Recent Updates from 3 NZ players – Lens on Abano, Fonterra, Aroa Biosurgery

  • Jun 25, 2020 NZST
  • Team Kalkine
Recent Updates from 3 NZ players – Lens on Abano, Fonterra, Aroa Biosurgery

Summary

  • COVID-19 has tightened its grip across the globe in various sectors.
  • Dairy giant, Fonterra, witnessed a reduction in milk production due to prolonged drought conditions. However, its global dairy import volumes across China were up by 10.1% in March 2020.
  • Aroa Biosurgery embraced itself during the pandemic and is now seeking for an IPO.
  • Abano is looking at numerous transaction possibilities that involve the interest of the third party in the shares and assets of the Company.

COVID-19 has spread its wings in the world across various sectors and has hampered the performances of numerous businesses leading to a decline in their share prices. On 24 June 2020, S&P/NZX50 closed at 11,259.41, reflecting an increase of 1.14%, while S&P/NZX20 increased by 1.16% to 3,302.99.

The index has demonstrated improvement from March 2020, and it looks like the improvement was bolstered by the ease in restrictions imposed to combat the spread of COVID-19.

ALSO READ: FAANGs Defining Resilience Amid Market Downtrends

Let us look at the performance of various companies amid the crisis period.

Abano Healthcare Group Limited (NZX:ABA)

NZX-listed Abano Healthcare owns and manages groups in New Zealand and Australia. 

The Company announced on 22 June that it does not plan to sell Abano through a Scheme of Arrangement option or ‘take private’ deal.

On 11 June 2020, ABA provided an update related to the capital structure options, under which ABA confirmed that it is exploring a range of transaction possibilities that involve third party interest in the shares and assets of the Company. Additionally, ABA is also committed to acknowledging its capital structure requirements within the current calendar year. The Company’s extended banking facilities reflect the commitment to consider transaction possibilities under review as well as to address capital structure.

ABA Unveiled Its Market Update on 2 June 2020 Amid Reopening of the Dental Networks

After the easing of coronavirus restrictions in Australia and New Zealand (ANZ) in mid-May 2020, Abano’s dental practices in ANZ have reopened and are offering a full range of dental services.

ABA witnessed the commencement of the marketing and customer communications along with the increase in the number of patients. Further, patient appointments and revenue generated were higher as compared with initial expectations. ABA’s management is focused on longer-term business and network optimisation initiatives in ANZ. The Company expects to make a full recovery to pre-COVID-19 earning performance over time. However, the timeline for achieving this recovery is unclear.

Considering the uncertainty of the full extent of the impact of the coronavirus on financial performance and recovery timeframe, the Company stated that it remains unlikely that dividends would be paid with regards to FY20 or FY21 financial years.

DID YOU READ: How S&P/NZX50 Performed?

Amendment of the banking facilities

Amid COVID-19, Abano is making amendments in its banking terms. The Company’s banking partners are supportive of the Company as well as of the transaction opportunities being explored.

Amendments to the existing banking terms include-

  • Maintenance of the existing facilities at NZ$169 million. Net bank debt of ~NZ$135 million at the end of 31 May 2020.
  • All facilities extended by 12 months and the maturity dates are now between March 2022 and July 2023.
  • Increased pricing on the banking facilities, reflecting tenure extension as well as financial covenant relief.

On 24 June 2020, the stock price of ABA ended at NZ$2.730 per share, reflecting a decline of 3.19% on an intraday basis.

Fonterra Co-operative Group Limited (NZX:FCG) 

An Auckland based dairy nutrition Company, Fonterra Co-operative Group is the world's leading exporter of dairy products, exporting ~95% of the total production.

On 23 June 2020, FCG announced that farmers would be eligible to earn more to produce sustainable, high-quality milk. The Co-operative Difference Payment will begin from 1 June next year.

Recently, Fonterra unveiled its global dairy update, highlighting below points:

Monthly New Zealand production was flat, and Australia production continues to improve.

Key Data (Source: Company Reports)

New Zealand monthly exports witnessed a decline, whereas the monthly exports from Australia, the US and EU noted an increase.

Key Data (Source: Company Reports)

China monthly imports were up; however, Latin America, Asia and Middle East and Africa imports were down.

Key Data (Source: Company Reports)

DID YOU READ: Fonterra Updates on Performance and Milk Price

Fonterra Slashes Farmgate Milk Prices as the Pandemic Hits Demand

The Company has narrowed 2019/2020 forecast farmgate milk price range for the season to $7.10 - $7.30 per kgMS. Chairman of the Company, named John Monaghan, is of the view that Co-op has narrowed the price range and has also reduced the mid-point of the range because of softening of demand relative to supply.

On 24 June 2020, the stock price of FCG ended at NZ$3.750 per share, reflecting an increase of 0.54% on an intraday basis.

DID YOU READ: Stupendous Recovery From COVID-19: New Zealand Puts Up A Great Show

Aroa Biosurgery

Aroa Biosurgery, a soft tissue repair Company, has stepped up to support clinicians as well as their patients who are struggling to treat wounds amidst disruption to several existing US facilities for wound care due to coronavirus. The Company stated that it manufactures its products and sources most of its raw material from New Zealand, the Company did not experience supply chain disruption.

On 24 June 2020, Aroa announced that as part of an IPO, the Company would list on the ASX raising ~AU$45 million (A$30 million at 75 cents per share and A$15 million from the sell-down by present shareholders). Bell Potter and Wilsons and Bell Potter are the Lead Managers. Brian Ward, the Company’s founder and CEO, is expected to have ~11% shareholding.

The Company is valued at A$225 million as per the IPO. Aroa anticipates beginning trading on the ASX (Code: ARX) on 30 July 2020. The Company plans to utilise the funds to pay down debt and selling shareholders along with the investment in manufacturing and sales and marketing.

In the release dated 19 March 2020, the Company confirmed that they had maintained an adequate level of inventory of product in the United States, Canada, and Europe to meet anticipated sales for the future.

 

 


Disclaimer
The website has been prepared for informational purposes only and is not intended to be used as a complete source of information on any particular company. The above article is NOT a solicitation or recommendation to buy, sell or hold the stock of the company (or companies) under discussion. Kalkine does not in any way endorse or recommend individuals, products or services that may be discussed on this site.

 

   
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