Yovich & Co. Market Update - 19 June 2019

Jun 19, 2019 | Commentary

Market News

 

 

In summary, the NZX50 had 13 companies on the downside, 35 companies were on the upside and 2 unchanged. The Global dairy trade on 18 June was down 3.8% with an average price of $3,208 (USD) per tonne, 24,239 metric tonne (MT) were sold; this is the third consecutive fall since 7 May. Whole milk powder dropped by 4.3% to $3,006 per (MT). Whole milk powder is the key component regarding farmgate milk price (the payment made to dairy farmers).

 

Investment News

New Zealand Equities

CannaSouth 

Listed on the NZX 19 June 2019. This is the first medicinal cannabis company to be listed on the NZ Stock Exchange. Cannasouth is a biopharmaceutical, research and development company based at the Waikato Innovation Park in Hamilton. The Company has been established to focus on the commercial development of the medicinally beneficial attributes of cannabinoid compounds such as CBD, THC, and associated chemical structures that are produced by the cannabis plant. The IPO offer was 50 cents per share.

Auckland International Airport

Share price reached a record high at $9.02 on 14 June. Research from Forsyth Barr show that the arrivals into NZ from China have fallen considerably since January 2019, On 12-month rolling basis Chinese arrivals have fallen from 10% in January to -7% in April. The other revenue stream for Auckland International Airport is NZ passengers travelling internationally, which is expected to decrease as economic conditions in NZ slow down. At current share price of $8.79 gross yield is 3.47% and a P/E ratio is 16.75.

Keytone Dairy

Is to acquire 100% of Omniblend Processor for A$22.6m plus earn-out, by way of A$8m in cash, a payment of A$4.6m to settle Ominblend’s existing debt, and A$10m of Keytone shares to Omniblend vendors.

Ominblend is a leading Australia based contract manufacturer of high value, formulated blended powder products and long-life UHT drinks, specialising in the health and wellness sector. The acquisition will make Keytone a leading player in both the dairy, health and wellness contract manufacturing sectors.

Keytone Dairy will fund the acquisition via a placement of up to $8m institutional investors and a Share Purchase Plan to raise up to $10.0 million from shareholders. The offer price of A$0.43 per share is a 18.1% discount to the close price of A$0.525 on 14 June. Current share price is A$0.53.

Vital Healthcare Property Trust

Announces commencement of construction at Wakefield Hospital in Wellington. The hospital will include up to 64 single beds, eight large operating theatres including cardiac and endoscopy, consulting suites, and a full range of specialist services. Vital’s investment forecast is a total of up to NZ$98m. The rentalisation rate has been set at 6.3%. Vital and Acurity entered into a 30 year lease with annual rental adjustments of 1.5 times the New Zealand CPI, capped at 3% per annum. Current share price is $2.38, gross yield 3.95%, 12 month target price at $2.13 and a P/E ratio of 15.13.

 

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Nathanael McDonald



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