Yovich & Co. Market Update - 9 February 2021

Feb 9, 2021 | Commentary

9 February 2021

Market Update 20210209

In summary, the NZX50G had 22 companies on the downside, 2 remain unchanged and 26 companies were on the upside.

The NZ50G closed the week down 0.56% as share prices eased off due to recent forecasting of possible higher interest rates. As a result of predicted higher rates and the NZ economy outperforming expectations the NZ 10-year government bonds added 20 points last week to 1.425% (44.67% since the start of the year).  The RBNZ announced that on 1 March 2021 the loan-to-value ratio (LVR) will be reinstated for owner-occupiers at a maximum of 20% of new lending at LVRs above 80% and LVR restrictions for investors will be reinstated to a maximum of 5% of new lending at LVRs above 70%. From 1 May 2021 no change for owner-occupier. For investors, restrictions will increase a maximum of 5% of new lending at LVRs above 60% (requiring investors to have a 40% deposit). The ANZ NZ Truckometer index showed that light traffic (movement of people and provides a six-month lead on momentum in the economy) was unchanged from February, while heavy traffic (real time indicator of goods being moved) fell 3.8%. Both traffic indexes are higher than a year ago, but the overshoot is easing. 

Biggest Movers 20210209

Investment News

Arvida Group

Has a market cap of $998m and is one of the larger operators of aged care facilities and retirement villages in New Zealand. The group comprises 33 villages spread nationally with 20 integrated retirement villages with co-located care centres, 5 standalone care centres and 8 standalone retirement villages. Over 4,000 residents are provided a continuum of care that extends from independent living to full rest home, hospital, and dementia level care. Arvida has announced a 7 year secured fixed rate bond, maturing on 22 February 2028 to New Zealand institutional and retail investors of up to $75M opened 9 February and closes 12 February 2021. The indicative issue margin range for the Bonds is 1.80% to 2.00% per annum over the underlying swap rate, subject to a minimum interest rate of 2.80% per annum. Interest will be paid quarterly on 22 February, March, August and November.

Current Share Price: $1.84, Gross Yield: 2.93%, NTA: $1.32.

Precinct Properties

Reported a preliminary revaluation gain on its property portfolio of approximately $149 million or 5.1% for the half year ended 31 December 2020. This gain will increase the value of Precinct’s portfolio to around $3.1 billion, post disposal of PCT’s 50% interest in the ANZ Centre, providing an NTA uplift of 11 cents per share. Auckland asset valuations increased by around 4.0% and Wellington assets recorded an uplift of 8.0%, compared with the draft interim book values. Precinct has entered into an agreement for the sale of its 50% interest in the ANZ Centre in Auckland for $177 million. The transaction remains subject to regulatory approval with settlement expected in April 2021. Including both the ANZ Centre sale proceeds and the preliminary revaluation movement will mean gearing as of 31 December 2020 is anticipated to be around 26%.

Current Share Price: $1.73, Gross Yield: 4.02%, NTA: $1.44.

Briscoe Group

Fourth quarter (26 October 2020 to 31 January 2021) was up 18.29% at $248.1m. Homeware sales increased by 18.77% to $156.2 million, while sporting goods sales were $91.9 million, an increase of 17.47% on the fourth quarter last year. Online sales for the Quarter increased 58.06% as more customers became comfortable with purchasing through the internet. Full-year group sales hit a record up 7.47% at $701.8m. Expected full-year NPAT of at least $70m. A final dividend is expected to be announced with the release of the Group’s full-year results on 16 March 2021.

Current Share Price: $5.68, Gross Yield: 3.67%.

Dexus

Is one of Australia’s leading real estate groups, managing a high-quality Australian property portfolio valued at AU$32.b of which Dexus owns AU$16.4m and manages AU$15.6m. Tax paid profit for the 1Half ending 31 December was down 55.5% at $442.9m primarily due to net revaluation gains being lower than those recognised in the previous corresponding period. Rent collections were at 96%, gearing remains conservative at 24.9% (target range of 30-40%) and AU$1.7b of cash and undrawn debt facilities. Occupancy rate remains high, with Dexus office portfolio at 96% and industrial at 95.5%. A dividend of AUD 28.8 cents, payable on 26 February 2021.

Current Share Price: AU$8.63, Gross Yield: 6.03%, NTA: $10.86, Target Price: AU$9.92

Macquarie Group

Provides diversified financial services in Australia, the Americas, Europe, the Middle East, Africa, and the Asia Pacific. Macquarie is Australia’s largest investment bank and asset management at AU$550.9b at December end down 1% from the previous quarter, with a capital surplus of AU$8.1b (exceeding regulatory requirements). Macquarie stated that “while the impact of future market conditions makes forecasting extremely difficult, we expect the Group’s result for FY21 to be slightly down on FY20” of AU$2,731m, thus not provide guidance for FY21. Market responded positively to the 2021 operating briefing up 6.62%.

Current Share Price: AU$$146.77, Gross Yield: 2.15%, Target Price: AU$141.00.

Commonwealth Bank

Tax paid profit for the half year ending December was down 20.8% at AU$4,877m (statutory), cash NPAT was down 10.8% at AU$3,886, operating income was down 0.5% at AU$11,961m due to the impact of COVID-19 and lower net interest margin.  An interim Dividend payment of AU$1.50 is down 25% on 1H20. ASB (the NZ branch) reported a tax paid profit of $614m for the same period, a 1% fall.

Current Share Price: AU$87.46, Gross Yield: 3.40%, Target Price: $77.36.

 

 

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Nathanael McDonald



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