Yovich & Co. Weekly Update - 12 November 2012

Nov 12, 2012 | Commentary

This Week's Themes

  • The local market bounced back from last weeks fall despite weak employment data being released and global markets marking further losses.
  • The New Zealand market has now outperformed the U.S., U.K., Australian and Hong markets over the past year.
  • U.S. markets fell after attention turned to how President Obama was going to prevent the U.S. from falling off the “Fiscal Cliff” and what impact new taxation policy was going to have on dividends.
  • European markets were also weak with economists forecasting that the Eurozone economy has contracted 0.1%.
  • The Kiwi fell over 1 percent after the unemployment figures showed that there are more people out of work than during the Asian crisis in the late 90’s.

Investment News

Infratil – Result Announcement: Earnings for the first half of the year were NZ$295.1million, up NZ$18.7 million (6.8%) on the previous corresponding period. As has been featuring in the news lately, the net parent surplus has been dragged down by further impairment charges relating to the loss-making operation in Europe. But, as you can see in the below bar graph, the Infratil Airports Europe assets are a relatively small part of the Infratil portfolio.

Breakdown of Infratil Net Asset Values Prior to Write-down


  

Most of the interest has been on the performance of Infratil Energy Australia, which has grown revenue by 19% and their customer base by 7% in the last 6 months. The retail base is growing nicely and might be getting set up to sell. This could provide a catalyst for the share price to jump and trade closer to fair value. The markets reaction to the announcement so far has been muted with the share price making modest gains this morning.

Zenith Minerals Limited has announced a rights issue, entitling shareholders to one new share for every 6 shares held at a price of 15 cents. Over the past week, ZNC.asx has traded in the range of 18 to 23 cents representing a good discount for the entitlement. Zenith has also announced that the next stage of drilling has commenced at their Eraheedy, Manganese project. In previous drilling they have found high grade manganese oxide intersecting at shallow depth. If you wish to take your allocation up we can process the application for you. Please drop the form into our office prior to the offer closing on the 29th of November.

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Jarrod Goodall



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