Yovich & Co. Market Update - 15 June 2020
Jun 15, 2020 | Commentary
New Zealand Equities
In summary, last week the NZ50G saw 38 companies on the downside, 1 remained unchanged and 12 on the upside. What a week it was for the NZ50G, Monday the index was in the green up 3.16% after positive news around America planning on a fast recovery. The rest of the week was spent in the red clawing back the gains to end the week 2.38 % down. NZ woke up Friday morning to hear the S&P500 slid 5.89% due to new contradicting news regarding the planned speedy recovery of America. The slide was caused due to an upsurge in COVID-19 cases as America starts to reopen and, the US weekly jobless claims added another 1.5m people (down 355,000 on last weeks revised level) now risen to 21m since March. Stats NZ will release its 2020 Q1 results on 18 June. ASB are forecasting a 1.1% contraction vs 2.4 by RBNZ, compared to 0.5% growth in 2019Q4. Only four business days of March are affected by level 4 lock down. As investors try to navigate the post COVID-19 world, Yovich & Co are advising clients that if their goals and time frames have not changed, to then stay the investment course. If at all concerned please contact your adviser.
Has announced a successful completion of its NZ$73.8m Placement, comprising a NZ$10 million primary issuance and a sell down by certain major shareholders of NZ$63.8 million of existing shares. The documentation for the NZ$2m SPP will be dispatched to eligible (record date 9 June 2020) shareholders on 15 June. Eligible shareholders are able to take up to NZ$50,000 of new shares at $3.65, a 22.3% discount to the closing price of $4.70 on June 9. Funds from the capital raise will be to reduce debt from NZ$37.1m to NZ$25.1m hence reducing Net Debt to expected FY21 EBITDA from 2.3x to 1.5x, along with providing greater flexibility to fund future anticipated growth. Current Share Price: $3.89, EPS: $0.13, PE ratio: 29.83, Target Price: $4.34, Rating: Outperform.
Tax paid profits for the FY20 ending 31 March, was down 18.8% at $264.7m (includes unrealised fair value gains on investment property). Underlying profit was up 6.6% at $242m. The growth in underlying profits was driven by strong development margins, particularly from Ryman’s Melbourne and Auckland villages. Operating cash flows rose 12% to $449.8m. Ryman Healthcare invested a record $711.4m seeing construction under way on 12 new villages with 841 beds and units built in the year, up 11%. Strong demand for villages with only 1.7% of resale units unsold at the year end, and 98% occupancy at established care centres. The purchase of a new site at Takapuna brings total Auckland sites to 13. Total assets increased 15% to $7.68b. A gross dividend of 12.7 cents with an ex-dividend date of 25 June is payable 10 July. Brings full year dividend to 24.2 cents per share. Current Share Price: $13.07, Price/NTA: 2.89, EPS: $0.53, PE ratio: 24.69, Gross dividend yield: 1.85%.
Has completed their institutional placement of $250m. The SPP opened 12 June and closes 25 June, eligible to shareholders with a record date as of 5 June 2020. The SPP will allow eligible investors to purchase up to NZ$50,000 of new shares at $4.76. The equity raising proceeds will provide additional balance sheet flexibility to fund growth investments across our existing portfolio companies and take advantage of new opportunities that may arise as a result of current market conditions. Current Share Price: $4.96, Price/NTA: 1.65, EPS: $0.37, PE ratio: 13.18, Gross dividend yield: 4.29%, Target Price: $5.36, Rating: Outperform.
Has announced that Centuria Capital Group have issued a takeover notice (is not the same as a 'takeover offer’). There are steps Centuria will need to take within a certain time period to ensure the notice does not lapse. The notice states an implied price of NZ$1 per Augusta share. Chairman of Augusta Paul Duffy said "The Board of Augusta will be meeting today to discuss the takeover notice received with the intention to convene a Board committee to oversee Augusta’s response. The Board committee will appoint an independent adviser to report on the merits of the offer and recommends that Augusta shareholders take no action at this time in relation to the proposed offer until shareholders receive further guidance, including the independent adviser’s report". Current Share Price: $0.90, Price/NTA: 1.38, EPS: $0.03, PE ratio: 25.71.
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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