Yovich & Co. Market Update - 25 January 2021

Jan 25, 2021 | Commentary

25 January 2020

Market update 2021-01-25


In summary, the NZX50G had 21 companies on the downside, 4 remain unchanged and 25 companies were on the upside. Another strong GDT result on 19 January saw prices increase 4.8% to US$3,593 the fifth consecutive positive result. Anhydrous Milk Fat had the greatest price increase of 17.2%. Total metric tonne (MT) sold was 29,606. According to Stats NZ December’s electronic card transactions data revealed spending in retail up 3.5% year on year (YoY) to $250m, while spending in core retail grew 4.8% to $305m. Increased spending was seen for both staples and discretionaries, with strong performances in the liquor 16.0%, supermarket 6.6% YoY, furniture 12.0% and motor vehicle 8.8% sub-industries. Fuel transactions by value dropped 13.0%, accommodation fell 32.0% and travel services plummeted 81.0%. Q4 inflation was higher than expected with a 0.5% quarterly lift, bringing the YoY CPI increase to 1.4% (forecast was +1.1%). Cyclical prices such as apparel, transport, household contents and recreation & culture led the index up, all rising >1% compared to last quarter. Food was the only good that was cheaper, with average prices dropping just under 2%. Bottom line, the CPI print offers no encouragement for the RBNZ to add additional monetary policy support at this time.

Biggest movers 2021-01-25

Investment News


Australasia’s largest online direct personal lender (non-bank) based out of Auckland issued 2% more loans in the six months to December than forecast in its prospectus. Harmoney has now originated over NZ$1.9 billion in personal loans to more than 48,000 customers across New Zealand and Australia, with a total current loan book of NZ$469m. Harmoney also confirmed its second NZ warehouse funding facility with M&G Investments of NZ$200m is now operational with NZ$264m of funding capacity currently available as at 31 Dec 2020. Loan portfolio continued to demonstrate strong credit performance with (Group) 61+ day arrears declining to 1.3% down from 1.6% as of 30 June 2020. 90+ day arrears also further declining to 0.58% down from 0.98% as of 30 June 2020. Audited market update for the H1 FY21 ending 31 December will be released on Wednesday 24 April. 

Current Share Price: $2.88, Target Price: $3.54.


Bingo Industries

Together with its subsidiaries provides waste management solutions for domestic and commercial businesses in Australia. It operates through three segments: Collections, Post Collections, and Other. It collects and transports building, demolition, industrial, and commercial waste from customers to post-collection facilities; and provides bins for hire. Bingo has received an unsolicited, highly conditional indicative bid from a consortium consisting of CPE Capital and co-investors including Macquarie Infrastructure and Real Estate (MIRA) for cash $3.50/share, subject to due diligence and financing. The announcement saw the share price increase 20.44% from $2.74 to $3.30 per share.  

Current Share Price: $3.21, Gross Yield: 1.15%, Target Price: $3.00.


Mercury Energy

Announced on Friday that it has revised its FY2021 EBITDAF guidance from $505 million to $535 million. This reflects an expected 200 GWh increase in full year hydro generation to 3,900 GWh and strong trading performance, due to storage levels in Lake Taupo increasing towards the end of the quarter. Share price increased 3.3% to $7.20.

Current Share Price: $7.38, Gross Yield: 2.97, Target Price: $6.00.


Oceania Healthcare

Unaudited tax paid profit for the 1HY21 ending 30 November 2020, was up $9.9m at $24.8m, sales volumes (for both independent living apartments and villas, as well as care suites) 44% ahead of the prior corresponding period. Operating cashflow increased 30.9% to $74.6m as a result of strong sales volumes. Total assets increased to $1.7 billion, up 11.8% ($177.1m) on November 2019, primarily due to significant development capital expenditure during the period. Oceania Healthcare’s significant development programme continues to be delivered on time and on budget, with Oceania  on track to complete 217 aged care beds and retirement village units by the end of this financial year (31 March 2021), in line with previous guidance. Oceania Healthcare has resource consents in hand for 84.2% of its 1,780 unit/bed development pipeline which are planned to be delivered over the next six years. A gross interim dividend of 1.3 cents has an ex-dividend date of 9 February 2021 and is payable 24 February 2021.

Current Share Price: $1.53, Gross Yield: 2.29%, Target Price: $1.70.


Fisher & Paykel Healthcare

Provided an update on its trading activities for the nine months ended 31 December 2020, Operating revenue for the nine was up 73%. Managing Director and Chief Executive Officer Lewis Gradon said, “In many parts of the world, we have continued to see an influx of COVID-19 patients requiring hospitalisation for respiratory treatment. Healthcare professionals are dealing with pressures unlike anything they have faced before. Our thoughts are with them, the patients under their care, and the families of those who are impacted at this challenging time.” No formal guidance is provided for the full financial year 2021 as COVID-19 creates significant uncertainties. The company currently expects revenue and net profit after tax for the 2021 financial year to be higher than implied by those previous assumptions. This nine-month trading update includes the following observations:  Hospital hardware sales and usage continue to generally track local hospitalisation surges in countries around the world; the volume of air freight continues to be higher than normal and freight costs remain elevated; in Homecare, OSA diagnosis rates continue to be reduced, offset by strong growth in products used for nasal high flow therapy in the home; and the company continues to progress the acceleration of investment in manufacturing capacity. Share price increased 5.35% ($1.78) on the back of this update.

Current Share Price: $34.56, Gross Yield: 1.27%, Target Price: $33.55.


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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