.

  • The New Zealand Dollar bounced back against the Aussie but was relatively stable against the USD ahead of the election.

Investment News

Scales (SCL.nz) – Agribusiness Growth Opportunity

The following is extracted from the initial research from FNZC. Scales is a diversified agribusiness group that operates in and provides services to the New Zealand primary export sector. The Company’s overriding business strategy is directed at opportunities that stem from rising demand for NZ primary sector produce. SCL, through Mr Apple, is a major apple producer and is well positioned to take advantage of NZ's rising reputation as a counter-seasonal supplier of premium-grade fresh apples. SCL is set to further enjoy NZ’s advantageous geographic proximity, as a counter-seasonal supplier of premium-grade fresh apples into the Asian region where discerning consumers are willing to pay a premium for the colour and eating qualities of the fruit NZ is able to produce. Additionally, SCL, as one of the major independent cold-storage facility operators, stands to benefit from on-going growth in global demand for NZ agri-products.

FNZC has a target price of $2.00 for Scales with the current price at $1.55. They are forecasting a gross dividend yield for 2014 of 9.1%. We like Scales as we believe in the sector growth opportunity of exporting primary produce into Asia and the forecasted rising dividends for this business.

The Election 2014 – Still Upside for the Energy Companies

Even after Monday’s rally in the energy companies there is still upside for the share prices and yield is still attractive, below are the updated target prices and forecasted dividend yields from FNZC.

energy sector summary

*Meridian’s share price and valuation is based on the fully paid share.

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Jarrod Goodall



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