Yovich & Co. Market Update - 18 October 2021
Oct 18, 2021 | Commentary
In summary, the NZX50G had 29 companies on the downside, 2 remained unchanged, and 19 companies were on the upside. The NZX50G had a bumpy week, with the first three days in the red and the last two clawing back any losses and closing the week in the black by 0.15%. The NZ dollar gained ground against USD (0.7062) and AUD (0.9530). According to a preliminary reading of the OctoberOct ANZ Business Outlook, ANZ said a net 85% of firms (up one percentage point) were expecting higher costs in the next 12 months with 12-month-out inflation expectations still above 3%. In terms of overall business confidence, this eased 2pts to -9, although "own activity" jumped 6pts to 26. Expected profitability saw a 13pt bounce, with just a net 3% of firms expecting lower profits. That’s despite extreme cost pressures, with a net 85% of firms reporting higher costs, similar to last month. Capacity utilisation, which normally correlates well with GDP, lifted from 17% to 20%. Only a net 4% of businesses reported lower activity than a year ago. A net 11% of firms are reporting higher employment than a year ago. NZ’s latest CPI print is due today.
Announced the acquisition of the Tennyson Centre. The Tennyson Centre is one of Adelaide's leading “Cancer Centres of Excellence”, comprising high quality tenants who operate within the identification, assessment and treatment of cancer through oncology, radiotherapy, imaging and consulting services. In order to fund the acquisition, Vital Healthcare has advised that it has successfully completed the $115m placement of new units (the Placement), which forms part of the $140m capital raising announced on 13 October 2021. The Placement was underwritten at a fixed price of $2.90 per unit, representing a 3.7% discount to the closing price of $3.01 on 12 October 2021. Unitholders as at 12 October 2021 will receive their personalised application forms to apply for up to $15,000 of new units in the unit purchase plan (UPP) component of the Offer from Tuesday, 19 October 2021. Close date for the UPP is 3 November 2021. The issue price of the new units under the UPP will be the lower of the Placement price and a 2.5% discount to the volume weighted average price of Vital units traded on the NZX during the five trading days up to, and including, the end of the UPP offer period.
Current Share Price: $2.94, Forecasted dividend yield: 3.74 %, Target Price: $3.23.
Is the only 100% consumer-direct personal lender operating across Australia and New Zealand. Harmoney provides customers with unsecured personal loans that are fast, easy, competitively priced (using risk-adjusted interest rates) and accessed 100% online. For the 1Q22 ending 30 September 2021, Harmoney delivered a record quarter, with $60m in new origination, the Australian new customer originations grew to A$31m. Harmoney Australia’s loan book is growing at 60% annualised and 15% quarter on quarter, all while delivering an enviable net lending margin of more than 7%. The Board have forecasted for FY22 a group pro-forma loan book of at least $600m a 20% growth on FY21, revenue of at least $92m up 16% and indirect OPEX to income ratio of less than 20%, a reduction of 2% on FY21.
Current Share Price: $2.00, Target Price: $3.30.
Is pleased to announce it has entered a conditional agreement to purchase 100% of the shares of Arena Living Holdings Limited (Arena Living) for approximately $345m. Arena Living owns a portfolio of six retirement villages located on prime sites in Auckland and Tauranga. The villages include Peninsula Club, Mayfair Village, Knightsbridge Village, Parklane Village, Mt Eden Gardens and Ocean Shores Village. In total, the acquisition of Arena Living will add 648 villas, 340 apartments and 58 serviced apartments to Arvida’s existing portfolio of 4,325 units and beds, representing a 24% increase in portfolio size.
Arvida CEO Jeremy Nicoll said the Arena Living villages are established, predominantly large scale and villa-led, and are set across a combined 48 hectares of well-located land. The acquisition and transaction costs are to be funded through a combination of new equity and debt as follows: $155 million underwritten placement (Placement) at a price of $1.96 per share; $175 million underwritten 1 for 6.57 pro-rata renounceable rights offer (Rights Offer) at an issue price of $1.85 per share; and $23 million of bank debt. The offer document for the Rights Offer will be released to the market on 22 October 2021, with individual Entitlement Letters being sent to eligible shareholders on the opening of the Rights Offer on 27 October 2021. The Rights Offer will close at 5pm, 8 November 2021, unless extended.
Current Share Price: $2.08, Forecasted dividend yield: 2.86 %, Target Price: $2.26.
Chatham Rock Phosphate
Is listed on the Toronto Venture Exchange (NZP.TSXV) and the New Zealand Exchange under ticker code CRP.nz. It is an exploration and development company focused on becoming a diversified phosphate developer and trader. Chatham Rock holds an offshore mining permit over part of the Chatham Rise that contains significant rock phosphate deposits and intends to recover these from the sea floor using a modified dredge. Chatham Rock have signed a Term Sheet to acquire the Korella phosphate mine in Australia. Final negotiation of the arm’s length Sale and Purchase Agreement with vendor Australia Venus Resources Pty Ltd. and its shareholders will now proceed with the acquisition subject to certain conditions. A trial mining operation at Korella in 2015 recovered and stockpiled over 10,000 tonnes of direct shipping phosphate from a shallow open cut. The stockpiled phosphate remains on site and will provide early cash flow with sales directly from the mine. Korella phosphate is low cadmium, direct application phosphate, with a low carbon footprint, suitable for the organic and regenerative farming sector.
Current Share Price: $0.136
T&G Global Ltd
The Board of Directors advises that Group Profit for the 2021 financial year, according to statutory accounts, is now forecast to be a profit of between $4.0 - $10.0 million, compared with the 2020 result of $16.6 million. His disappointing outlook reflects updated forecasts in the results of a number of T&G business units, particularly:
· Apples, due to shipping challenges and associated impacts on pricing and costs, especially in the Northern Hemisphere and Asia,
· International Trading, due primarily to the afore-mentioned shipping delays, market access challenges, and supply shortages, particularly from USA and Australia,
· T&G Fresh, due primarily to the impact of COVID-19. This has affected labour in terms of availability and costs, the pricing of seasonal produce lines, restrictions on physical openings of independent retailers and foodservice, and shipping delays for imported produce.
Current Share Price: $2.94, Historical dividend yield: 5.65%.
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