Yovich & Co. Weekly Update - 8 July 2013

Jul 8, 2013 | Commentary

This Week's Themes

• The recovery in markets continued last week

• The local market was up with investors chasing growth stocks. Ryman Healthcare and Xero are both at record highs despite recent market weakness.

• The Australian market made another small step forward as investors started to find value. A sector breakdown of the market shows that over the past six months the materials and industrial sectors have underperformed by 23.7% and 4.6% respectively, while the consumer discretionary and healthcare sectors have outperformed by 13.7% and 12.5%.

• Signals from European banks that interest rates would remain low for an "extended period" increased the appetite for shares.

• Strong employment numbers out of the U.S. and an improving growth outlook helped markets in the world's largest economy to surge upwards.

• NZD strengthened against the Aussie but fell against the USD.

Investment News

Telecom New Zealand (TEL.nz) – Internet Protocol TV

Telecom has partnered with Coliseum, the new holder of the English Premier League (EPL) rights in New Zealand and offered a special deal for new subscribers of their broadband internet packages. The deal with Coliseum was the first major sporting contract that Sky TV has lost to a distributor offering content online and signifies how content will be offered in the future. With the Ultra Fast Broadband network being rolled out and Smart TVs starting to be purchased, serious content has begun to be offered online as opposed to being transmitted in the traditional way With this partnership, Telecom has indicated that they are moving in this direction and will be in a strong position to offer similar services if Sky TV loses any more content to online distributors, which until recently, has had a monopoly on paid TV in New Zealand.

First NZ Capital has an outperform recommendation for Telecom, highlighting their cost reduction initiatives and the results announcement on August 23rd as catalysts for a move in the share price. They have assigned a 12 month target price of $2.45 with the share price currently at $2.28.

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Jarrod Goodall



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