Yovich & Co. Market Update - 30 June 2020

Jun 30, 2020 | Commentary

30 June 2020

New Zealand Equities

Market update 2020-06-30

 

In summary, last week the NZ50G saw 39 companies on the downside, 1 remained unchanged and 9 on the upside. The first quarter (Jan, Feb, Mar) GDP results were down 1.6%, economists are forecasting a 17% fall in the Q2 (Apr, May, Jun). In the Monetary Policy Statement 2020 the RBNZ forecasted Q2 GDP down 22% (due to NZ achieving Alert Level 1 earlier than expected, GDP forecast maybe revised). As at 26 June 2020 the NZ50G is down 3.16% for the calendar year, while the NASDAQ is up 8.74%.  In a recent Bloomberg interview Grant Robertson mentioned that he is comfortable to take NZ debt levels to 50-60% of GDP to get NZ through the COVID-19 pandemic.  As investors try to navigate the post COVID-19 world, Yovich & Co are advising clients that if their goals and time frames have not changed, to then stay the investment course. If at all concerned please contact your adviser.

Biggest movers 2020-06-30

Investment News

Fisher & Paykel Healthcare

Tax paid profit for FY2020 ending 31 March, was up 37% at $287.3m, total revenue up 18% at $1.26b. Net tangible assets are lower, from $1.46 to $1.41. Both Hospital product group and Homecare product group, operating revenue increased 25% to $801.3m and 9% to $457m respectively, for the year. Hospital group revenue was due to increase sales of new application consumables, these consumables are used in respiratory, acute, and surgical care. Homecare group sales included obstructive sleep apnea (OSA) and respirator support in the home. Fisher & Paykel FY21 forecasts as follows; net profit after tax to be in the range of $325m to $340m.  A final gross dividend of 21.53 cents, with an ex-dividend date of 3 July and is payable 17 July 2020. Current Share Price: $35, Price/NTA: 24.82, EPS: $0.50, PE ratio: 69.94, Target Price: $2508, Gross dividend yield: 0.48%.

New Zealand Refining

Announced on the 15 April a strategic review to determine the optimal business model and capital structure for its assets to maximise “through the cycle” returns to shareholders and deliver secure, competitive fuel supply to New Zealand. The first phase of the Strategic Review included extensive engagement with stakeholders, customers, and Government.  And to simplify refinery operations and structurally reduce operating costs while focusing on fuel supply into the Auckland and Northland markets where it has a competitive advantage due to its Marsden Point infrastructure and Refinery to Auckland Pipeline. In parallel the company will continue to evaluate a possible future staged transition to an import terminal, such a transition would require shareholder approval. Further update to the review is expected end of Q3 2020.Current Share Price: $0.76, Price/NTA: 0.32, EPS: $0.01, PE ratio: 57.14, Target Price: $1.33, Rating: Outperform.

Abano Healthcare

Has received a further revised non-binding, indicative offer to acquire all the Abano shares by way of Scheme of Arrangement. The Board reiterates its previous expectations that any Scheme proposal would need to satisfactorily address the Company’s underlying value and to provide sufficient certainty of execution and price to Abano shareholders. Current Share Price: $2.93, EPS: $0.06, PE ratio: 44.53.

Mainfreight

Tax paid profit for the FY20 ending 31 March was up 10.6% at $156.1m, group operating revenue was 4.8% higher at $3.10b. Net profit make up is split 57.9% offshore, NZ 42.1%. Gross dividends are up 5.4% at 81.94 cents. Mainfreight’s goals are to increase, revenue to $4b 2021, $5b by 2024, warehousing from 729,684m2 to exceed 1,000,000m2 and focus on information technology for customers. Current Share Price: $39.63, Price/NTA: 5.43, EPS: $1.58, PE ratio: 25.07, Target Price: $41.56, Rating: Neutral, Gross dividend yield: 2.06%.

Mercury

Has revised its FY20 earnings before interest tax and depreciation down $10m to $480m. This reflects an expected 100 GWh decrease in full year generation to 3,700 GWh due to continued dry weather conditions in Taupo catchment in FY20. Current Share Price: $4.71, Price/NTA: 1.89, EPS: $0.24, PE ratio: 19.12, Gross dividend yield: 4.62%.

Aroa Biosurgery

Is an Auckland based soft tissue regeneration company that is set to list on the Australian Securities Exchange as part of an initial public offering (IPO) that will see it raise $45m from investors and commence trading 30 July 2020. Aroa has achieved product revenue of NZ$22m in FY20 (March year end) and NZ$18.7m in gross profit. Aroa will be valued at A$225m made up by 40m shares at 75 cents per share ($30m), with the difference of A$15m funded from a sell down by existing shareholders in the company.

 

NZ Upcoming Dividends

up coming dividends 2020-06-30

 

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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Nathanael McDonald



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