Investment Matters

Company news: Centuria's, South32, TZ Limited

This week we sold the remaining stake in the Centuria Industrial Property REIT (the old 360 Industrial Fund), along with the majority (~two-thirds) of the Centuria Metropolitan REIT (the old 360 Office Fund) holding out of clients equity portfolios.

During our period of ownership, these assets have delivered great returns for clients.  However, with both now trading above their net asset values, and with slow (flat at best) medium-term distribution growth outlooks, they no longer meet the return requirements of the equity portfolio in the medium term.

In the short term, this will impact income generation overall for the portfolio.  However, we expect in due course to be able to reinvest this money in a way that will replace this income, as well as enhance the growth prospects going forward.  

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South32 released its Sep-17 quarter production report.  The company's cash position has further strengthened, despite an increase in working capital - reflecting good realised commodity prices.  Production is on track to meet FY-18 guidance.   The company did flag that increasing cost pressures (such as raw input costs) may feed through to cost inflation through the remainder of the year.  It noted that these cost pressures are flowing through to increases in cost bases across the industry.

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TZ Limited also released its quarterly update.  Pleasingly, the company delivered a net positive cash flow for the quarter.  Revenue was lower than the PCP (lower postal and logistics sales), but at a higher margin.  The company reiterated its three focus areas for the year: positive EBITDA growth, profitable revenue growth, and leveraging the company's technology to expand into new areas.

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Challenger released its quarterly update on funds and assets under management.  The company reported 5% growth in asset under management for the quarter.  Significantly (as it points for future revenue and profit growth), annuity sales - up 6% on the PCP, with long-term life sales up 45%.