Yovich & Co. Market Update - 23 April 2020
Apr 22, 2020 | Commentary
23 April 2020
Most, if not all of you, will be aware that NZ will be moving from level 4 to level 3 at 11.59pm April 27. As an essential service Yovich & Co will still be servicing clients via email or phone calls, from their homes. No face to face meetings will be held at the office. COVID-19 has not affected any services Yovich & Co provide. Remember to keep social distancing, stay safe and shop local.
New Zealand Equities
In summary, last week the NZ50G saw 2 companies on the downside, 1 remained unchanged and 47 on the upside. The NZ50G had an amazing week, up 8.18%, currently down 9.85% from January 1 2020. As oil future prices go negative due to supply glut, the S&P 500 and the NZX50 also ended the day in the red. The economic impact of COVID-19 is now starting to show. Global Dairy Trade (GDT) April 22 was lower at 4.20%, the average USD/metric tonne was $2,836, from products that were offered only Lactose and Cheddar was up 12.0% and 1.9% respectively. Yovich & Co are advising that if clients’ goals and time frame have not changed then to stay the investment course. If at all concerned please contact your adviser.
Market leader in Mānuka honey, Propolis and Fresh-Picked Olive Leaf Extract, is pleased to report that the strong demand shared with the market in mid-March has continued throughout March and resulted in a strong quarter delivering double digit growth year on year, with all major markets reporting good sales output. Comvita was profitable in each month and have generated good cashflows and working capital improvements that have enabled us to continue to reduce debt. This year’s honey harvest has increased by over 60% year on year with over 95% of the extraction complete. In addition the quality of the crop (volume of the crop over UMF™ 10+) has also improved by over 150%. Current Share Price: $3.05, Price/NTA: 1.30.
Delivered a strong first half and most Covid-19 impacts have only materialised in the final quarter of FY20, which moderates the impact of the pandemic during this financial year. With the information that is known today, Spark reaffirms FY20 guidance, EBITA range of $1,100m - $1,120m. Travel restrictions and border closures have significantly reduced higher-margin mobile roaming revenues that annually generate only 5% of total mobile revenue. Retail revenues have also declined due to lower device and accessory sales due to store closures. Full year dividend is expected to be 25 cents per share. Current Share Price: $4.44, Price/NTA: 20, EPS: 23.03, Gross dividend yield: 7.34%.
The coronavirus pandemic has temporarily boosted a2M’s profit margins. Panic buying of milk products, particularly infant formula, a lower New Zealand dollar, and reduced operating costs because of travel restrictions, have lifted earnings, the company said Wednesday. It forecast full-year revenue in a range of NZD$1.7 billion to NZ$1.75 billion and a profit margin of 31%-32%, higher than previously indicated. "It's unlikely that these factors will be sustained as these unprecedented circumstances begin to unwind," the company said. It is continuing to target a profit margin of 30% in the medium term. A record share price of $20.30 was reached on April 20 and 22. Current Share Price: $19.58, Price/NTA: 15.30, EPS: 43.53, PE Ratio: 45.00.
Group reports 141 sales for the quarter ending 31 March 2020, comprising 70 new sales and 71 resales. Summerset CEO Julian Cook said, “We have maintained our sales for the first quarter at normal levels and have a good pipeline of sales. It is still too early to tell the impact of COVID-19 on our next quarter.” As of 31 March, Summerset had a further 98 new sales contracts in place (20 more than at 31 December 2019) and 73 resales contracts in place (19 more than at 31 December 2019). Summerset continues to ensure it has strong financial management disciplines in place with close to $400m of unutilised funding capacity available. Current Share Price: $6.18, Price/NTA: 1.23 PE Ratio: 7.46, Gross dividend yield: 2.28%.
Disclaimer: This publication has been prepared for your general information. While all care has been taken in the preparation of this publication, no warranty is given as to the accuracy of the information and no responsibility is taken for any errors or omissions. This publication does not constitute financial or insurance product advice. It may not be relevant to individual circumstances. Nothing in this publication is, or should be taken as, an offer, invitation, or recommendation to buy, sell, or retain any investment in or make any deposit with any person. You should seek professional advice before taking any action in relation to the matters dealt within this publication. No part of this publication may be reproduced without prior written permission from our company. Disclosure statements relating to the financial advisers associated with this newsletter are available on request and free of charge.
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