Yovich & Co. Market Update - 7 August 2018

Aug 7, 2018 | Commentary

PGG Wrightson: (PGW)  

PGW has made a positive announcement of a conditional agreement to sell its Seed and Grain business (PGW Seeds) to DLF Seeds (DLF) for NZ$421m. The sale price implies a FY18F EBITDA transaction multiple of 13.4 x for the Seed and Grain business. Within this agreement DLF will assume (or repay) NZ$18m net debt outstanding as at 30 June 2018. The agreement is conditional on Shareholder approval and the receipt of applicable regulatory approvals in New Zealand. Following completion, PGW could expect to have a net cash balance (on a pro forma basis as at 30 June 2018) of approximately NZ$270 million. Subject to outcomes from the strategic review, the PGW Board could determine to make a potentially non-taxable distribution of available subscribed capital to shareholders of up to NZ$292 million. 

Ryman: (RYM)   

Great news for Ryman as the project in Burwood East, Melbourne has reportedly gained planning approval. This $200m development on a 2.5-hectare site will become home to more than 400 people, this spread across aged care beds, assisted living suites, and independent apartments. RYM’s investment pipeline in Victoria is now past the $1.5b mark. 

Synlait Milk: (SML)            

A2 Milk has acquired a further 9.2% of SML for $161.8m taking them to 17.4% holding. 

Sheffield: (SFX)

Sheffield spun off Carawine in November 2017 and the transaction had 12 December 2020 options attached. Investors received a letter re the options and have recently been querying the letter. The options expire 12 December 2020 with an exercise strike price $0.30. If the market price of the shares at that time is above $0.30 the option could be exercised to take the gain. If the market price is below $0.30 one should let them lapse. 

Of interest:

NZ car sales – New vehicle sales increased 6% in July versus the prior year, to 12,324, and the second highest July ever, behind 1984’s 13,983. The country remains on track to post a fifth annual record for new vehicle sales with registrations so far this year tracking  1.8% ahead of 2017. Japanese car maker Toyota remained the market leader in July, with a 17% market share, followed by Ford on 10% and Mazda at 8%. 

Media consumption – The reach of broadcast TV to New Zealanders has fallen from 83% (2014), to 73% (2016), to 66% (2018) over the last four years. Broadcast TV remains the number one media channel, followed by radio consumption (albeit also in decline 67%, 59%, 55%). Online video and music consumption have both expanded reach to 52% and 39% of NZ’s population respectively, while SVOD (subscription video on demand) viewership has surged to 37% reach, from 6% in 2014. TVNZ 1 remained the most popular single media channel (43% penetration) followed closely by Youtube (42%), then Facebook (32%) and Netflix (27%). 

News for next week:

Monday 13th:                    Contact Energy Full Year Results

Tuesday 14th:                    PGG Wrightson Full Year Results

Wednesday 15th:               Heartland Bank Full Year Result, NZX Half Year Results

Thursday 16th:                  Skellerup Full Year Results, Pacific Edge AGM 

Nathanael McDonald is into his second week of work at Yovich & Co. He has come from a farming back ground in the great Waikato, with his three daughters and  lovely wife. The last two and a half years he has completed a Degree in BBA majoring in Agribusiness and Finance. While working at Yovich & Co the aim is in six months time to become an Authorised Financial Advisor. In the mean time Nathanael is learning the fundamentals of how the Wealth Management office and investment world operates.

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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Walter Yovich

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