Yovich & Co. Market Update - 25 June 2019
Jun 26, 2019 | Commentary
In summary, the NZX50 had 13 companies on the downside, 37 companies were on the upside and 0 unchanged. The markets closed higher on Friday up 91.92 points from the previous Friday’s close. The Reserve Bank of NZ will make an announcement regarding OCR on 26 June. 85% of economists from the TMM's OCR Preview Survey are expecting the Reserve Bank of NZ to keep the OCR at its current record low of 1.5%. Friday had a lot of trading activity as the quarterly index reviewing took place, this event is when institutional investors need to buy/sell companies to match the index they track.
New Zealand Equities
Tourism Holdings Limited
Has announced a Rights Issue offer of 1 share per 9 shares held by investors, to raise $50m of new equity capital, following the placement of $30m new shares to HB Holding Limited. Shareholders who hold shares as of 2 July will be eligible to participate in the offer. The right issue price is $3.40, a 15.8% discount to the last close and a 14.5% discount to the theoretical ex-rights price of $3.97. The continued relationship between THL and HB Holdings provides THL opportunities into the Chinese market, where RV sales are expected to reach 400,000 by 2025 (Goldstein), from 25,000 in 2017. THL is expecting to pay a gross dividend of 14 cents per share in October. Current share price: $4.00, Gross yield: 8.74%, 12 month target price: $4.57.
AFT Pharmaceuticals Limited
Is a growing multinational pharmaceutical company that develops markets and distributes a broad portfolio of pharmaceutical products across a wide range of therapeutic categories which are distributed across all major pharmaceutical distribution channels. AFT has recently established a beachhead in South America after signing a licensing agreement with Galenicum Vitae. Galenicum Vitae plans to market, sell and distribute AFT’s patented combination analgesic, Maxigesic®, in Colombia and Peru, which have a combined population of almost 100 million people and the current combined retail value of the over-the-counter pain relief market is NZ$749 million. Share price reached a record price of $3.06 on 14 June 2019. Current share price: $2.95, 12 month target price: $2.80.
Arvida Group Limited
Is to acquire a portfolio of premium villages in Tauranga and Queenstown for $180m. This will add 326 independent living units to Arvida’s existing portfolio of 3,677 units and beds, with the possibility of developing 504 new units in these key retirement growth areas. To help fund this acquisition Arvida has announced a Rights Issue of 1 share per 5.7 shares held by investors on 3 July 2019, for a price of $1.15, a 17% discount to current price and a 13.9% discount to the theoretical ex-rights price of $1.336. Arvida’s estimated NPAT earnings for the new acquired villages are $13.4m and $19m for FY20 and FY21 respectively. Current share price: $1.38, Gross yield: 4.49%, 12 month target price: $1.28.
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