Yovich & Co. Market Update - 18 January 2019

Jan 18, 2019 | Commentary

New Zealand Equities

In summary, the NZX50 had 5 companies on the downside, 4 remained unchanged and 41 companies were on the upside. 

  • Kathmandu is still feeling the effect of the Christmas blues with shares down at $2.45

  • Gentrack made up for its losses last week with current share price at $5.23.   

Market News

Truckometer:

  • The ANZ Truckometer report last week showed a weaker December -4.1% monthly change. The data is volatile, particularly the Heavy Traffic Index, and it is too soon to call a change in trend. We are waiting to see how large any bounce-back next month proves to be, with declining petrol prices likely to help out. The truckometer has a strong contemporaneous relationship to GDP. While the light traffic can give a six month lead on economic activity measured by GDP.

Retail Card Spending:

  • When adjusted for seasonal effects, retail card spending was down 0.2 percent for the quarter ending December. This followed a 2.1 percent rise in the quarter ending September 2018. Four of the six retail industries saw an increase in spending. The largest mover down being the fuel industry at -4.7%. This coincides with fuel prices dropping by nearly 35 cents per litre towards the end of the December quarter. The largest mover up was consumables at 1%.

  • December’s month seasonal retail spending fell 2.3% after a 0.5% fall in the month of November. The second largest fall was in the durables industry (this being furniture, hardware, whiteware, and electronics) down 4.4%. The fuel industry had the largest fall, down 8% from last month.

Global News 

This week the British Parliament voted on the Brexit deal put forward by PM Theresa May. The result was 230 MPs rejecting her Brexit blueprint. With a no deal, investors are still showing signs of caution at this time of economic uncertainty.

Delegates from China and the US wrapped up three days of trade talks last  Wednesday and markets had been cheered by the first face-to-face negotiations since both sides agreed to a 90-day truce.

Investment New

 

Briscoe Group

Is in the retail industry focusing on homeware (Briscoe and Living World stores) and sporting goods (Rebel Sports).

  • Current price: $3.23   Target price: $3.50     Expected Gross yield: 8.8%  Forward P/E: 11 

Genesis Energy

An electrical company that generates power by thermal and renewable power stations. It is also a significant energy retailer supplying electricity, natural gas and LPG.

  • Current price: $2.70    Target price: $2.46      Expected Gross yield: 9.2% Forward P/E: 15

Z Energy

More than just a gas station, Z Energy imports crude oil that is processed by the NZ Refinery in which they hold a 15% stake. It also owns pipelines and bulk storage terminal infrastructure around the country. Z Energy has just released the new Fastlane facility at 40 stores across Auckland and the North Island.

  • Current price: $5.79  Target price: $6.50   Expected Gross yield: 11.8% Forward P/E: 10.2

Trustpower

Fifth largest electricity generator and fourth largest energy retailer by market share. Trustpower offers services in electricity, gas and telecommunications.

  • Current price: $6.17  Target price: $6.10   Expected Gross yield: 7.7%  Forward P/E: 18.5 

 

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About the author



Nathanael McDonald



Related Tags



Briscoe Group BGP.nz Genesis Energy GNE.nz Z Energy ZEl.nz Trustpower TPW.nz Truckometer Retail Card Spending



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