Yovich & Co. Market Update - 11 June 2019

Jun 11, 2019 | Commentary

Market News

 

 

In summary, the NZX50 had 21 companies on the downside, and 23 companies were on the upside and 6 unchanged. Although the index closed lower than the previous week, it closed higher than the three trading days beforehand with an average close of 9964.10. The Global dairy trade on 4 June was down 3.4% with an average price of $3,423 (USD) per tonne, with 19,874 (MT) sold; this is the second consecutive fall since 7 May.

 

ANZ NZ Truckometer

Heavy traffic rose 0.8% month on month with light traffic up 0.9% month on month. The heavy traffic report has been used to closely track the level of GDP. Reliance on this has become less reliable due to GDP results shifting from traditional Agricultural production to other factors dominating GDP results such as the service industry. The light traffic index gives a 6 month lead of future GDP performance and has seen growth since March. This suggests that the decline in GDP may soon run its course. ANZ, The Reserve Bank and Treasury are expecting annual GDP growth from the middle of the year.

 

Investment News
New Zealand Equities

 

a2Milk

Share price received a trim last week due to China’s new policy to become 60% self-sufficient (currently 45%) in the infant milk-formula industry. Research form Jarden (formerly FNZC) states that the next 2 years revenue or growth are not affected, but there is uncertainty after that. The positive for a2 Milk is the deep brand awareness and the already established trade channels. Current share price: $14.51, 12 month target price: $14.00, P/E: 42.49.

Sanford

Is New Zealand’s largest integrated fishing and aquaculture business. Sanford own 49 vessels and 210 aquaculture farms and holds 23% of New Zealand’s quota. Operations span from Stewart Island to Auckland, as well as Australia and China. Tax paid profit for 1H19 results were softer than last period at $22.9m down -16%. The outlook is positive with a grant to the Big Glory Bay operation to increase salmon production by 40%. This is a key driver that relates to Sanford’s strategic target of increasing average profitability (EBIT) per kg to $1 by 2021 from $0.57/kg. (Forsyth Barr). Current share price: $6.90, 12 month target price: $7.57, current gross yield: 4.63%, P/E: 17.5.

Smartshares

As of 6 June NZX Limited brought to the market 8 new Exchange Traded Funds (ETFs).

 

  • Five Environmental, Social and Governance funds focusing in: Emerging Markets, Japan, USA, Europe and Global.
  •  Two megatrend funds; Automation & Robotics and Healthcare Innovation.
  • A passive Global Aggregate Bond fund.

 

These ETFs will provide investors with a great opportunity to gain a diversified investment within these sectors. 

Mercury Energy

Is considering making an offer of up to NZ$300m of subordinated capital bonds. Details are to be released towards the end of this week or early next week.

Sheffield Resources

Has commenced an update to its Bankable Feasibility Study (BFS) for the Thunderbird Mineral Sands Project (Thunderbird). The updated BFS sets out to defer capital expenditure, and replace ilmenite revenue with zircon revenue, whilst targeting an optimisation of debt carrying capacity. These updates may enable a material reduction to the Stage 1 capital expenditure and targeting a significant reduction to the projected equity funding requirement. The updated BFS is expected to be finalised during early Q3 2019. Current price: $0.39 AUD.

Listed companies with upcoming ex dividend dates

 

 

 

 

 

 

 

 

 

 

 

 

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Nathanael McDonald



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a2Milk Company ATM.nz Sanford Limited SAN.nz SmartShares Dividends Mercury NZ Limited MCY.nz Sheffield SFX.asx



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