Yovich & Co. Market Update - 01 December 2020

Nov 30, 2020 | Commentary

Market update 2020-12-01

In summary, last week the NZ50G saw 20 companies on the downside, 2 remained unchanged and 28 on the upside.  We have reached the final month of the year already, and what a roller-coaster year it has been. The general NZ index increased 5.66% in November and 2.87% in October. The ANZ-Roy Morgan Consumer Confidence shows consumer confidence eased 2 points to 106.9 in November, with the current and future conditions indexes falling by similar amounts. Consumer confidence remains under par – its historical average is around 120. The key retail spending indicator in the survey is still very weak, suggesting the sharp overshoot in retail sales seen in Q3 is likely to fade relatively quickly. Inflation expectations are the highest in 10 years.

Biggest movers 2020-12-01

Investment News

Asset Plus

Tax paid profit for 1H FY21 ending September was up $9.52m to $11.53m, net rental revenue was down 7% (mainly due to rental abatements) at $4.67m. Adjusted funds from operations (AFFO) was up 30% at $2.63m. Net tangible assets (NTA) decreased from 51 cents per share to 44 cents per share, this is mainly due to the capital raise undertaken in October.  Debt of $26.6 million (was drawn) as at 30 September 2020 which represents an LVR of 16.8% (March 2020 34.3%). Immediately post balance date all debt was repaid when the retail entitlement offer was completed. On the completion of the capital raise in early October there was a net cash position of approximately $5.0 million.

Current Share Price: $0.335, Gross dividend yield: 7.27% Target price: $0.37, Rating: Outperform.

Argosy Property

Tax paid profit for the 1H FY21 ending September 2020 was up 49% at $114.5m and rental revenue up 0.2% at $51m. Strong like-for-like rental growth and additional income from leasing of 7WQ and acquisitions & developments were offset by rental abatements for Covid-19 and lower insurance proceeds for rental loss at 7WQ. An 8.5% increase in NTA provided by a $79.8m revaluation increases NTA from $1.40 to $1.41 per share. Argosy’s portfolio as at September 30 is valued at $1.92b.  LVR is reduced from 38.8% to 36.6%. The FY21 dividend guidance has increased 1.6% to 6.45 cents per share. A gross 1.0708 interim dividend has an ex-dividend date of December 8 and is payable December 23.

Current Share Price: $1.51, EPS: $0.05, PE ratio: 29.55, Gross dividend yield: 4.67%. Target price: $1.55, Rating: Outperform.

Genesis Energy

Announces that it is undertaking a strategic review in relation to its 46% interest in Kupe. Genesis owns a 46% stake in the Kupe oil and gas field. The asset has attractive cash flow and a strong growth outlook. The Kupe joint venture is now considering further development, including drilling an additional well and further exploration, which changes the risk and opportunity profile of the asset for Genesis. If Genesis can hold its incremental dividend after a sale, then a sale should be viewed positively. The decision regarding the sale is expected by mid 2021.

Current Share Price: $3.29, EPS: $0.04, PE ratio: 73.71, Gross dividend yield: 6.84%. Target price: $3.45, Rating: Outperform.

Turners

Tax paid profit for the 1H FY21 ending September was up 25% at $13.4m, group revenue was 14% lower at $148m. Revenues were down for majority of the divisions, but net profit before tax (NPBT) increased for three out of the  four divisions: Auto Retail; revenue $96.1m, down 17%, NPBT $.8m up 6%; Finance; revenue $23.2m,  up 2%, NPBT $7.6m up 18%: Insurance; revenue $21.1m,  down 5%, NPBT $4.5m up 74%: Credit Management; revenue $7.0m, down 29%, NPBT $3.0m, down 17%. NPBT guidance for FY21 to be toward the upper end of guidance of $28m to $31m, conditional on no significant further lockdowns. Projected FY21 dividend of 17 cents per share, a gross interim dividend of 5.55 cents per share has an ex-dividend date January 13 and is payable January 28, 2021.

Current Share Price: $2.89, EPS: $0.28, PE ratio: 10.45, Gross dividend yield: 6.73%.

Stride Property

Tax paid profit for 1H FY21 ending September 30 was up $24.6m at $51.6m, net rental income was down $4.1m at $20.5m, due to sale of three large format retail assets to Investor Property Limited. Net tangible assets (NTA) at 30 September was $2.00, expected to be $2.01 on a pro forma basis following the capital raise and acquisition of the two Wellington office properties. Loan to value ratio is expected to be 30.3%, following the capital raise and contracted acquisitions.  The $220m capital raise comprises a $180m for institutional investors (“placement”) at an underwritten floor price of $2.10 per share; and a $40m Share Purchase Plan (SPP) for retail investors owning Stride Property shares as  at November 24, 2020. The SPP will allow investors to purchase up to $50,000 new shares at the lower of the “placement” price and 2.5% discount to the volume weighted average market price (VWAP). Stride currently expects combined cash dividends for FY21 will be 9.91 cents per share. An interim dividend from Stride and Stride Management ltd (SIML)of 0.7986 cents has an ex-dividend date of December 14 and payable December 22, 2020.

Current Share Price: $2.23, EPS: $0.10, PE ratio: 20.67, Gross dividend yield: 5.69%, Target price: $2.48, Rating: Outperform.

Future Dividends

Future dividend 2020-12-01

 

 

 

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Nathanael McDonald



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