Yovich & Co. Market Update - 16 November 2020
Nov 16, 2020 | Commentary
New Zealand Equities
In summary, last week the NZ50G saw 9 companies on the downside, 4 remained unchanged and 37 on the upside. What a week it was, the NZ50G increased 1.83% on Monday as news that a COVID-19 vaccine is gaining traction. Friday’s intraday trading reached a record high of 12,733.55. Pfizer announced early results regarding its coronavirus vaccine, the shots may be 90% effective at preventing Covid-19, putting the company on track to apply later this month for emergency-use approval from the Food and Drug Administration. Still on the pandemic, Friday saw the USA have their biggest surge of COVID-19 cases at 170,333, at the same time England goes into lockdown until December 2, 2020. This not so positive news increased volatility in the market, as hospitality and travel stocks in NZ increased (some as much as 20%), on the back of the vaccine announcement. Retracting with the new cases in USA, and England’s lockdown. NZ’s new cases of COVID-19 have had little effect on the market yet. The RBNZ has now informed the market that $28b will be printed for the Funding for Lending Programme, to be actioned in December. The Loan to Value Ratio (LVR) restrictions are to be reinstated next year.
Tax paid profit for the 1H FY21 September 30, was down 35.3% at $57m, total revenue 33.4% lower at $662m, net debt comprised 28% of Infratil’s capital and was $385m lower than on March 31, 2020, at $1.3b. The outperformer of Infratil’s portfolio is CDC Data Centres, “CDC continues to experience explosive demand growth for data centre capacity. Data sovereignty is a growing issue and CDC’s ultra-secure facilities and 100% Australia New Zealand ownership provide it with a huge advantage”. Infratil’s share of NPAT from CDC was $108m, second was Tilt Renewables at $18.8m.
Gross interim dividend of 8 cents has an ex-dividend date of November 30 and is payable December 15, 2020.
Current Share Price: $5.39, EPS: $0.31, Target price: $5.89, Rating: Outperform.
Source: Company data
Scheme price has increased from $4.75 to $5.20 per share. The increased Scheme price remains subject to the price adjustment regime described in the Scheme Booklet. This increased Scheme price falls within the Independent Adviser’s revised valuation range of $4.95 to $5.80 for each Abano share. If the increased share price has swayed your proxy vote (and you have already voted) there is still time to amend the proxy vote.
Current Share Price: $4.92. Takeover Price: $5.20.
Tax paid profit for the 1H FY21 September 30, was up $80.1m at $90m largely due to a strong revaluation movement of the large format retail properties that focus on “everyday needs”, such as supermarkets. Portfolio valuation of $980.3m, an increase of 9.4% from March 31. Revenue increased 13.75% to $27,4m, the Loan to Value Ratio (LVR) reduced from 31.1% to 28.3%. Net tangible assets increased from $1.70 to $1.93 per share. A gross interim dividend of 2.19 cents per share has an ex-dividend date of November 25 and is payable December 2, 2020.
Current Share Price: $2.24, EPS: $0.10, PE ratio: 21.54, Gross dividend yield: 5.0%. Target price: $2.35, Rating: Outperform.
Has completed its $180m underwritten placement of new shares to institutional investors at $5.10 per share, a discount of 14.0% to the last trading price of NZ$5.93 per share on 9 November 2020, and a discount of 6.6% to the five-day volume weighted average price of NZ$5.46. A $20m Share Purchase Plan (SPP) to retail investors opened November 13. Existing shareholders as at record date November 9, 2020 are eligible to subscribe for up to NZ$50,000 worth of Synlait Milk shares. Closing date is November 25, 2020. Click to view Offer Document.
Current Share Price: $5.60, Target price: $6.30, Rating: Neutral.
Together with its subsidiary, manufactures and exports dairy, health and wellness, and nutrition products in New Zealand and Australia. It offers powdered milk nutritional products, including whole milk powder, skim milk powder, colostrum milk powder, and kiwifruit milk powder under the KeyDairy brand name; and health supplement capsules for the treatment of acne and natural beauty products under the KeyHealth and FaceClear names. The company also exports its products to China, Vietnam, Hong Kong, Taiwan, Malaysia, Japan, Korea, Australia, and the European Union. Recently Ketone signed a material manufacturing and supply agreement with Foodstuffs, a leading NZ retailer for the ongoing supply of milk powder. The agreement is to supply whole and skim milk powder for Foodstuffs own brands across multiple Foodstuffs products brands and sizes to be distributed throughout NZ. The deal is forecasted to be worth more than NZ$7.1m. Importantly, it also illustrates that the business is not reliant on any one channel and geographic market or one client (as some other manufactures are). Ketone does not, and nor has it historically, relied on the Chinese Daigou cross-border distribution channel as a key route to market.
Current Share Price: AU$0.215.
Develops, manufactures, and sells healthcare products worldwide. It offers medicines and vaccines in various therapeutic areas, including cardiovascular, metabolic, and pain, under the Eliquis, Chantix/Champix, and Premarin family brands. The NZ Government signed an agreement with Pfizer and BioNTech in October to buy 1.5m Covid-19 vaccines (to serve 750k people), subject to the vaccine successfully completing all trials and passing NZ regulations. Megan Woods noted that the vaccine could be delivered as early as first quarter 2021 provided it passes Medsafe oversight. The positive announcement for a possible vaccine saw Pfizer’s share price increase 7.69% to US$39.20 per share.
Current Share Price: US$37.33, PE ratio: 23.77, Gross dividend yield: 1.5% Rating: Neutral.
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