Yovich & Co Blog


Yovich & Co. Weekly Update - 12 November 2012

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.

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Tags: Infratil Zenith Minerals Limited Bonds Market Commentary Weekly Update Investments Shares


Yovich & Co. Weekly Update - 5 November 2012

Investing for Income:

In April 2009 the Reserve Bank of New Zealand (RBNZ) reduced the Official Cash Rate (OCR) to a record low of 2.5% as the world economy was in the depths of the Global Financial Crisis (GFC). Since then, crisis has been averted but economies have struggled to bounce back with significant growth, in contrast markets have rallied as investors chase high yielding stocks and bonds. With the RBNZ making indications that an upward move in the OCR could be a long way off, the search for high yielding investments remains central to all investors. Our top Income Investments have proven track records with dividends, robust balance sheets and a sustainable bottom line.

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Tags: Weekly Update Investment Shares Bonds Market Commentary Investments


Yovich & Co. Weekly Update - 29 October 2012

Fonterra:

On Friday, Fonterra issued a prospectus for the issue of $500m of units in the Fonterra Shareholders’ Fund. The units give the unit holder the economic rights attached to Fonterra shares, such as dividend and other corporate actions, but do not carry the right to vote the underlying Fonterra shares. The Fund is designed to support the liquidity of the Farmer-only market for shares, and there are structural features in place to ensure the units and the shares will trade at very similar prices. The units have an expected gross yield of 5.8-7.0% and a cash yield (post PIE tax) of 4.2-5.0% for 2013, based on the indicative price range of $4.60-5.50 per unit.

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Tags: Weekly Update Investment Shares Bonds Market Commentary Investments Fonterra


Yovich & Co. Weekly Update - 22 October 2012

NZ Property Sector:

Falling interest rates have helped elevate returns for the sector, driven by earnrings growth and investors chasing better yields. With current expectations that the Reserve Bank of New Zealand will keep rates lower for longer, we can expect that the property sector will remain favourable. On current valuations the sector is trading at a premium but there are moves by the valuer CBRE to reduce the cap rates. Cap rates are set by the valuer and identify the required yield for a property and are likely to be reduced given the low return environment we are in at the moment. The result of this reduction in the cap rate will see valuations of the underlying properties rise.

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Tags: NZ Property Sector Gascoyne Resources GCY GCY.asx Weekly Update Investment Shares Bonds Market Commentary Investments DNZ Property Fund Limited DNZ DNZ.nz Argosy Property Limited Argosy ARG.nz ARG NPT Limited NPT NPT.nz


Yovich & Co. Weekly Update - 15 October 2012

Australian Financial Sector Outlook: 

The major banks rational oligopoly is alive and well, delivering high profits, sustainable growing dividends and providing an attractive alternative to declining returns from bank deposits. The previous five years have been about capital strength and asset quality, but the focus for the next five years will be on technology and improving operational efficiency in a low credit growth environment. Australia & New Zealand Banking Group (ANZ) and National Australia Bank (NAB) carry more risk and benefit from higher exposure to growth opportunities in business banking than the retail heavyweights, Commonwealth Bank (CBA) and Westpac Banking Corporation (WBC). We retain our positive banking sector view with expectations that the major banks will start capital management initiatives in FY13 to return excess capital to shareholders unless there is an external economic shock or the Australian economy goes into a sharp decline.

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Tags: Australian Financial Sector Outlook ANZ ANZ.nz Westpac


Yovich & Co. Weekly Update - 8 October 2012

Fisher & Paykel Appliances (FPA.nz):

The independent directors have rejected the offer of $1.20 per share by Haier and recommended that shareholders do the same. The valuation by Grant Samuels recommended that FPA was worth between $1.28 and $1.57 per share. At this stage Haier has an agreement in place with the second largest shareholder to take their total shareholding to 37.46%, so only needs another 13% to gain control. The market has reacted positively to the report with FPA shares now trading at a premium over the offer price at $1.245. Haier has stated that they believe that the valuation of $1.28 to $1.57 is “overly optimistic”. The game of Poker has started with Haier making a statement that for FPA to achieve the valuation they would be relying on their 5 year plan playing out, but there was a “high degree of risk” in achieving the plan’s objectives.

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Tags: ANZ Banking Group ANZ ANZ.nz First NZ Capital Fisher & Paykel Fisher & Paykel Applicances FPA FPA.nz NZ Equity Strategy Weekly Update Investment Shares Market Commentary Investments


Yovich & Co. Weekly Update - 1 October 2012

New Zealand Refining (NZR.nz) released their throughput and refining margin for July and August with processing of 7.3 million barrels, exchange rate 0.80 U.S. cents and margins at US$6.10 per barrel. The margin is up on the average for the year which is currently running US$4.81 per barrel. The net result of these figures was a processing fee of $38 million. It is anticipated that the margins will continue to improve but the high NZD value relative to the USD remains a key negative in the short term.

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Tags: Shares Bonds Market Commentary Weekly Update Investments Fonterra Moa Brewing Co New Zealand Refining NZR NZR.nz Nuplex Industries NPX NPX.nz


Yovich & Co. Weekly Update - 24 September 2012

Shares vs. Property:

There have been a couple of articles in the NZ Herald over the past few weeks trying to tackle the ongoing debate on which is the best investment, Shares or Property? In the original article, they compared returns on a group of different asset classes over the past 40 years with shares outperforming by an impressive and clear margin. There was one glaring caveat in the research and that was that the property investment did not include rent while shares included dividends. Although this meant that they were not comparing "apples with apples" I can understand the reasoning for it. First of all, it is near impossible to find the average rental return for property and secondly, rental returns are eaten away by maintenance costs, rates and times when the property is vacant.

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Tags: Shares Bonds Market Commentary Investment advice Investments Weekly Update


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