Yovich & Co. Weekly Update - 30 July 2012
Jul 30, 2012 | Commentary
This Week's Themes
- The NZX50 was higher last week led by Fletcher Building on the back of positive expectations for Australian House Construction.
- The RBNZ left the OCR at 2.50%, reiterating that they expect economic activity to grow modestly over the next few years.
- U.S. markets ended the week strongly on hopes that central banks in Europe and the U.S. will step in to support their economies with another round of asset purchases.
- U.S. data showed GDP growth of 1.5%.
- The Kiwi Dollar was once again strong with it rising to a 3 month high during the week on mentions of further stimulus.
Goodman Fielder (GFF.nz) provided an update on trading conditions and warned of more write downs. Total write downs could equal A$200 million and relate to a cash impairment charge against the baking and home ingredients division and other businesses under review. They also reaffirmed earrings guidance of between A$230-A$245 million and announced that they had completed the first stage of costs cutting measures.
Mainfreight (MFT.nz) reported an impressive result with full year profit of $65.8 million. The logistics company has an aggressive growth strategy with the Managing Director, Don Braid believing that they can become New Zealand’s largest company by 2028. With a foothold in Australasia, Asia, North America and Europe the company is well placed to benefit from a pick up in global growth but at this stage they are still being held back by slow earnings recovery in Europe.
Comvita (CVT.nz) is continuing to deliver strong growth with sales of $96 million, this represents growth of 17% over last year. Significant growth is coming from operations in Hong Kong and China and is reflecting operating leverage from their investment in infrastructure. A gross dividend yield of 6% and further possible growth from over 400 outlets in Asia is pushing the stock price to its highest level since 2008.
Atlas Iron (AGO.asx) released their June quarter production results with shipments of 1.5Mt of Iron Ore, an increase of 25% on the previous quarter. The company also reiterated their guidance to produce 12mtpa by December 2013. With reserves at their tenements in the Pilbara totalling 414Mt and the joint rail study with Queensland Rail progressing, Atlas Iron’s growth endeavours are appearing possible.
- Stocks hosting their annual meetings this week include Ryman Healthcare (RYM.nz), Wakefield Health (WFD.nz), TrustPower (TPW.nz) and Pharmacybrands (PHB.nz).
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