Yovich & Co. Weekly Update - 14 October 2013

Oct 14, 2013 | Commentary

This Week’s Themes

  • Worldwide, markets are waiting on the U.S. to resolve the Government “shutdown” and to increase the Debt Ceiling. The VIX (measure of market volatility) has moved up from post GFC lows but is still sitting below 20, which is still very low, indicating that markets are not overly concerned. October 17 is the deadline for the Debt Ceiling so this will need to be resolved before then to avoid defaulting on their debt.

  • Friday is the last day to apply for Meridian in the Retail Offer. The main benefit of applying through the Retail Offer is that you are guaranteed to not pay more than $1.60 per share. If you are considering Meridian, contact us to discuss your application.

  • The New Zealand dollar remains strong despite the uncertainty surrounding the situation in the US.

Investment News

Infratil (IFT.nz) – A Strong Financial Position

The partial sale of Z Energy Limited has left Infratil in a strong financial position to fund organic expansion and enhance growth through new investments. There was also the announcement today that Infratil has sold the Manston Airport in the UK for 350,000 British pounds which helps to improve future cash flows and leaves Infratil with a more focussed portfolio.

Infratil’s trading update confirmed that major businesses are performing in line with expectations with earnings guidance of between $500-540 million.

First NZ Capital highlight that the gap between the current price of Infratil and their valuation is due to uncertainty in the electricity sector and that TrustPower makes up 40% of their portfolio. The key to Infratil’s share price improvement is TrustPower’s return to growth and the Australian wind farm investment to produce a decent uplift in earnings in 2015. FNZC has assigned an outperform rating and $3.00 price target. Current price is $2.54.

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About the author

Jarrod Goodall

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