Yovich & Co. Market Update -27 August 2019

Aug 28, 2019 | Commentary

Market News

 

 

In summary, last week saw the NZX50 with 19 companies on the downside and 28 companies were on the upside 3 remained unchanged. The NZD depreciated against the AUD and USD, this has been a continual trend for the NZD/USD over the previous five weeks. The latest Global Dairy Trade was down 0.2% at $3,255 compared to a negative 2.6% the previous auction. Whole Milk Power and Cheddar were up 2.1% and 0.8% respectively; all other products were either unchanged or lower. The reporting season is now into its third week with some results having a negative effect on share price.

 

 

 

Investment News

New Zealand Equities

Air New Zealand

Tax paid profit for the full year 30 June was down 31% at $270m, operating revenue up 5.3% at $5.8b. Operating cash flow down 4.4% at $986m, due to increased fuel prices and increase in operating costs, as the airline sought to improve network resiliency for its customers in the face of the global Rolls-Royce engine issues. The Business review principles for FY20 and FY21 will focus on cost cutting with a goal of $60m in annualised savings over this period. The Cargo segment showed strong performance in first half, this was offset in the second half due to lower volumes and yield declines. A key performance indicator for the airline is the passenger revenue per available seat kilometres (RASK) this was up 2.1%, Domestic, Tasman & Pacific Islands down 0.1%, International up 2.7%. A FY20 earnings before taxation is to be in the range of $350-$450m. A gross dividend of 15.28 cents with an ex dividend date 5 September is payable 18 September Share price: $2.81, Gross yield: 10.88%.

Auckland International Airport

Tax paid profit for the full year 30 June was down 19.5% to $523.5m, revenue up 8.7% at $743.4m, net tangible assets per share is up at $4.98 from $4.73, net debt ratio of 26.6% remains unchanged. Total number of passengers increased to 21.1m up 2.8%. Expected underlying net profit after tax for FY20 in the range of $265-$275m in line with FY19. Auckland Airport has began work on two of the eight key infrastructure projects, more information regarding these projects will be realised in November. A final gross dividend of 15.63 cents with an ex div date 3 October is payable 18 October.  Share price: $9.20, Gross yield: 3.34%.

EBOS Group

Tax paid profit for the full year 30 June was up 5.2% at $144.4m, revenue down 0.8% at $6.9b. This was due to lower Hepatitis C medicine sales and the Pharmaceutical Benefits Scheme (PBS) reforms in Australia. Net debt ratio at 22.8% down from 28.7%. EBOS invested $93.6m on acquisitions for the FY19. EBOS has two business segments, Healthcare and Animal Care. Due to the share placement in May EBOS is in a great financial position for any strategic acquisition and opportunities. A final gross dividend of 40.6 cents with an ex div date 26 September is payable 11 October.  Share price: $23.80, Gross yield: 3.30%.

SKY Network Television

Net loss after tax for full year 30 June was $607m (on an adjusted basis tax paid profit was $97m), revenue down 6.8% at $795m. Sky has now started to offer streaming services to customers with greater than 50% growth in streaming subscribers, leading to 16% growth in streaming and commercial revenues. A suspended final divided reflects the boards focus on investing in the business. Sky has paid down $43m of debt this year resulting in a net debt to equity ratio of 54%. Share price: $1.15.

Metlifecare Limited

Tax paid profit for the full year 30 June was $39.2m due to lower unrealised fair value gains in a slower real estate market. Operating revenue was up 8.3% at $124m, total revenue up 14% at $131m. Net asset per share has increased 1.1% to $6.96. Metlife’s total assets grew by 7% to $3.5b. Realised resale margin of 35% with a total of 354 occupations rights sold. Net debt to asset ratio up from 9% to 15%. Metlifecare is in the process of providing a retail bond to the market, proceeds from bond is to replace a portion of bank debt. A gross dividend of 7.25 cents with an ex dividend date 13 September is payable 20 September. Share price: $4.36, Gross yield: 2.52%.

Seeka Limited

Tax paid profit for the half year 30 June up 27.3% at $11.8m, revenue was up 16.8% at $169.8m. EBITDA guidance for the FY19 $33.5m up 8%. Debt has increased 27.7% to $148.1m, Seeka has in the pipeline a further $21.65m of assets for sale by end of this financial year, sale proceeds planned for debt reduction. A gross dividend of 16.67 cents with an ex dividend date 12 September is payable 9 October. Share price: $4.36, Gross yield: 6.67%.

Abano Healthcare

Tax paid profit for the full year 31 May down at $10.9m, gross revenue by Maven and Lumino up at A$179m and $147m respectively. Net bank debt has increased to $134.6m from $94.2m, with a net debt to asset ratio up 8.3% at 39%. Share price: $4.01, Gross yield: 7.61%.

Infratil   

Has launched two bond offers 1) 7.25 year Unsecured, Unsubordinated, Fixed Rate Bond (IFT280), 2) 10.25 year Unsecured, Unsubordinated Bond with an annual rate reset (IFTHC) (the “Infrastructure Bonds”).

 

 

 

 

 

 

 

Tourism Holdings

Tax paid profit for the full year 30 June was down 52% at $29.7m (FY18 profit including $23.1m one-off gain) including the loss from Togo Group (previously known as TH2), revenue down 1% at $423m. Net debt is up from $199m to $202m. The NZ rental segment has performed well with EBIT up 23% at $31.5m, vehicle sales revenue was up 8%, rental income up 11%. While vehicles sales were up 35 on last years 499 it was 100 short of the desired goal. A final gross dividend of 16.72 cents with an ex dividend date 2 October is payable 11 October. Share price: $3.76, Gross yield: 8.42%.    

 

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Nathanael McDonald



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Weekly Update Investment Shares Bonds Investment Strategy Investment Advice Share Advice Share Investment Investing in Shares Dividend Air New Zealand AIR.nz Auckland International Airport AIA.nz Ebos Group Limited EBO.nz SKY Network Television SKT.nz Metlifecare MET.nz Seeka SEK.nz Abano Healthcare ABA.nz Infratil IFT.nz Tourism Holdings THL.nz



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