Yovich & Co. Market Update - 15 February 2021
Feb 15, 2021 | Commentary
15 February 2021
In summary, the NZX50G had 37 companies on the downside, 2 remain unchanged and 11 companies were on the upside.
The NZ50G closed the week down 3.56%. Contact and Meridian Energy, (two prominent companies on the NZX50G) dragged the market down last week, along with investors revaluing their stock holdings, with the possibility of interest rates rising mid-2022. We will all be aware that Auckland has re-entered Level 3 Covid-19 lockdown until midnight Wednesday 17 February following the discovery of three confirmed cases of community transmission in South Auckland. The rest of NZ is in Level 2. Melbourne also entered a snap-lockdown on Friday (for five days), with the Holiday Inn cluster reaching 13 confirmed UK-variant cases at that time.
Seeks to set the standard for collecting, managing and analysing pole and overhead assets information for electric utilities, communications companies and their engineering service providers. Usage of IKE solution shows, (when compared to existing practices) increased efficiency for filed engineering by approximately two times and back office by approximately five times. The revenue engine for IKE is driven be the number of assets being processed through the IKE platform. In the Q3 FY21 period, less engineering activity occurred on certain network projects while COVID-19 response measures were put in place in specific U.S. regions. Revenue for the period was $2.1m, gross margin of approximately $4.3M with a gross margin percentage of approximately 67, strong balance sheet with total cash and receivables as at 31 December 2020 of approximately $18m with no debt.
Current Share Price: $1.10, Target Price: $1.44.
Is a global high technology company and a world leader in its field. The company designs and manufactures advanced frequency control and timing solutions. Its three core markets are Telecommunications, Global Positioning and Space and Defence. Rakon products are found at the forefront of communications where speed and reliability are paramount. The company’s products create extremely accurate electric signals which are used to generate radio waves and synchronise time in the most demanding communication applications. Rakon has secured several significant orders from new and existing customers including a material order from a new multi-national customer. Rakon expects to deliver the majority of these orders in FY2022, with the balance in FY2023. Indicatively, Rakon expects that these orders will increase its revenue in FY2022 by at least 20% from FY2021. These orders are not expected to impact financial performance for FY21, with current guidance for FY21 of underlying EBITA of between $20m and $22m. An earnings guidance for FY2022 is expected end March 2021.
Current Share Price: $0.86.
Air New Zealand
Announced that it plans to raise capital by 30 June 2021, the capital raise was subject to Cabinet approval. The government has confirmed it plans to maintain a majority shareholding by participating in the capital raise. The announcement had very little effect on share price.
Current Share Price: $1.56.
Provided an update on its unaudited trading performance for the six months ended 31 January 2021 (1H FY21). Group total sales for 1H FY21 were 12% above last year, including a full six-month contribution from Rip Curl. EBITDA is expected to be in the range of $47m to $49m. Group Net Debt is expected to be $7m following careful working capital management and the $207m capital raise in 2020. Online represents 13% of direct-to-consumer sales, up from 8.9% last year. The Group intends to release the full result for the half year on Tuesday 23 March 2021. An announcement regarding dividend resumption will be made at that time.
Current Share Price: $1.28, Target Price: $1.70, Rating: Buy.
Tax paid profits for the six months ending 31 December 2020 was up 32% at $78m, EBITDAF increased by 11% to $25m. Operating free cash flow for the period was up 31% at $157m. The Board has revised dividend policy to distribute ordinary dividends targeting a pay-out ratio of between 80-100% of the average operating free cash flow of the preceding four financial years. A gross interim dividend of 23 cents has an ex-dividend date of 15 March and is payable 30 March 2021. Contact Energy has also announced a $400m equity raise via a $325m underwritten placement and a $75m non-underwritten retail offer. The shares will be offered at $7.00 a 7.8% discount to the 5-day volume weighted average price (VWAP) of $7.60. Under the Retail Offer, eligible shareholders in New Zealand and Australia will be invited to apply for up to NZ$50,000 / AU$46,500 (respectively) of new shares, free of any brokerage or transaction costs. Funds for the equity raise will be used to part fund a new $580m low carbon 152 megawatt Tauhara geothermal plant near Taupo, which is expected it to be built by mid-2023.
Current Share Price: $7.20, Gross Yield: 6.77%, Target Price: $8.27, Rating: Buy.
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