Investment Matters

Company News

Australian Equities Portfolio

Lynas Corporation announced that the Australian Government has recognised it's proposed cracking and leeching plant as a “Major Project Status”. The designation recognises the significance of the project to the Australian economy and will assist with the granting of future State and Commonwealth Government approvals.

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Paragon Care provided an update to the market on Monday.

Paragon expects a normalised operating profit (EBITDA) for the first half of FY-20 of $12m (excluding one-off restructuring and redundancy costs of approximately $3m), which was below market expectations. Its share price was subsequently negatively impacted.

Its result has been impacted by the loss of key contracts (which are now the subject of legal action) during the period. Furthermore, the implementation of a company-wide Enterprise Resource Planning (ERP) system has encountered challenges and is being reviewed.

However, adjusted revenue has continued to grow by 8.5%. Furthermore, there remain to be $6m in operating cost savings to be achieved by the company, which will flow through to operating profit and margins.

We recently engaged with the company, and remain comfortable with their positioning and business strategy going forward.

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Worley announced the retirement of CEO Andrew Wood. Mr Wood will be succeeded by Mr Chris Ashton, current Chief Operating Officer (COO) who has been instrumental in the company’s recent transformation.

Property Portfolio

The Centuria Metropolitan REIT announced its result for 1H-FY20. The portfolio remains well leased, with a weighted average lease expiry (WALE) of 5.1 years occupancy and 99.2%. Gearing at 31 Dec 19 was 33.2% (within the company’s target of <35%).

Funds from operations (that is, net income before depreciation, amortisation and gains or losses from the sale of real estate assets or impairments) per unit were 9.6 cents, 8.9 cents of which will be distributed – in line with guidance. Based on a share price of $2.90, the company is forecasting a distribution yield of 6.1% for FY-20.