Yovich & Co. Weekly Update - 22 April 2013

Apr 22, 2013 | Commentary

This Week's Themes

• The NZ market inched higher after reaching another all time high mid week before the Labour/Greens proposal to regulate the electricity sector put the brakes on the market.

• The sell off in the resource sector in Australia is continuing as commodity prices come under pressure from slowing Chinese growth figures.

• U.S. stocks suffered their worst drop since June 1, 2012 with companies reporting disappointing results at the beginning of this reporting season.

• The Kiwi fell sharply against the U.S after the Labour/ Greens proposal but firmed against the Aussie.

Investment News

Steel & Tube Holdings Limited – New Zealand Construction Exposure:

STU provides exposure to the New Zealand Construction industry though their core business, distributing Steel construction materials. Unlike Fletcher Building, STU does not have exposure to the Australian market which has been slow over recent years and negatively effected FBU during a period of increased activity in New Zealand as a result of the pick up in activity in Christchurch. The result announcement in February indicated that activity has picked up in the local market with Profit after Tax increasing by $0.9 million to $7.3 million for the 6 months to 31 December, a 13% uplift.

First NZ Capital believes that STU is currently trading at around a 10% discount to their mid-cycle valuation due to uncertainly around the recovery in the local market and the Christchurch rebuild. They assign a 12 month target price of $2.95 and an outperform rating.

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Jarrod Goodall



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