Yovich & Co. Market Update - 03 April 20109

Apr 3, 2019 | Commentary

Market News




In summary, the NZX50 had 4 companies on the downside, 1 remained unchanged and 46 companies were on the upside. The New Zealand stock market saw a rally due to the Reserve Bank’s indication to reduce the OCR later this year. Strong defensive companies providing high dividend yields gained the most as investors search for a place where returns are higher than the bank. Last week the NZD weakened across both AUD and USD, due to the dovish outlook taken by the Reserve Bank. Both currencies are 0.77% and 1.71% (respectively) up from 1 January 2019.

New Zealand Equities

Heartland Bank

Is offering up to $75m (with the ability to accept oversubscription at its discretion) of a 5 year (maturing 12 April 2024), unsecured, unsubordinated fixed rate note. The offer opens 1 April and closes 5 April 2019, with an expected interest rate between 3.50% and 3.67%, with interested paid six monthly. Current share price is $1.56 with a gross yield of 8.01%, this is a better investment.

Kathmandu Holdings Limited

Tax paid profit for the 1H19 ending January was up 7.3% at $13.2m. Net debt has increased from $17m to $79.2m, resulting in the net debt to equity ratio increasing from 4.9% to 16.5%. The Oboz Footwear acquisition in April 2018 has contributed $60m of debt to the balance sheet. Group sales were up 13.3% to NZD $232.0m and operating expenses were reduced by 1.8% as a percentage of sales. At the current share price of $2.41, gross yield is 8.00% and expected target price is $2.63.

PGG Wrightson Limited

Tax paid profit for the 1H19 ending December was down at $0.3m. This result includes a profit of $9m from the Rural Service and a loss of $8.6m for the discontinued Seed and Grain business.  The gross dividend of 1.04 cents is payable on the 5 April 2019, at the current share price of $0.50 gross yield is 5.56%.

Infratil Limited

Announced a conditional sale of its 50% interest in the Australian National University student accommodation business. This agreement is conditional to the counterparty consents. If conditions are satisfied the transaction is expected to be completed mid April 2019. Infratil is expected to receive cash proceeds of $162m, with final proceeds adjusted for normal working capital.  Current share price is $4.30 and the gross dividend yield is 5.27%.

Abano Healthcare

Has the largest group of dental practices in the trans-Tasman region with over 237 spread across NZ and Australia. The Australian network focus has now changed from acquisition to organic growth. This reduces the need to raise capital in the foreseeable future. Expected tax paid profit of approximately $9m for the FY19. At the current share price of $3.87 gross yield is 12.18%.

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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Heartland Group Ltd HGH.nz Infratil IFT.nz Abano Healthcare ABA.nz PGG Wrightson PGW.nz Weekly Update Investment Shares Bonds Investment Strategy Investment Advice Share Advice Share Investment Investing in Shares Dividend Kathmandu Holdings Ltd KMD.nz


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