Investment Matters

Company News: Emeco, MMA Offshore, Lovisa and others.

Australian Equities sub-portfolio

Emeco (positive impact) held its Annual General Meeting this week. The company provided an update on trading for the first half of 2021 (1H-21). It remains on track to achieve the operating profit it guided towards earlier in the year. Importantly, the company has acknowledged the disconnect between its value and its share price. It signalled that as conditions improve, it will consider measures to return capital and close this gap, including implementing a buy-back and resuming dividends.
Its share price reacted favourably to the announcement, 8% higher on the day. This has added to the broader recovery we have seen in Emeco’s share price in November, which is currently 24% higher for the month.


MMA Offshore (positive impact) will conduct an equity raising as part of restructuring its debt. The restructure is a significant turning point and will put the company on much firmer financial footing during the current downturn in oil and gas capital expenditure.
The deal includes a $15.1m concession from its lenders, a reset of its covenants, alteration to interest payment schedule and an extension to the term of the facility to January of 2025 (previously September of 2021).

The company will look to raise approximately $80m in equity, with a majority of the proceeds used to pay down debt. This will lead to a total reduction in company debt of $93.7m, with gross debt reduced from $172.9m to $86.5m.

We participated in the raise on behalf of clients. MMA Offshore is now a smaller position in the portfolio, we reduced your holding at significantly higher prices earlier this year (on average a price approximately 150% higher than its current share price post raising). The restructure leaves the company much better placed to ride out the current downturn in oil and gas spending and a more attractive investment proposition. We see it as cheap based on both the potential sale value of its vessels and its future earning potential.


Pushpay (neutral impact) held its Investor Day this week. Pleasingly, the company provided more clarity around the pace of customer growth and mix of customers across products. Growth in customers was in line with our expectations.

We have taken recent share price weakness as an opportunity to add to our holding this week.


James Hardie (neutral impact) announced its result for the first half of 2021 (1H-21). The company announced it will reinstate its dividend in the current financial year, a reflection of its strong operating performance throughout the pandemic and disciplined cost-cutting. Furthermore, the company remains on track to achieve the profit it has guided towards for the full year and is still seeing strong demand (with growth above market), particularly in North America and strengthening sales in Europe and Australia. Importantly, the company alluded to a Global Innovation platform (to be announced in Feb 2021) which will see it look to enter adjacent categories, particularly in the exterior market.


Incitec Pivot’s (negative impact) full year result (FY-20) reflected some of the challenges the company has faced over the year. This includes weakened demand due to COVID-19, a sharp decline in coal production in the US and the impact of the repricing of several long-term customer contracts. Pleasingly improved seasonal conditions have seen an improvement in the performance of the company’s fertiliser business, with prices beginning to recover.
Seasonality (particularly variability in fertiliser pricing) and variable operating performance (particularly plant outages) have impacted the business in the past. However, we see that its share price materially discounts the company’s long-term value, as economic activity improves.


Lovisa (positive impact) announced it will acquire a network of 80 stores from a competing fashion retailer ‘beeline GmbH’ that will dramatically accelerate its growth in Europe. The company will acquire store leases, staff and associated support team as part of the transaction for a nominal amount (€60 – sixty euros) along with cash of €9.87 million. The transaction will also come with an option to acquire a further 30 stores in France. The company will begin to transition existing stores from March of 2021.
Lovisa’s share price reacted favorably to the news – up more than 13% at the time of writing, capping off the strong 52% recovery we have seen in its share price over November.