Yovich & Co. Market Update - 22 February 2021

Feb 22, 2021 | Commentary

22 February 2021

Market Update 20210222

In summary, the NZX50G had 32 companies on the downside, 2 remain unchanged and 16 companies were on the upside.

The NZ50G closed the week down 0.33%. The Global Dairy Trade Auction (GDT) on 16 February increased 3% (seventh consecutive positive result) to an average price of US$3,746 per metric tonne (MT), 26,883 MT were sold.  Whole milk powder had the greatest gain, up 4.3%. The Capital Good Index (The index tracks the change in costs for capital assets, which are used by companies and the New Zealand government to produce other goods) rose 1.9% in the year, led by the cost of residential buildings which were up +3.0%, but civil construction costs fell -0.1% in the year. Plant & machinery was up +1.9% led by office furniture (+7.7%) and restrained by medical & surgical equipment (-1.3%). Computer costs rose a mere +0.8%. The market awaits the RBNZ Monetary Policy Statement (MPS) due to be announced 24 February.

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Tax paid profit for the 1HFY21 ending December 2020 was up 13.7% at AU$92.9m, revenue was up 6.3% at AU$4.7b. Very strong performances from both Healthcare and Animal Care segments, with Healthcare’s Underlying EBIT up 11.2% and Animal Care’s EBIT up 25.6%. Net-debt to EBITDA reducing to 1.00x from 1.11x in June 2020. EBOS has continued its strategy of investing for growth, with two acquisitions completed in the first half of the 2021 financial year. The Cryomed acquisition in the medical devices sector and the acquisition of CH2’s vet distribution business (AU$9m) strengthen existing presence in those sectors and are EPS accretive to EBOS shareholders. Interim goss dividend is up 13.3% to 46.63 cents and has an ex-dividend date of 4 March, payable 18 March 2021. 

Current Share Price: $28.71, Gross Dividend Yield: 2.96%, Target Price: $29.20.

Asset Plus

Is pleased to confirm that it has now received resource consent for the preferred office development at 35 Graham Street, Auckland CBD. Resource Consent has been granted for the addition of 3 new levels on the existing office building, taking the building from approximately 12,900 sqm of gross floor area (GFA) to 25,800 sqm of GFA. A gross interim dividend of 0.56 cents has an ex-dividend of 23 February and is payable 3 March 2021.

Current Share Price: $0.37, Gross Dividend Yield: 5.57%, NTA: $0.51, Target Price: $0.37.


Group sales for the 1HFY ending 1 February 2021 was up 13.6% to $182m, group unaudited tax paid profit is projected to be in the range of $19.5 million to $20.0 million, an increase of approximately 28% over the prior year ($15.4 million). Online sales continue to play an integral part and account for 24% of sales in the first half. The balance sheet for the Group remains strong and stock levels continue to be well controlled. A full announcement with financial statements for the six months ended 1 February 2021 including dividend declaration will be released to the market on 26 March 2021.

Current Share Price: $7.70, Gross Dividend Yield: 7.03%.


Tax paid profit for the full year ending 31 December 2020 was up 20.1% at $17.6m, operating earnings up 9.7% at $34.4m. Record trading levels with a 41.8% increase in value traded to $53.7b and FY2021 operating earnings guidance is in the range of $31.5m to $35.5m. A final gross dividend of 4.3 cents per share carries an ex-dividend date of 11 March and is payable 26 March 2021, contributing to a gross FY2020 dividend of 8.47 cents per share. Together with the strong appreciation in NZX’s share price, the total shareholder return (TSR) for the year ended 31 December 2020 was 50.3%.
Current Share Price: $2.01, Gross Dividend Yield: 4.22%.


Has and is going through a challenging time with managing the drop in NZs fuel consumption and changing from New Zealand’s largest fuel refinery possibly to becoming a terminal tank farm. Over the last year (and currently) the goal for the Refinery is to maintain cash neutral and operating within the Fee Floor. Refining NZ is now well progressed in its assessment of the import terminal option, with an understanding of the costs and time involved in a conversion to an import terminal with Front End Engineering and Design (FEED) and detailed planning work now underway. The proposed import terminal system would have annual capacity of approximately 3b litres, supplying the Auckland and Northland markets which make up circa 40% of the total New Zealand market. Net debt down $10 million to $231 million, reflecting the financial discipline of cash neutral operations.

Current Share Price: $0.50, Target Price: $1.38, Rating: Outperform.


Tax paid profit for the 1HFY21 ending December 2020 is up 61% at $19.5m, operating cash flow up 33% at $35.1m, revenue up 11% at $136.6m and net debt reduced by $15.5m to $13m. Forecasted net profit in in the range of $33m to $37m. The Argi and Industrial divisions produced record results with EBIT up 56% ($15.3m) and 52% ($15.5m) respectively. The CEO David Mair said “Our returns have improved because of product mix, new business, better operational execution and reduced costs. Our leaders are focused on moving time and resources into areas where the largest benefits can be achieved, and we continue to have a strong pipeline of new business which will underpin growth in future years.” Issues going forward are extended shipping times and increased freight costs due to congestion and availability, along with some increases in raw materials and the strengthening of the NZ dollar. An interim gross dividend of 7.76 cents (an increase of 18%) has an ex-dividend date of 4 March and is payable 18 March 2021.

Current Share Price: $4.30, Gross Dividend Yield: 3.61%, Target Price: $4.35.

Sky City

Tax paid profit for the 1HFY21 ending 31 December 2020 was down 76.1% at $78.4m, revenue was 37.7% lower at $449.9m. Group performance had been significantly impacted by COVID-19, particularly in the tourism-related areas of hotels, food and beverage, and international business. The online casino platform has seen significant growth in gaming revenue and EBITDA (margin around 40%, well ahead of expectations), currently over 30,000 active customers. Net debt of $587m drawn to EBITDA is 3.5x. The Board is expecting to pay a final dividend for the FY21 assuming no prolonged property closures.

Current Share Price: $2.89, Target Price: $3.40, Rating: Buy.

Heartland Bank

Tax paid profit for the 1HFY 31 ending December up 13.4% at $43.2m (underlying basis), return on equity of 12.2% up 54 basis points, net operating profit up 5.6% at $125.3m. While Heartland experienced continued growth in its core lending portfolios (Motor, Reverse Mortgages, Business Intermediate), overall balance sheet growth has been impacted by the continued reduction in non-core portfolios and higher than forecast repayments. Elevated repayments are believed to have resulted from the extensive economic stimulus provided by the New Zealand Government and RBNZ. Heartland launched a digital home loan product in October 2020, so far in 2H2021 $303.6m approved online and $16.6m drawn down year to date. Heartland expects NPAT for FY2021 to be at the upper end of the guidance range of $83 million to $85 million.  A Reduced (due to RBNZ restrictions) gross interim dividend of 5.6 cents per share has an ex-dividend date of 1 March and is payable 16 March 2021.

Current Share Price: $1.88, Gross Dividend Yield: 4.8%, Target Price: $2.34, Rating: Buy.



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Nathanael McDonald

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