Yovich & Co. Market Update - 6 March 2019
Mar 6, 2019 | Commentary
In summary, the NZX50 had 20 companies on the downside, 1 remained unchanged and 29 companies were on the upside. No material change in the NZD/AUD exchange rate closing at 0.9600.
Last week finished off the reporting week for February. As mentioned last week Sky TV is struggling with the increased competition from companies offering alternative paid streaming. Fonterra Share Holders Fund took a dive due to the announcement that they won’t be paying an interim dividend for the FY19. On the other side, Vista Group saw its share price go from $4.23 to close the week at $4.50, with revenue up 23% at $130.7m.
New Zealand Equities
Tax paid profit for the FY18 ending December was down $25.4m (-11%) at $214.5m. Net profit was largely affected due impacted by the fair value movement on investment property. There were 133 units built in December which are to be sold this financial year (FY19). This will provide a healthy level of inventory (319) units to be sold in the first half sales for FY19. Gearing ratio is up at 31.2% from 30.2% in FY17 an increased debt of $103.7m. This extra debt has been contributed to by land purchases and development cost. A final dividend of 7.2 cents payable 21 March brings the total gross dividend to 13.2 cents. This is an increase of 21% on FY17. At current share price of $6.65, gross dividend yield is 1.95%. Expected 12 month target price is $7.90.
Operates a fully-integrated orchards-to-market service. It controls and owns post harvest and orchard operations of kiwifruit, kiwiberries and avocados in NZ and Australia, Seeka also imports and handles tropical fruits.
Tax paid profit for the FY ending December 2018 is up $1.6m (27%) at $7.4m, and is 3% above their upper guidance. Throughout the financial year Seeka has acquired T&G Horticulture’s post-harvest business and six kiwifruit orchards for $42.21m, five of the six have settled with the remaining to settle on title. This agreement will secure long term supply in the Northland area. An interim gross dividend of 16.67 cents is payable 15 March. At current share price of $4.96 the gross yield is 6.7%. Expected 12 month target price is $5.99.
Has seen growth of 16% since the end of November 2018 when share price was $6.80 and is currently trading at $7.89. Tax paid profit for the 1H19 ending December was up $0.6m (2%) at $32m. The Express Package/Business Mail and the Information Management divisions have both seen growth of 7.8% and 7.6% respectively. An Interim gross dividend of 20.83 cents is payable 1 April. At current share price of $7.89, gross dividend is 5.32% with a 12 month target price of $7.35.
Has delivered a record underlying profit for the 1H19 ending December of $41.7m up 15% on last year. Total assets have increased by 11% to $3.4b and net assets per share are up at $6.97 (5%) from $6.64. Gearing ratio has increased to 15% from 9%, this is largely due to Orion Point and Beachlands land purchase together with ongoing investment in new village buildings. An interim dividend of 3.75 cents is payable 15 March 15% higher than last year. At a current share price of $5.16, the dividend yield is 2.03%. Expected 12 month target price is $7.00.
NZ King Salmon
Is the world's largest aquaculture producer of King Salmon. Tax paid profits for the 1H19 is down $0.6m (-4%) at $15m. Warm summer water in 2018 meant salmon mortality was high at 9%, 2019 summer water temperature has been cooler which has resulted in a lower mortality rate of 5.6%. Overall sales volume was down, although the sales to North America (+1%) and Asia (ex-Japan) markets have had modest growth. These markets have seen an increase in price value also from NZ$21.70/kg to NZ$23.49/kg. A gross dividend of 2.78 cents is payable 22 March, at current share price of $2.37 the total gross dividend yield is 2.9%. Expected 12 month target price is $2.71.
Is a diversified agribusiness portfolio business, it operates three divisions - horticulture, storage and the logistics and food ingredients. The tax paid profit for the FY18 ending December was up $13.9m (44%) at $45m. Mr Apple own grown export volumes reached a new record with an increase of 9% at 3,867 TCEs (Tray equivalents). FY18 gross dividend was 25.69 cents per share at a current share price of $4.70 gross yield is 5.47%.
Vital Healthcare Property
Is a unit trust that focuses on healthcare and medical related properties in New Zealand and Australia. Tax paid profit for the 1H19 year ending December was $46.7m (-11.5%). The gross rental income of $50.5m is up 12.9%, this was driven by investment activity and organic growth. Gearing is at the upper range at 39.5% with a portfolio value of $1.77b. The second quarter gross dividend is 2.19 cents payable 29 March. The Board has also reconfirmed its full-year guidance for a cash distribution of 8.75 cents per unit. At current share price of $2.07 the cash dividend yield is of 4.23%. Expected 12 month target price is $2.25.
Had a takeover offer on the 14 December by GWA Group Limited, share price went from $1.15 to $1.60 (43% premium) and is currently trading at $1.62 per share. The offer would see the Australian-listed kitchen and bathroom group purchasing all of the shares in Methven, subject to shareholder and court approval and other conditions being met. The offer by GWA to Methven shareholders is $1.65 per share. This is comprised of a “share offer price” of $1.60 cash per share, plus a permitted dividend of up to $0.05 per share which is payable out of first half FY19 profits. Methven’s largest shareholder Lindsay Investment Trust intends to vote all of its Methven shares (19.9%) in favour of the Scheme, subject to no superior proposal arising. Voting can be done online or via proxy voting form that shareholders have recently received.
Disclaimer: This publication has been prepared for your general information. While all care has been taken in the preparation of this publication, no warranty is given as to the accuracy of the information and no responsibility is taken for any errors or omissions. This publication does not constitute financial or insurance product advice. It may not be relevant to individual circumstances. Nothing in this publication is, or should be taken as, an offer, invitation, or recommendation to buy, sell, or retain any investment in or make any deposit with any person. You should seek professional advice before taking any action in relation to the matters dealt within this publication. No part of this publication may be reproduced without prior written permission from our company. Disclosure statements relating to the financial advisers associated with this newsletter are available on request and free of charge.
Scales Corp Ltd SCL.nz Metlifecare MET.nz NZK Salmon NZK.nz Vita Healthcare Property VHP.nz Summerset Group Holdings Ltd SUM.nz Seeka SEK.nz Freightways FRE.nz