Yovich & Co. Market Update - 16 July 2019
Jul 17, 2019 | Commentary
In summary, the NZX50 had 28 companies on the downside, 16 companies were on the upside and 6 unchanged. The markets closed higher on Friday up 0.46% from the previous Friday’s close. Stats NZ has announced that nationwide spending on apparel and durable goods was strong, up 2.1 percent, while across the food sector only restaurant meals and ready-to-eat food prices had an increase of 0.5 percent for the month of June. August is the month that most companies publish their half yearly statements. Investors should be looking at reported earning of these companies to calculate the price per earnings ratio, as currently high yielding companies are trading at multiples well above the market average.
New Zealand Equities
Develops technology solutions (products and services) that manage vehicle fleets, support regulatory compliance, improve driver safety and reduce the costs associated with driving. EROAD also provides valuable insights and data analytics to universities, government agencies and others who research, trial and evaluate future transport networks. Delivery of the first quarter results ending 30 June 2019 has delivered solid growth, with 24% annualised growth and 6% quarterly growth in total contracted units. North America has had the largest growth, while Australia has not reached expectation. The positive is that an encouraging enterprise pipeline has been established. Current share price: $3.10, 12 month target price: $3.40.
Has seen an increase in demand since Stats NZ announced that NZ’s nationwide spending has increased in apparel items, and expectations that the Reserve Bank will cut interest rates further in August. Current share price: $3.45, Gross Dividend: 8.05%, PE Ratio: 12.03.
Announced on the 10 July that it has updated its Ore Reserve for its world-class Thunderbird Mineral Sands Project. The results are:
Ore Reserve updated by 68 million tonnes to 748 million tonnes @ 11.2% heavy mineral (HM).
Exceptionally high in-situ zircon grades of 1.02% in Proved Category.
6.4 million tonnes of contained zircon (500,000 tonne increase).
Confirms Thunderbird as one of the largest undeveloped zircon-rich mineral sands deposits globally.
The updated Ore Reserve increases the period of mining higher grade ore from 7 to 10 years and removes the lower grade ore from the process plant feed. Share price has seen a significant increase since mid June from $0.32 to the Current share price: $0.55.
Has formally lodged a consent to undertake open ocean salmon farming in Cook Strait, the CEO indicating under a best case scenario the company could be farming by 1H CY20. Current share price: $2.00, 12 month target price: $2.28, Gross Dividend: 3.47%, PE Ratio: 17.91.
Vital Healthcare Property
Invests in high-quality health and medical-related properties in New Zealand and Australia. Their tenants are hospital and healthcare operators who provide a wide range of medical and health services. The announcement that the portfolio for FY19 ending 30 June has gained $102.4m (5.9%), brings total portfolio value to $1.8b. Current share price: $2.57, Gross Dividend: 3.65%, PE Ratio: 16.40, Price/NTA: 1.08.
Fonterra Capital Notes:
Has reset the rate payable on the notes from 4.01% p.a. to 3.385% p.a. This rate is reviewed yearly on 10 July. The next quarterly interest payment is due 10 October 2019.
Has undergone a review of their practices and found that employment contracts and rostering practices showed non-compliance. There is expected to a one off cost in the range of $10m to $25m. Currently it is not anticipated that any remediation will have a material impact on the underlying earnings for FY20 or any future financial years. Current share price: $0.53, Gross Dividend: 10%, PE Ratio: 11.30, Price/NTA: 1.03.
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.
Weekly Update Investment Shares Bonds Investment Strategy Investment Advice Share Advice Share Investment Investing in Shares Sheffield Resources Limited SFX.asx Eroad ERD.nz Briscoe Group BGP.nz Vita Healthcare Property VHP.nz Michael Hill International Limited MHJ.nz NZK Salmon NZK.nz