Yovich & Co. Market Update - 05 November 2019
Nov 5, 2019 | Commentary
In summary, last week saw the NZX50 with 31 companies on the downside, 16 companies on the upside and 4 unchanged. The NZD was weaker against the AUD, and stronger against the USD. The NZX50 has lost ground for the second consecutive week. The ANZ -Roy Morgan NZ Consumer Confidence reported that consumer confidence rose 4 points in October to 118, reversing last month’s fall. Head to the ANZ -Roy Morgan NZ Consumer Confidence report and give the questionnaire a go.
New Zealand Equities
ANZ New Zealand
Tax paid profit for the full year ending 30 September 2019 was down 8% at $1.825b. Cash net profit after tax was up 2% at $1.933b. This was due to the sales of life insurance company OnePath (NZ) Limited and ANZ New Zealand’s 25% share in Paymark Limited. The ANZ Bank Group statutory profit was down 7% at $5.95b. Lower OCR rates, along with increased capital requirements by the RBNZ could cause headwinds for ANZ. ANZ has kept the final gross dividend payment at NZD $0.89 with an ex-date of 11 November and payment date of 18 December. Current PE ratio is 12.62. Current: PE Ratio; 12.47, Share Price: $28.00, Gross Dividend Yield: 6.36%.
Has announced a $2b institutional and $500m retail capital raise. Retail clients that hold Westpac as of 1 November 2019, will have the opportunity to apply for up to $30,000 of new fully paid ordinary shares at $25.32(AUD) per share. The capital raise is to provide an increased buffer above the Australian Prudential Regulation Authority’s (“APRA”) “unquestionably strong” CET1 capital ratio benchmark of 10.5%. The raising also creates flexibility for changes in capital rules and for potential litigation or regulatory action. Shares under the placement are not entitled to receive the 2019 final dividend of AUD$0.80. New Shares under the Placement will trade under a separate ASX code (“WBCNB”) up to and including 11 November 2019, being the day prior to the ex-dividend date for the 2019 final dividend. New Shares will then trade under the code “WBC” from 12 November 2019. Current: PE Ratio; 13.93, Share Price: $30.00, Gross Dividend Yield: 6.70%.
Is a logistics company that operates three core portfolios; Express Package, Business Mail and Information Management. These are supported by their Internal service providers. Freightways has announced that it will acquire Big Chill Limited for $146m. With $117m being the initial payment the remaining 20% deferred until 2022. Big Chill is a NZ based temperature-controlled transport operator. Transaction multiple is 7.9x EV / EBITDA based on the expected earnings in the first 12-months of Freightways ownership, excluding any synergies. The initial payment of $117m will be funded using existing and increased debt facilities. Current: PE Ratio; 18.95, Share Price; $7.85, Gross Dividend Yield; 5.40%.
Announced it has acquired UK based Silclear Limited for GBP 3.3 million. Skellerup Group CEO David Mair said, “The acquisition is an excellent fit for Skellerup. Silclear’s products are a great extension to the range we offer to our international Agri customers. Their technology will also enable us to provide new and enhanced solutions for our Industrial Division customers. The Silclear business is performing well and will be immediately earnings accretive to the Skellerup Group. We are pleased to welcome the Silclear team to the Group.” The share price has not reacted either way to this acquisition. Current: PE Ratio; 15.24, Share Price; $2.28, Gross Dividend Yield; 6.81%.
Evolve Education Group
Is a New Zealand and Australian childcare and education centre operator. Evolve operates a multifaceted Early Childhood Education (ECE) services, that offer both centre-based and home based ECE. Evolve has in place a contract to acquire 5 childcare centres across Queensland and Victoria with a total licence capacity of 456 children per day. All contracts are conditional upon customary approvals (such as licensing etc). The acquisition price is AUD7.65m upfront with a further payment of AUD1.5m deferred subject to centre based EBIT being no less than AUD2.5m for the year ended 31 December 2020. The upfront purchase price represents 4.2x EBIT for the 12 months ended 30 June 2019. Current: PE Ratio; -0.29, Share Price; 16.4 cents.
Has partnered with Kia Motors New Zealand (KMNZ) to provide Kia Finance – a new vehicle finance service for people looking to purchase a new or used Kia from a Kia dealership. This alignment is not only an alignment of finance but also values. Supporting NZ business to grow and reducing barriers to entry that people may have previously faced when looking to purchase a new vehicle. Current: PE Ratio; 12.66 Share Price; $1.65, Gross Dividend Yield; 8.47%.
Highlights for the 3rd quarter (13 weeks) to 27 October 2019:
• Total Group sales $140.3 million, +5.67%
• Homeware sales growth, +4.65%
• Sporting goods sales growth, +7.41%
• Group same-store sales growth, +4.13%
Briscoe Group are continuing to expand their store network with the opening of the new Briscoes Homeware and Rebel Sport stores, including online fulfilment centres, in Mt Roskill, Auckland at the end of November. “Online sales for the nine months of this financial year remain strong at 20% growth on last year. Share price has increased 10.56% year-to-date. Current: PE Ratio; 13.15 Share Price; $3.70, Gross Dividend Yield; 7.69%.
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Weekly Update Investment Shares Bonds Investment Strategy Investment Advice Share Advice Share Investment Investing in Shares Australia and New Zealand Banking Group ANZ.nz Westpac Banking Corporation WBC.nz Freightways FRE.nz Skellerup SKL.nz Evolve Education EVO.nz Heartland Group Ltd HGH.nz Briscoe Group BGP.nz