Yovich & Co. Market Update - 23 November 2020
Nov 23, 2020 | Commentary
In summary, last week the NZ50G saw 25 companies on the downside, 5 remained unchanged and 20 on the upside. As like the week before, the NZX50G (along with most other indices) reached new record highs. Midweek saw the index trim those gains to end the week 2.03% down. The markets have been on a bull run for the last 11 days, and naturally last week saw investors sell-off gains. On the currency front the NZD/USD is back to levels seen at the end of 2018, beginning of 2019. The appreciation in the NZD is good for investors looking at purchasing US stocks, but at the same time is bringing down the value of assets already held by investors. A stronger NZD is good for importers but negative for companies whose revenue is weighted to exports e.g. Fisher & Paykel and Fonterra.
Has announced an offering up to $50 million of unsecured, unsubordinated fixed rate Infrastructure Bonds which are to mature on 15 March 2026 (“Bonds”), with the option to accept up to $50 million of oversubscriptions at Infratil’s discretion. The Bonds will form part of the same series as Infratil’s existing 3.35% per annum fixed rate bonds issued on 16 December 2019, 16 January 2020 and 14 February 2020 (“IFT300”). The Issue Price for the Bonds will be $1.01694 per Bond for Bonds issued on 15 December 2020 and $1.01619 for Bonds issued on 15 March 2021, which has been determined using an Issue Yield of 3.00% p.a. The coupon rate for the Bonds (payable on the Face Value of $1.00, not the Issue Price) is fixed at 3.35% p.a. for the term of the Bonds. Investors searching for a defensive asset returning 3% should contact their adviser to find out more.
Infratil’s current Share Price: $5.62, EPS: $0.31, Target price: $5.89, Rating: Outperform.
Tax paid profit for the 1H FY21 ending September 30, was down 14.2% at $88.4m (this was the underlying profit, which ignores impacts of unrealised gains on the valuation of investment properties), while their reported profit (including property gains) was up 12.8% to $212.4m. Revenue was up 9.1% at $423m. Due to lower volume of sales in the first half of the financial year, the board is expecting cash collections from new sales of $275m in the second half, up from $118m pcp. Ryman has a large land bank in front of them with 1,703 aged-care beds and 4,468 retirement-village units yet to be developed. Total assets are up 14.9% at $8.34b. Ryman is considering an offer of 6 or 8-year, fixed rate bonds to New Zealand institutional and retail investors, details are expected late November early December. An interim dividend of 8.8 cents carrying an ex-dividend date Wednesday 9, is payable December 18, 2020.
Current Share Price: $15.02, EPS: $0.57, PE ratio: 26, Gross dividend yield: 1.43%. Target price: $14.00, Rating: Neutral.
New Zealand Refinery
Said it would reduce its employees by 90 over the next few months as it moves toward converting to a fuel import terminal. New Zealand's sole oil refinery, on Thursday, said it is now developing engineering and design plans for the conversion, including estimated costs and timing. The company has said refining has become uneconomic in New Zealand because of the greater scale and efficiency of regional refineries. It hopes to realize value in future
from its fuel storage and pipeline infrastructure. Net debt was reduced by $17m to $232m as at the end of October, due to savings realised from the six-week temporary refinery shutdown in July/August and proceeds of asset sales of $13m. Part of the proceeds of the sale is to fund restructuring costs associated with the refinery simplification plans.
Current Share Price: $0.59, Target price: $1.09.
Went live on the NZX and AXS on Thursday 19 at NZ$3.75 per share, 25 cents more than the IPO price. There was little intra-day fluctuation in price, closing at $3.57, and just over 110,000 shares were traded. Heartland Group holds (in escrow) 8.44% of Harmoney’s shares on issue. Harmoney provides online direct personal loans in Australia and New Zealand. Its personal loans are used for various purposes, including consolidating debt, financing home renovations, financing vehicle purchases, financing a holiday, and funding other life events. The company distributes its loan products by engaging customers directly. Harmoney Corp Limited was founded "in 2013 and has its headquarters in Newmarket, New Zealand".
Current Share Price: NZ$3.65.
Has been given the green light for its $150 million retirement village in Boulcott, Lower Hutt, after resource consent was granted by the Environment Court. Summerset CEO Julian Cook said the retirement village will provide homes for more than 300 residents and was good news for locals who wanted options to retire in their own community. The new village will provide a wide range of retirement living options; comprising: 155 independent living apartments and villas; 56 serviced apartments; a 30-bed care centre; and Summerset’s award-winning memory care centre, which provides people living with dementia with the option of their own apartment in a secure environment.
Current Share Price: $10.57, EPS: $0.36, PE ratio: 28.68, Gross dividend yield: 1.30%, Target Price: $11.40 Rating: Outperform.
Tax paid profit for the half year ending September 30, was up from $0.1m to $1.2m, operating revenues increased 4% to $48.8m with growth in Australian and rest of world markets. Operating profit forecast for the FY21 remains in the $14 to $18m range. In the half year AFT signed a further ten Maxigesic IV Licensing and Distribution Agreements in six countries within the CEE, Germany, Austria, France and Italy. These agreements have lifted the number of territories in which the medicine has been licensed to 90 as at 30 September 2020 with further recent signings since then in Hong Kong and the UK. The Board maintained and reiterated intent to start dividends in FY22 subject to 2H21 performance and achieving target gearing.
Current Share Price: $4.88, Target Price: $6.50, Rating: Outperform.
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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