At the end of week’s last trading session on 24th April 2020, the equity market of New Zealand closed in red and the index S&P/NZX50 went down by 0.25% to 10,419. In the last week, Goodman Property Trust Limited (NZX: GMT) increased by 6.6% and Vista Group International Limited (NZX: VGL) declined by 17.4%.
S&P/NZX50 (Source: Thomas Reuters)
Let us have a look at the top performers and worst performers of the week.
Goodman Property Trust
Goodman Property Trust (NZX: GMT) happens to be an externally managed unit trust. It is listed on NZX under the symbol “GMT”. For the six months ended 30th September 2019, the company reported a statutory profit of $236.4 million before tax. Fair value gains stood at $172.4 million on investment property, and the net tangible assets per unit rose from 157.0 cents at 31 March 2019, to 172.8 cents at 30th September 2019, up by 10.1%.
A significant portfolio revaluation, further development progress, successful leasing outcomes and strategic new acquisitions have all added to the company’s record interim profit. The company also declared a cash distributions of 3.325 cpu, which represents about 106% of the company’s cash earnings of 3.15 cpu.
Overview of Results (Source: Company’s Reports)
Guidance and Outlook for FY20
Goodman Property Trust’s investment strategy has been refined to meet the growing requirement for warehouse and distribution space across Auckland. The city’s industrial property market remains to be New Zealand’s best performing commercial real estate sector led by a strong regional economy. The company is expecting full-year distributions of 6.65 cents per unit.
The stock of GMT closed the day at $2.340 per share on 24th April 2020, down by 1.27% on an intraday basis. The company has a market capitalisation of $3.242 billion and its 52-week low and high is $1.705 and $2.520, respectively. In the past 5 days, the company’s stock has increased by 6.61%.
Argosy Property Limited (NZX: ARG)
Listed on NZX, Argosy Property Limited is one of the leading diversified property investment vehicles. Recently, the company released its 31st March year-end valuation update. The company recorded a full year portfolio revaluation gain of $61.7 million, a 3.6% increase over book value. Of this, $50.8 million was booked in the 30th September 2019 interim results.
Auckland was the largest contributor to the revaluation gain with $49.7 million or 81% of the total portfolio gain. By sector, Industrial again provided the greatest contribution at $53.4 million, up 6.8%. The Office portfolio increased $21.3 million, or 2.9% and Large Format Retail declined by $13.0 million or -6.5%.
FY20 Guidance Amid COVID-19 Pandemic
The company has a diversified portfolio of properties by location, type and tenant. As at 29th February, the portfolio was weighted 45% to Industrial, 38% to Office and 17% to Large Format Retail. By location, 72% of the portfolio was in Auckland and 26% in Wellington. The company has maintained high occupancy at 98.4% and has a weighted average lease term of 6.1 years. The ongoing impact of Covid-19 is unknown. However, the company remains comfortable with overall performance of the business and has also reiterated its FY20 guidance of 6.35 cps.
The stock of ARG closed the day at $1.090 per share on 24th April 2020, up by 0.93%. The company has a market capitalisation of $901.634 million. The stock of the company has witnessed a rise of 3.81% in the span of past 5 days.
Vista Group International Limited
Vista Group International Limited (NZX: VGL) is involved in the business of providing software as well as additional technology solutions. These solutions are provided across the global film industry sectors of distribution, exhibition, and consumer. Recently, the company completed its NZ$25 million underwritten placement and the institutional entitlement offer component of its fully underwritten 1 for 4.37 pro-rata accelerated entitlement offer. A total of about NZ$65 million will be raised under the Placement and Entitlement Offer. The Institutional Entitlement Offer and Placement closed on April 16, 2020 and raised up combined gross proceeds of around NZ$51 Mn.
Impact of COVID-19 on Film Industry
The impact of COVID-19 on the film industry globally has been significant and cinemas in many countries are temporarily closing. As per the release dated March 24, 2020, Vista Group companies serving the studio segment of the film industry like MACCS, Powster, and Numero have so far not seen significant impact to their business.
The company has taken following steps to encounter this pandemic:
- The Directors have reduced their directors’ fees by 30%;
- The Chief Executive Officer has voluntarily reduced his salary by 30%;
- The senior leadership team have voluntarily reduced their salaries by 25%;
- A hiring freeze has been implemented across the company;
- Marketing spend has been reviewed and reduced with most industry trade shows cancelled or deferred.
Cancellation of Vista China transaction
Recently, the company made an announcement that it has cancelled the agreement to acquire a further 14.5% of Vista Entertainment Solutions (Shanghai) Limited, which was earlier announced on December 20, 2019. However, it may revisit the potential future transaction in respect of Vista China but only once the impact of the coronavirus pandemic is fully understood.
The stock of VGL closed the day at $1.230 per share on 24th April 2020, down by 2.38% on an intraday basis. The company has a market capitalisation of $265.154 million. The company’s stock has fallen 17.45% in the span of past 5 days.