Yovich & Co. Market Update - 30 October 2019
Oct 30, 2019 | Commentary
In summary, last week saw the NZX50 with 31 companies on the downside, 11 companies on the upside and 8 unchanged. The NZD was weaker against the AUD, and stronger against the USD; this is good for NZ domestic companies exporting product abroad to Australia and USA. Since a volatile period between early and mid-September the NZ50G has moved sideways. It is currently below the 20- and 60-day moving average of 10970.90 and 10870.82 respectively.
New Zealand Equities
Kiwi Property Group
Is seeking to raise approximately $200 million through a $180 million underwritten Placement and a $20 million Retail Offer. The net proceeds of the Placement and Retail Offer is to pay down bank debt and reduce gearing, providing the financial flexibility to progress developments at locations including Sylvia Park, LynnMall, The Base and in the longer term at Drury, and to respond to new acquisition opportunities as they arise. The Retail Offer is open to eligible shareholders with a registered address in New Zealand and are recorded as shareholders as of 5.00pm 29 October 2019. Each eligible shareholder can apply for up to $50,000 of new shares. New shares to be offered under the Placement and Retail Offer at a fixed price of $1.58. This fixed price is a discount of 5.4% to last close ($1.67) and 4.9% to the 5-day VWAP1 ($1.66). The Retail Offer application is to close on 15 November 2019. Share price: $1.67, Gross Dividend yield: 5.36%.
NZ Power Generator-Retailers
Have been in the news over the past week, due to Rio Tinto warning that the future of the Tiwai Point smelter is under review. Meridian Energy is the supplier to Tiwai Point and will feel the biggest effect of the outcome from these negotiations. The NZ Aluminium smelter uses 13% of NZ electricity.
There is street talk that the new owner is on track to be unveiled in the next fortnight. So far, the talk is that an Australian buyout firm BGH Capital has been in exclusive talks with Abano and their bankers to acquire the company in full. At the same time ASX-listed group 1300 Smiles is interested only in the Australian business, known as Maven Dental Group. A sale to 1300 Smiles would leave Abano with the profitable NZ operations and a de-levered balance sheet, albeit with a much smaller overall business in terms of revenue and earnings. Share price: $4.73, Gross Dividend yield: 6.45%.
Has announced that it is to purchase Dairyworks for $112m (subject to OIO). This is reflective of an approximate 7.56x EBITDA multiple based on the last 12 months earnings. Synlait has a strategic plan called the “Everyday category.” This acquisition will provide Synlait with opportunity to keep optimising its value chain while providing access into Australia where Dairyworks presence is already growing. Share price: $9.52.
Operates retirement villages with a range of living and care options, from independent living to hospital level care. We have been watching this healthcare provider lately with interest due to its discount to Net Tangible Assets. The share price has reacted positively since a low period in mid-June ($4.34) to current levels at $4.84. With current net asset backing at $6.96, and share price at prevailing level, Metlifecare is trading at a 31% discount. The company has signalled a share buyback programme of up to $30m of its shares, with further details to come in November. Share price: $4.82, Gross Dividend yield: 2.28%.
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Weekly Update Investment Shares Bonds Investment Strategy Investment Advice Share Advice Share Investment Investing in Shares Contact Energy CEN.nz Genesis Energy GNE.nz Meridian Energy MEL.nz Mercury NZ MCY.nz Trust Power TPW.nz Abano Healthcare ABA.nz Kiwi Property Group Ltd KPG.nz SML Synlait Milk SML.nz Metlifecare MET.nz