Summary

  • New Zealand witnessed a sharp decline in the number of properties sold in April 2020 due to the coronavirus pandemic.
  • The sector is likely to bounce back in the coming months according to market experts as the economy is on a recovery path.
  • While KPG’s FFO increased by 6.3%, IPL reaffirmed its FY20 dividend guidance.
  • Argosy reported a marginal decline in net property income.

The New Zealand property market has taken a hit due to COVID-19 with the country witnessing a drop in sales due to lower demand amid the lockdown period.

According to the latest report released by REINZ, the number of properties sold across the country in April decreased by more than 78% from the same time last year: from 6,082 to 1,305. This happened as level 4 lockdown made it very difficult for property sales to occur. After excluding Auckland region, the number of properties sold declined by about 82.4% when compared to the same time last year (from 4,357 to 767). In Auckland, the number of properties sold in April decreased by -68.8% year-on-year (from 1,725 to 538).

GOOD READ: 5 Key Questions for the New Zealand Property Market

Four regions with the largest decline in the annual sales volume were:

  • Southland: -92.1% (from 140 to 11 – 129 fewer houses)
  • Nelson: -91.6% (from 83 to 7 – 76 fewer houses)
  • Manawatu/Wanganui: -87.2% (from 384 to 49 – 335 fewer houses)
  • Gisborne: -86.6% (from 67 to 9 – 58 fewer houses)

Let us look at five property stocks and how they have performed in the past months.

Kiwi Property Group Limited (NZX:KPG)

Kiwi Property Group is a major property investment in New Zealand engaged in the operations of office buildings and shopping centres.

For the year ended 31 March 2020, Kiwi Property Group Limited reported a net rental income of $186.8 million, up by 3.4%. The operating profit before tax stood at $129.7 million, up 4.2% compared to the previous year.

  • Funds from operations rose by 6.3% to $113.6 million led by income growth across its diversified property portfolio
  • At year-end, the portfolio was 99.5% occupied, with a healthy weighted average lease expiry of 4.9 years
  • The Company has decided not to pay any dividend this year

Stock Performance

The stock of KPG closed the day’s trading at $1.020 per share on 29 May 2020, up by 2.00% from its previous closing price. The Company has a market capitalisation of $1.600 billion and its 52-week high and low is $1.700 and $0.740, respectively. The stock has corrected 29.66% and 35.44% in the period of three months and six months, respectively.

Investore Property Limited (NZX:IPL)

Investore Property Limited is engaged in the ownership of commercial property in New Zealand.

Portfolio Valuation as at 31 March 2020

For the financial year ended 31 March 2020, the Company has reported a net increase of +1.0% or $7.4 million in the fair value of its property portfolio. After valuing the portfolio independently, the total aggregate value stood at $761.4 million as on 31 March 2020.

The Company has also advised that after considering the properties which were acquired on 30 April 2020, about 80% of the Company’s occupants by gross rental consist of “Essential Businesses” and could remain open for trading. The Company has reaffirmed its total cash dividend guidance of 7.60 cps for FY20.

Stock Performance

The stock of IPL closed the day’s trading at $1.730 per share on 29 May 2020, up 1.17% from its previous closing price. The Company has a market capitalisation of $636.874 million and its 52-week high and low is $2.0000 and $1.3500, respectively. The stock has corrected 1.70% and 3.89% in the period of three month and six months, respectively.

Precinct Properties New Zealand Limited (NZX:PCT)

Third Quarter Dividend and Business Update

In the third quarter, the Company has declared a dividend of 1.575 cps and also imputation credits of 0.289332 cps. The Company has also reiterated its FY20 dividend guidance of 6.3 cps, which is steady with PCT’s FY20 AFFO.

The construction has also restarted at Commercial Bay and the completion is aimed for June. Before the lockdown, the total project cost rose by about 2.5% or $20 million because of the dispute settlements and delays.

Stock Performance

The stock of PCT closed the day’s trading at $1.585 per share on 29 May 2020, up 2.92% from its previous closing price. The Company has a market capitalisation of $2.082 billion and its 52-week high and low is $1.9500 and $1.4450, respectively. The stock has corrected 16.14% and 12.67% in the period of three months and six months, respectively.

Argosy Property Limited (NZX:ARG)

For the 12 months ended 31 March 2020, the Company’s net property income stood at $99.7 million, down by 2.7% from the previous year.

The net distributable income stood at $59.6 million, an increase of 3.8% as compared to $57.4 million in the prior year. The net distributable income rose 3.7% to 7.20 cents per share, compared to 6.94 cps in the previous year.

The independent valuation conducted by valuers led to a boost of $60 million in annual revaluation.

  • By sector, Industrial delivered the greatest contribution at $53.4 million, up 6.8%
  • By location, Auckland was the biggest contributor to the revaluation gain with $49.7 million or 83% of the total portfolio gain
  • The Office portfolio increased by $19.5 million, or 2.7% and Large Format Retail decreased by $13.0 million or -6.5%

Financial Summary (Source: Company’s Report)

Financial Summary (Source: Company’s Report)

Stock Performance

The stock of ARG closed the day’s trading at $1.150 per share on 29 May 2020, up by 2.22% from its previous closing price. The Company has a market capitalisation of $952.186 million and its 52-week high and low is $1.5400 and $0.7400, respectively. The stock has corrected 18.44% and 18.44% in the period of three months and six months, respectively.

CDL Investments New Zealand Limited (NZX:CDI)

Headquartered in Auckland, CDL Investments is engaged in the property investment business. The Company offers services including property investment and development, and management of property across New Zealand.

The Company reported a profit after tax of $34.1 million for the year ended 31 December 2019, led by property sales and other income which increased by 7.9% to $91.8 million as compared to the previous year. Profit before tax rose to $47.4 million.

  • The Company has reported profit growth in the last ten years. The consistent growth is an admirable achievement, looking at the difficult market conditions.
  • During FY19, the Company acquired 9.7 hectares of land in Hawkes Bay.
  • The Company is now targeting more acquisitions, but only if location and pricing are viable and consistent with the investment criteria.

Financial Summary (Source: Company Reports)

Financial Summary (Source: Company Reports)

Stock Performance

The stock of CDI closed the day’s trading at $0.815 per share on 29 May 2020 with no change from its previous closing price. The Company has a market capitalisation of $228.555 million and its 52-week high and low is $0.950 and $0.6600, respectively. The stock has corrected 7.39% and 6.32% in the period of three months and six months, respectively.

NOTE: $ denotes New Zealand Dollar, unless stated otherwise.

 

 


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