Yovich & Co. Market Update - 9 November 2020

Nov 9, 2020 | Commentary

New Zealand Equities

Market update 2020-11-10

In summary, last week the NZ50G saw 17 companies on the downside, 1 remained unchanged and 32 on the upside. The US elections have come to a close with Joe Biden becoming the President. The Democratic Party won the Electoral Votes and held on to the House of Representatives. Markets can now put the election uncertainty behind them and focus on the Democrats’ policies; one of these are expected to be a large fiscal package to lift the US economy. The RBNZ is to review the OCR this Wednesday; expectations are that the rate will remained unchanged. Further details of the Funding for Lending Programme (FLP) will be announced, providing lower cost funding for banks – could this see lower retail rates? NZ’s unemployment rate increased 1.3% to 5.3% for the September quarter, a touch better than the latest expectations of 5.4%; and materially better than May-budget Treasury expectations of up to 9.8%.     

Biggest movers 2020-11-10

Investment News


Provides a donor management system, including donor tools, finance tools and a custom community app, to the faith sector, non-profit organisations and education providers in the US, Canada, Australia and New Zealand.  The company announced the EBITDAF for FY21 is expected to be between US$50m and US$58m, up from US$50m and US$54m (announcement 18 June 2020). Bank debt reduced from US$50m to US$25m (30 September 2020); gross margins increased by 3% to 68% compared to previous corresponding period. What the market did not like was the expected slower growth in new customers. Going forward growth is expected to be achieved via acquisitions/ cross-selling between Pushpay and the Church Community Builder platform it bought last year. Pushpay also announced a 4:1 share split, providing four shares for every one held on the 27 November 2020.

Current Share Price: $8.54, EPS: $0.12, Target price: $9.20, Rating: Outperform.



Has announced their unaudited FY20 results ending 30 September 2020. Tax paid profit down 46% at $22.4m, total revenue 14% lower at $468.8m. Earnings reflect the ongoing impacts of the Covid-19 pandemic on Sanford’s sales channels, primarily to food service. The four-quarter profitability was further impacted by the following factors: Poorer than expected wild-catch performance in September driven by a lower than expected Patagonian toothfish catch and a lower fair value of salmon stock in water with expected future sales pricing under pressure. Despite this, cash collection remained satisfactory through the year and balance sheet is strong.

Current Share Price: $4.91, Gross dividend yield: 5.1%, Target price: $6.80, Rating: Outperform.


Trust Power

Tax paid profit for the 1H21 ending 30 September 2020, was down 13% at $33.6m, while underlying earnings after tax was up 7% at $52.7m, operation earnings up 3% at $110.4m. The FY21 operating results for the half year were impacted by weather but the expected lift, particularly in retail performance, has materialised despite COVID-19, which is pleasing. Trustpower expects its FY21 EBITDAF to be in the range of $185 - $205 million. A gross interim dividend of 23.6c cents carries an ex-dividend date of November 26 and is payable December 4, 2020.

Current Share Price: $7.25, EPS: $0.29, PE ratio: 24.95, Gross dividend yield: 5.90%.



Together with its subsidiaries, produces and sells chicken and turkey products in Australia and New Zealand. Also it offers; stock feeds for poultry, pig, and dairy industries. Today Ingham’s is the largest integrated poultry producer in Australasia, processing over 4 million birds per week and with a workforce of 8000 strong. The groups first quarter business update ending September 2020, shows poultry demand has strengthened with trading volumes up 6.3% compared to the first quarter of FY2020, and 7.5% up on the last quarter of FY2020. Inventory levels have reduced $16m within the first 17 weeks with further reductions expected with upcoming Christmas demand. There is anticipation that reduced feed cost will occur 2HFY21 with benefits showing in cost of sales by the 4Q FY21. The company announced a revision in dividend policy to a 60 to 80 percent payout ratio of Underlying NPAT before AASB 16, up from 60 to 70 percent. Using FY2020 NPAT the new policy would imply a reduction in payout by 30% at the bottom end and 20% at the top end.

Share Price: $3.33, Gross dividend yield: 4.59%, Target price: $3.70, Rating: Neutral.



Is considering making an offer, subject to market conditions, of up to NZ$200m (with the ability to accept oversubscriptions at Chorus’ discretion). The offer may comprise two Series of Bonds, which are expected to have terms of seven years and/or ten years. The proceeds of any offer will be used to refinance Chorus’ NZ$400m bond maturing in May 2021. The offer is expected to open, subject to market conditions, the week beginning 16 November 2020 and full details will be available then.

Share Price: $8.80, Gross dividend yield: 2.84%, Target price: $3.38, Rating: Neutral.


Synlait Milk

Has had a big week with:

1) Signing a new multinational customer agreement with an established, global category leader. Under the agreement, Synlait will manufacture, blend, and package nutrition products which include plant-based products. Processing and packaging customisation will be required at Synlait Pokeno and Synlait Auckland, with expected capital expenditure of $70 million spread over two years. Commercial production is currently projected to start mid-2022. Due to confidentiality further details of the agreement will not be disclosed. Synlait’s CEO does mention that the strategic partnership gives Synlait broader market and category exposure throughout Asia Pacific.

2) Settlement of the Pokeno historical land covenant legal dispute with NZ Industrial Park and Karl Ye. The settlement brings certainty for Synlait’s shareholder, customers, farmer suppliers and staff. Once again due to confidentiality further details of the agreement will not be disclosed except for noting that the settlement price was reasonable and not material to Synlait.   

Share Price: $5.89, Target price: $6.30, Rating: Neutral.


AFT Pharmaceuticals

Announces it has received a US Food and Drug Administration (FDA) complete response letter (CRL) covering its application for the approval of a tablet version of its Maxigesic® pain relief medication. The US regulator said an FDA Good Manufacturing Practice (GMP) inspection of the tablet production facilities – delayed due to COVID-19 related travel disruptions – was the “only deficiency” with AFT’s application. A remote GMP inspection has already been requested which is an alternative solution. Presently the precise timing cannot be confirmed. AFT Managing Director Dr Hartley Atkinson said the CRL indicated AFT had cleared a significant hurdle on its path towards the commercialisation of the Maxigesic pain relief family of medicines in the world’s largest pharmaceutical market.

Share Price: $5.50, EPS: $0.13, PE ratio: 42.18 Target price: $6.50, Rating: Outperform.




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Nathanael McDonald

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