Yovich & Co. Market Update - 11 June 2019
Jun 11, 2019 | Commentary
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.
New Zealand Equities
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.
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.
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.
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.
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
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.
a2Milk Company ATM.nz Sanford Limited SAN.nz SmartShares Dividends Mercury NZ Limited MCY.nz Sheffield SFX.asx