Yovich & Co. Weekly Update - 11 March 2013

Mar 11, 2013 | Commentary

This Weeks Themes

• Equity markets continued their push higher with the NZX50 Gross index marking an all time high and knocking on the door of reaching the 4400 level.

• The Aussie market has traded through resistance at the 5,000 level for the first time since 2008, a level that the market has failed to penetrate 5 times since 2009.

• The Dow made another record high last week with the S&P 500 edging towards it's all time high as well and the NASDAQ also surging upwards to a post GFC high but still short of its all time high during the tech bubble of 2000.

• The momentum in the U.S. markets has continued despite the sequester coming into effect. The term sequester is used to describe a general cut in Government Spending.

• A disappointing U.S. non-farm payrolls announcement had risk sentiment fall and drag the kiwi slightly lower.

Investment News

Air New Zealand – First Half 2013 Result:

AIR reported its first half result with normalised profit of $139 million, a significant improvement on the $33 million in the previous corresponding period due to cost control and revenue growth of 3.4%. Management has given guidance that the second half profit should comfortably exceed last year's performance and earnings forecasts for the full year are for earnings of $234 million. A 3.0 cent per share fully imputed dividend was declared, giving the stock yield of 5%. Air New Zealand is also one of the assets that the Government plans to sell down and given the demand for Mighty River Power, and Air New Zealand's strong dividend performance, it looks to be well placed ahead of the sell down. First NZ Capital rates AIR as an outperform, with target price of $1.65, current price is $1.48.

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Jarrod Goodall

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