Yovich & Co. Weekly Update - 21 May 2012

May 21, 2012 | Commentary

This Weeks Themes

Global markets continued to retreat with uncertainty remaining in Greece and in wider Europe.Banks cut interest rates. The move has been prompted by increased competition and with expectations that the RBNZ will not raise rates until 2013. With the Reserve Bank of Australia dropping their official rate by 50bps at the start of the month there is now a possibility that the next move by the RBNZ could be down.The long awaited NZD devaluation has started. Lower interest rates and decreased risk appetite in global markets have seen a sell off in riskier currencies such as the Kiwi.

Company News

RYM - 2012 Result
Ryman announced their annual result with net profit at $121m. This was slightly ahead of expectations and was up 16.6% over the corresponding period. The build rate for new beds has also picked up to 770 beds last year compared to its target of 550 beds. The dividend of 8.4c has also increased from 7.2c last year. The low vacancy is also impressive with on average less than one unit available per village.

MVN - 2012 Result
Methven surprised by announcing a final dividend of 5.5c despite revenue constraints in its key markets and thanks to prudent management keeping costs in check. This dividend equates to a gross yield of 10.7%. With low debt levels and opportunities to grow in new markets Methven is well placed to expand earnings once operating conditions improve.

IFT- 2012 Result
Infratil announced full year profit of $520m, an increase of 10% over the previous year. Strong performance in Lumo, an Australian Energy supplier was the highlight along with good earnings in TrustPower and NZ Bus.

Other News

Earnings results to keep an eye out for this week include Argosy Property Limited & Xero.Facebook IPO was hot news in the U.S. with the stock listing at the top of pricing guidance of $38. In its first day of trading the stock rallied to $45 before falling back towards its listing price and closing at $38.23. It will be interesting to see where it trades to this week with the current valuation of $104 billion equating to 80 times current earnings.

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Jarrod Goodall



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