Yovich & Co. Market Update - 26 February 2019
Feb 26, 2019 | Commentary
In summary, the NZX50 had 28 companies on the downside, 2 remained unchanged and 20 companies were on the upside. No material change in the NZD/AUD exchange rate; closing at 0.9599. NZ dairy commodities rose slightly (0.9%), this seeing Whole Milk Powder back above the $3,000 mark at $3,022. The global supply of milk has reduced since last auction, this believed to be the driver of the price increase.
The reporting month has arrived for most NZ listed companies. Last week seeing Sky TV taking a big fall, share price dropping from $1.76 to close on Friday at $1.59, as it competes with alternative paid streaming service for the Rugby World Cup and other viewing services. Due to another outstanding half yearly performance a2Milk traded at record highs last week of $14.87.
New Zealand Equities
Steel & Tube
Tax paid profit for the 1H19 ending December is up $1.8m (47%) at $5.6m. This is a significant improvement on 2H18 of -$35.9m (this included no trading costs and impairments). Steel & Tube’s net debt was $16m at the end of December, due to debt repayment of $78.9m funded through a capital raising in September. With debt facilities being successfully refinanced in December 2018, and the capital raising, the company has sufficient liquidity to drive the business forward.
A gross dividend of 4.86 cents per share is payable 29 March. At the current share price of $1.26 gross yield is 7.7%, with a 12-month target price of $1.65.
Property for Industries Limited
Expectations did not meet some analyst’s forecasts seeing the share price drop 0.8 percent to $1.91. Tax paid profit for the FY18 is up $58.4m (3.2%) at $110m. New property valuations have lifted total portfolio valuation by $66.4m (5.3%) resulting in a net tangible assets increase of 14.5cents (8.9%) to $1.78 cents per share. Portfolio value is $1.32b with a prudent loan to value ratio of 30.3%.
A final gross dividend of 2.54 cents is payable 13 March bringing total gross dividends to 9.33 cents per share. At a current share price of $1.90 gross yield is 4.91%, with a 12-month target price of $1.67.
Tax paid profit for the 1H19 ending December is up $7.8m (44.1%) at $25.5m. An announcement of a $150m equity raising to repay bank debt and reduce pro-forma gearing to 18.5% from 24.3% at end of December, was made on 19 February. The property portfolio has seen an increase of $153m since June 18 now at $2.4b. Total asset value has declined by $36.8m to $2.5b which has seen the net tangible assets drop to $1.39 from $1.40 on June 18.
An interim gross dividend of 2.57 cents is payable 27 March. At a current share price of $1.48 total gross dividend is 4.57% with a 12-month target price of $1.48.
After tax profit for 1H19 ending December is up $2m (6.5%) at $33.1m. The one off-cost relating to the corporate restructure and ASX listing was more than expected. Heartland Bank considers that it could still achieve a result at the bottom end of the guidance range of $73 to $75m. The return on equity has reduced from 10.8% to 10.3%. This is largely due to the higher average equity held for the current period.
An interim gross dividend of 4.86 cents per share is payable 29 March. At a current share price of $1.39 the gross dividend is 8.99% with a 12-month target price of $1.43
EBOS Group Limited
Is the largest and most diversified Australasian marketer, wholesaler and distributor of healthcare, medical and pharmaceutical products. It is also a leading marketer and distributor of recognised consumer products and animal care brands.
Tax paid profit 1H19 ending December down $2.9m to $67m. This was due to transition costs for major warehouses and restructuring costs. Ebos Group will be the exclusive wholesale distributor of pharmaceutical products to more than 450 Chemist Warehouse and My Chemist stores in Australia, starting 1 July 2019. Ebos has shown positive growth in the Animal care segment with revenue up at $192m, a 1.4% growth.
An interim dividend of NZ 34.5 cents (up 4.5%) is payable 5 April. At a current share price of $21.50, the gross dividend is 3.57% with a 12-month target price of $20.75.
Tax paid profit for 1H19 ending December is down $9m (-5.6%) to $153m, due to the Southern Cross Cable Holdings Limited dividend not being declared in FY19 which has impacted Spark’s income by $28m.
An interim gross dividend of 16.15 cents per share payable 5 April. At a current share price of $3.75 the gross dividend yield is 8.61% with a 12-month target price of $3.28.
Tax paid profit for the 1H19 ending December is up (55.1%) at $152.7m. Infant formula sales were up 45% year-on-year to $495m. This follows growth of 83% in 2H18. The announcement has seen the share price go from $13.22 to close on 21 February at $14.82. The current share price is $14.55 and the 12-month target price is $12.25.
Tax Working Group
As expected the Tax Working Group (TWG) recommended a broadening of capital gains taxes (CGT) to include investment property, business assets, shares and intellectual property. Owner-occupied property would continue to be exempt. Revenues from the extended CGT would largely be applied to reductions in personal income taxes. The Government has indicated it will announce its response to the TWG recommendations in April 2019.
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