Yovich & Co. Weekly Update - 3 September 2012

Sep 3, 2012 | Commentary

This Week's Themes

  • The last week of reporting season saw the New Zealand market jump over 1% led by the 20% rally in Air NZ after their annual results announcement on Thursday. 
  • The Business Outlook Survey was positive for the first time in 4 months, indicating that businesses expect a moderate recovery in the NZ Economy. The report also showed positive expectations for construction.
  • U.S. markets paired losses early in the week with Ben Bernanke speaking on Friday. Once again there was no firm commitment to further quantitative easing but the tone lead to onclusions that the odds have improved.
  • The Kiwi Dollar fell slightly as concerns of slow Chinese manufacturing weighed on Australasian currencies.

Company News

Heartland New Zealand (HNZ.nz) reported their 2012 result with net profit of $23.6 million, a three fold increase compared to last year’s profit. The increased profit included earnings from the acquisition of PGG Wrightson Finance Limited, which has diversified their loan book by increasing their percentage of rural loans. HNZ has applied to become a bank and is expecting the Reserve Bank of New Zealand to provide an outcome in November. If successful, this will serve as a catalyst for a re-rating by Standard & Poor’s, reducing funding costs and further improving margin capture.

Port of Tauranga (POT.nz) clearly made the most of the industrial dispute at the Ports of Auckland and declared a 26% increase to net profit to $73.5 million. A final dividend of 27 cents will be ex dividend on 19 September and takes the total to 39 cents this year. Guidance made by management was for further growth, driven by higher log and container volumes. They are confident enough in this growth that they have earmarked $180 million for capital expenditure over the next three years. At the current share price POT appear to be fully valued.

Northland Port (NTH.nz) also experienced a good year with an increase in profit of 59% to 7.6 million. They highlighted larger volumes of log exports at Northport, new tenancies and revaluation of their property portfolio as reasons for the improvement.

Auckland Airport (AIA.nz) announced increased earnings of 15% to record a profit of $139 million.  Increased arrivals from the World Cup and a strong result from the Queenstown airport contributed to the bottom line. The dividend payout ratio is now 100% with a forecasted net yield of 4.2%.

Air New Zealand (AIR.nz) beat expectations by announcing a profit of $71 million. Strong passenger revenue gains and foreign exchange gains were the main contributions to the result but were offset by large fuel costs.  The market has reacted favourably to the result and to guidance that earnings will more than double in 2013.

Other News

  • The Warehouse Group (WHS.nz) is reporting at the end of the week.
  • The European Central Bank President Mario Draghi will comment following the central bank's policy meeting on Thursday.

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Jarrod Goodall



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Heartland Heartland New Zealand HNZ HNZ.nz Port of Tauranga POT POT.nz Northland Port NTH.nz NTH Auckland Airport AIA AIA.nz Air New Zealand AIR AIR.nz Weekly Update Investment Shares Bonds Market Commentary



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