Yovich & Co. Market Update - 12 March 2019

Mar 14, 2019 | Commentary

Market News

 

 

 

In summary, the NZX50 had 21 companies on the downside, 1 remained unchanged and 28 companies were on the upside. No material change in the NZD/AUD exchange rate closing at 0.9659. The Global dairy trade on 5 March saw another increase of 3.3%. The average price of products was US$3,309, with Whole Milk Powder up 6% at $3,186. Total product sold was down at 23,930 from 25,324 two weeks ago.

No progress in trade talks between US-China leaders and the Brexit negotiations.

The New Zealand Retail trade sales, (which is an important indication of confidence in the NZ economy) have increased 1.7 percent quarter-on-quarter in the three months to December 2018. This follows a 0.3% gain in the previous period and above market expectations of a 0.5% rise. It was the biggest gain in retail trade since the first quarter of 2017, as sales rebounded for pharmaceutical & other store-based retailing.

Retail card spending for February was up 0.9%, compared to 1.8% rise in January. The driver of this was increased card spending for goods such as liquor and groceries. 

 

 

 

Fonterra announced permanent appointment of Miles Hurrell as Chief Executive Officer. This has brought a sense of stability for the company, while it is in the process of executing its strategic plan of reducing debt and increasing return on capital. This news has seen an increase in the FSF share price which is currently trading at $4.48, still well off its high of $6.50 just over a year ago.   

New Zealand Equities

Precinct Properties

The retail offer of $20m has been well taken up by investors. Precinct received applications totalling $21.8m, and they have elected to accept without any scaling effect. The retail offer was part of the $150m capital raising to pay down bank debt and to provide additional capacity to deliver on medium term opportunities; including Bowen Campus Stage Two and Wynyard Quarter Stages Three and Four; and to provide flexibility for growth opportunities when they arise.

Argosy Property Limited

Is seeking to raise $75m through a 7 year (27 March 2026) fixed rated bond offer and has allowed for $25m of oversubscriptions. The bond is called the Green Bond and carries an interest rate of 4% per annum.



Foley Wines

Was established in 1996 in the USA and are a major producer, marketer and distributor of highly acclaimed, handmade wines from some of the world’s greatest vineyards. Foley Wines is home to several of New Zealand's top wine brands including Vavasour, Grove Mill, Te Kairanga, Martinborough Vineyards and Mt Difficulty.

Tax paid profit for the 1H19 ending December was up at $1.62m from $0.298m the previous year. This was seen by increased bottle sales here and abroad with exports up 46.8%, and strong growth in Australia (45%), the USA & Canada (65%) and the UK & Europe (41%). The completion of purchasing Mt Difficulty in December aims to add $5-$6m to the EBITDA by year end 2020. Current share price is at $1.65, gross dividend yield is 2.6%, the share price is up 10% from March last year.

Delegat

Is a leading global Super Premium wine company, and has invested in state-of-the-art wineries and world class vineyards in the prime grape growing regions of New Zealand and Australia. They focus exclusively on making the world’s most sought-after Super Premium wines and brands. It has a winery in Auckland and undertakes contract processing in Marlborough and Hawkes Bay. Tax paid profit for the 1H19 ending December was $25.3m, up 30%. Delegat has made a record operating net profit after tax of $31.4m, up from $23.9m, along with record global case sales of 1,576,000. Delegat is expecting global case sales for the FY19 to be 3,040,000, up 11% on last year. At current share price of $9.85, gross dividend yield is 2.4%.

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.

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Nathanael McDonald



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