Yovich & Co. Weekly Update - 23 July 2012

Jul 23, 2012 | Commentary

This Week's Themes

  • The Kiwi Market reversed last week’s gains with lower than expected inflation figures raising concerns about growth and the threat of deflation.
  • New Zealand CPI came in at under 1%, the lowest since 2009.
  • The U.S. market was lead higher by companies that announced positive reports last week.. This was despite Ben Bernanke giving little indication of further Quantitative Easing earlier in the week.
  • The European rally continued for a seventh straight week, the longest winning streak for more than 6 years.
  • The Kiwi Dollar was stronger with the currency closing the week just shy of 80 U.S. cents as positive company results in the U.S. and Europe increased traders’ appetite for risk.

Company News

Methven (MVN.nz) had their annual meeting last week and announced an increased profit of $6.5 million despite reduced revenue. MVN has reduced their debt levels and with strong cash flow they are confident in continuing to return sustainable dividends to shareholders. The result included a small profit in their Chinese business and they are pursuing a high growth strategy in the region focussing on hotels and large projects.

Mighty River Power: John Key spoke at the National Party conference and revealed a few more details of the share float. There will be a minimum investment of $1,000 and investors who intend to invest more will be able to invest up to $2,000 without being scaled. There will also be a loyalty bonus share scheme for longer term New Zealand investors. Call us to be added to the register of investors who are interested in MRP.

Woodside Petroleum (WPL.asx) The Pluto LNG (Liquefied Natural Gas) project off the North West coast of Western Australia delivered its first production this quarter. The project surprised with 80% availability resulting in higher than expected LNG production.  However, the price WPL is receiving for LNG is 5% below expectations and not being reviewed again until 2014. WPL has strong cash flow and is expected to use this excess cash for new acquisitions.

Other News

  • Earnings season in New Zealand is starting to heat up with Comvita (CVT.nz), Mainfreight (MFT.nz), OceanaGold (OGC.nz) and Xero (XRO.nz) all reporting this week.
  • The Reserve Bank of New Zealand is reviewing the OCR on Thursday.
  • Australian companies will start reporting next week.

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About the author

Jarrod Goodall

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weekly update investment shares bonds market commentary methven mvn mvn.nz might river power mighty river woodside petroleum wpl wpl.asx


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